HMO Energy Costs per Room UK (2026): £886 a Room a Year in Our 6-Bed Example, and How to Cut It

Last updated: Saturday 24 October 2026 (Europe/London).
Next update: when the government publishes new business energy price figures, due on 17 December 2026.
By: Switch Editorial Team, Switch Squid Ltd

As of 24 October 2026, the latest government figures show the smallest business energy users paid an average of 38.36p per kWh for electricity and 9.31p per kWh for gas, including standing charges and the Climate Change Levy but not VAT. At those prices, our example six-bedroom HMO using 9,000kWh of electricity and 20,000kWh of gas a year would pay about £5,314 before VAT, or roughly £886 per room a year (about £17 a week). Your own figure depends on your meter readings, heating type and contract, so use the method below with your bills. The biggest levers are the rate on your business contract, avoiding out-of-contract rates and making sure the right VAT is charged. This SwitchSquid guide shows how to work out HMO energy costs per room and how to bring them down. We may be paid if you use our business energy form; it doesn’t change the price you pay.

Sources: DESNZ — gas and electricity prices in the non-domestic sector, HMRC — VAT on fuel and power (Notice 701/19) and Ofgem — if you live in a home with a business energy contract, all checked on 24 October 2026.

How much do HMO energy bills cost per room?

There is no official average for HMOs, because they range from three-bed shared houses to large licensed properties with communal boilers. The honest way to answer the question is to take your own yearly usage from your bills, multiply it by your contract rates and divide by the number of lettable rooms. To show how the sum works, we have used the government’s average business prices for the smallest users and an example usage for a six-bed HMO with gas central heating.

Prices are DESNZ table 3.4.2, provisional figures for April to June 2026, published on 29 September 2026: the “very small” electricity band (up to 20,000kWh a year) and the “very small” gas band (under 278,000kWh a year). They include standing charges, network costs and the Climate Change Levy, but not VAT. The usage figures are our own example, not an average; replace them with the yearly kWh on your bills.

What the numbers say: electricity is the bigger cost per room in this example even though the house uses more than twice as much gas, because business electricity costs about four times as much per kWh. Every 1p per kWh you take off the electricity rate saves £90 a year on 9,000kWh, and every 1p off the gas rate saves £200 a year on 20,000kWh.

What drives an HMO energy bill?

• Number of rooms and occupants: more people means more showers, cooking and devices. Usage rises with occupancy, not just floor area.

• Heating type: gas central heating is usually cheaper per kWh than electric heaters or storage heaters, but a single communal boiler serving every room makes heating hard to control.

• Communal areas: hallways, stairwells, kitchens, fire alarm panels and emergency lighting run on the landlord’s supply all year. Our landlord communal electricity guide covers these supplies.

• Your contract type: business contracts have no price cap, and out-of-contract or deemed rates are usually much higher than a fixed deal. See our deemed business electricity rates guide.

• Standing charges: a fixed daily cost for each meter, whatever you use. Our business gas standing charge guide explains how they work.

• Bills-included rent: when tenants don’t see the bill, usage tends to be higher. A fair usage clause helps; read our HMO fair usage policy guide.

Business or domestic contract: which applies to an HMO?

Many HMO landlords hold the energy contract in their own or their company’s name and include bills in the rent. Suppliers often treat these as business contracts, especially for portfolios or licensed HMOs. Ofgem is clear that business energy customers are not protected by the energy price cap, and that business contracts have no cooling-off period once agreed, so the rate you sign matters a great deal.

If your tenants pay you for energy based on meter readings, Ofgem’s rules on resale apply: a landlord cannot profit from energy resold to tenants and can only charge the price they paid, though they may charge a separate administration fee. Our HMO sub-metering and recharging guide explains how to do this fairly.

Check you are paying the right VAT

VAT is one of the easiest savings for HMO landlords to miss. HMRC’s Notice 701/19 says fuel and power for domestic use qualifies for the reduced rate of VAT, rather than the standard 20%. Energy used in tenants’ homes generally counts as domestic use, and HMRC adds that where premises are in multiple occupation, charges to tenants for common parts are treated as part of the payment for the right to occupy.

On our example gas bill of about £1,862, the difference between 20% and 5% VAT is about £279 a year. Ask your supplier for a VAT declaration form if your bills show 20% on a supply that serves tenants’ homes.

How to cut HMO energy costs per room

1. Fix your contract before it ends. Start comparing four to six months before your end date so you never roll onto out-of-contract rates.

2. Compare at your real usage. Give suppliers your yearly kWh for each meter so quotes reflect your HMO, not a generic business.

3. Line up end dates across your portfolio so you can negotiate in one go.

4. Fix the VAT with a declaration for domestic-use supplies.

5. Control the heating. Timers, thermostatic radiator valves and a locked boiler programmer stop heating running all day in empty rooms.

6. Set a fair usage allowance for bills-included rooms, or sub-meter rooms and recharge at cost.

7. Plan for voids. Our landlord energy between tenancies guide covers what to do with empty rooms.

How to work out your own cost per room

1. Find the yearly kWh for each electricity and gas meter on your last 12 months of bills.

2. Multiply each by your unit rate, then add 365 days of standing charge for each meter.

3. Add VAT at the rate that should apply to each supply.

4. Divide the total by the number of lettable rooms, then by 52 for a weekly figure.

5. Compare that weekly figure with what your rent includes for bills, and with any fair usage allowance.

If your weekly cost per room is creeping above what the rent covers, a better contract rate is usually the fastest fix. For more on rates, see our business electricity prices per kWh guide and our page for HMO landlords.

Who it suits

• Good fit for a quote now: your contract ends in the next six months, or you are on out-of-contract rates.

• Check VAT first: your bills show 20% VAT on supplies that heat or power tenants’ rooms.

• Sub-meter or set a fair usage clause: usage in bills-included rooms is rising.

• Portfolio landlords: align end dates so every property is quoted together.

Want a hand with the numbers? Squid AI, SwitchSquid’s AI assistant, can help you work through your HMO energy costs before you request quotes.

Important conditions

• The six-bed usage figures are an example; your own bills give your real cost.

• DESNZ prices are averages for April to June 2026 and include standing charges but not VAT; your contract rates may be higher or lower.

• Business energy contracts have no price cap and no cooling-off period once agreed.

• Reduced and zero VAT rates depend on qualifying domestic use and a declaration on file.

• Information checked on 24 October 2026.

FAQ

How much does energy cost per room in an HMO?

It depends on your usage and contract, so there is no single figure. In our example, a six-bed HMO using 9,000kWh of electricity and 20,000kWh of gas a year at the latest government business averages pays about £886 per room a year before VAT, or roughly £17 a week.

Who pays the utility bills in an HMO?

It depends on the tenancy agreement. In many HMOs the landlord holds the gas and electricity contracts and includes bills in the rent, while in others tenants pay a share or are recharged through sub-meters. If tenants pay the landlord for energy, Ofgem’s rules mean the landlord can only charge what they paid.

Is an HMO on a business or domestic energy contract?

It can be either, but many HMO landlords are on business contracts, particularly for licensed HMOs or portfolios. Business contracts are not covered by the energy price cap and have no cooling-off period, so compare carefully before you agree.

What VAT should an HMO landlord pay on energy?

Energy used in tenants’ homes is generally domestic use, which qualifies for reduced-rate VAT under HMRC Notice 701/19. Gas is charged at 5%, and HMRC has set a temporary zero rate for domestic electricity in Great Britain from 1 October 2026 to 31 March 2027.

How can I reduce energy costs in my HMO?

Start with the contract: compare fixed deals four to six months before your end date and avoid out-of-contract rates. Then check your VAT, control heating with timers and valves, and use a fair usage clause or sub-metering for bills-included rooms.

How much do small businesses pay for gas per kWh?

The government’s latest figures put the average at 9.31p per kWh for the smallest gas users in April to June 2026, including standing charges and the Climate Change Levy but not VAT. Larger users paid less, with the next band averaging 4.86p per kWh.

Our verdict

Work out your own cost per room from your bills using the steps above, then check two things: that you are on a competitive fixed contract rather than out-of-contract rates, and that the right VAT is being charged. In our six-bed example, energy costs about £886 per room a year before VAT, and every 1p off the electricity rate saves £90 a year. Compare business energy quotes for your HMO before your renewal window closes.