SOME THOUGHTS ON HMO ENERGY USE
“When people lose the connection between their actions and their consequences, they lose their hold on reality, and the further this goes the more it looks like madness”
Robert Green
If you are the owner/operator of multi occupant buildings right now you will be acutely aware that your utility bills are total madness. As much as prices have rises its likely not just about higher prices but also about undisciplined usage. With cheap energy, operators could get away with ignoring this. That’s no longer true.
As owners of a portfolio in which the costs of energy are included in the tenants rent it has become increasingly important for us to have a very clear understanding of energy usage at a per-property and per-tenant level.
That way we can understand our current bills, influence and predict our future bills and remove the frustration of dealing with the seeming randomness of utility providers.
HMO’s will always be vastly more energy intensive that regular houses because on average these properties may contain (an average of) seven occupants who all need to cook, shower, iron, wash, air-fry, dry clothes and run their electronics.
A big issue for the owners of these HMO’s is that the tenant’s rent is inclusive of bills and so there is no direct financial implication (cost) to the tenant of being wasteful with their energy use.
While in the past this didn’t matter too much, with increased energy costs (on top of increased borrowing costs) owners are having to become more sophisticated if they wish to perform financially in this climate and to maintain an appetite for growth despite the current challenges.
As well as less personal incentive to be diligent with energy (on an individual basis) these properties can also easily become a ‘tragedy of the commons’ as other tenants may observe the least careful energy user at work and can start to trend towards that behaviour themselves. Multiplying the problem. This is probably also true of recycling. (And probably even washing up but perhaps that saves energy..!?)
Owner operators must over-communicate with tenants to guide the ship and drive energy awareness but also be diligent in selecting occupants. In any multiple-occupation house it only takes one person to negatively pollute the harmony of a house and the corresponding standards. Cleanliness, peace, cohesion and wastefulness etc.
Back to some meandering and inconclusive thoughts on HMO energy usage.
But let’s start with context. The best context in terms of usage would be a standard UK house and its usage.
A typical UK household each day will consume:
8 kWh of electricity per day
33 kWh of gas per day
They will, on average, pay:
34 pence per kWh of electricity
10p per kWh of gas.
(It’s worth remembering that electricity is more expensive than gas on a kWh basis)
As portfolio owners you would think we would receive economies of scale in terms of energy costs but that doesn’t seem to be the case. (Or perhaps we don't negotiate hard enough or perhaps we just timed our energy fixing impeccably badly. Probably a blend)
We pay between 36p and 77p per kWh for electricity. So we pay from ‘the same as the everybody else’ to ‘double what everyone else pays’.
And with gas we pay between 10p and 20p. So from ‘The same as everyone else pays’ to ‘double what everyone else pays’.
We’re focusing on usage in this note which obviously doesn’t impact the daily ‘standing charge’. That is an additional daily charge from your energy provider which simply gives you access to the energy. So you are effectively paying for the ability to use electricity and gas if you choose to. This standing charge that we all may effectively pays for the network and supply side of making sure each home can be wired up to the grid. Even if you don’t use a dot of energy all month you will still pay a monthly bill which will purely be the months sum of the ‘daily standing charge’.
The average UK residential standing charges are;
28p per day for gas. ****So even if you use no gas at all you will still pay about £10 a month for gas.
46p for electricity. So even if you use no electricity at all you will still pay about £15 a month for electricity…
The higher unit costs we pay (as business customers as opposed to residential) is one part of the issue but that kind of is what it is for now and we have very little control over this.
What is a far larger part of the problem is the actual usage. So as owners we have gone from quite carefully monitoring the bills but never truthfully thinking at device/appliance level to carefully monitoring the kWh usage, the electrical devices/appliances in our property (and their wattage) and thinking very carefully about how we heat stuff (with gas or electric) as well as the scheduling of these machines that do the heating, the cooling and the ventilating.
In our experience HMOs average the following energy usage figures;
Per Day…
100 kWh of Gas
30 kWh of Electricity
Per Month…
3k kWh of Gas (3 mWh)
1k kWh of Electricity (1 mWh)
(1k kWh = 1 Mega Watt Hour mWh or 1 million watts)
Per Year…
35k-40k kWh of Gas (35-40 mWh)
12k kWh of Electricity (12 mWh)
Knowing these numbers more intimately and analysing them regularly is probably going to provide the sets and reps necessary to build a really detailed understanding of energy usage which will serve us for years to come. If energy prices suddenly drop we won't regret going so deep on the subject.
We are now thinking about how we build better to be more efficient with energy. Building well insulated properties is of course ground zero and that's now a matter of course. We will write more on that in another note as this is nothing we have been spending a vast amount of time thinking about.
So the non insulation related elements to building and operating that we are currently focusing on are:
The timings of the heating systems and the access that we give tenants to control these systems. We are considering replacing tenant access to internal thermostats (usually on each floor) as these are often used turned up to 37 and forgotten about. This extreme use of thermostats is obviously crazy from an energy point of view but also causes disharmony as others become too hot and complain. By removing these thermostats and then carefully programming the heating we would ensure that each house is sensibly heated and then each tenant can control their own radiator in their rooms.
Considering the timings and seasonal requirement for the use of the Positive Input Ventilation System (PIV) as they run constantly and require 320w. Since they currently run 24 hours they could cost over £100 a month and we need to be totally sure that these are needed year round 24 hours a day.
“A PIV works by drawing fresh air in through a unit that’s usually, but not always, installed in your loft. This air is then filtered and gently diffused at ceiling level, creating a positive pressure within the home that forces air pollutants out through the natural leakage gaps found in every UK property, both old and new”
(Because HMO’s have more people living in them all breathing and washing and drying clothes they are more vulnerable to damp. Badly ventilated houses will often present themselves with dark mould appearing behind wardrobes etc. So we always install a PIV unit in the attic)
Trying to work out the optimal schedule for heating and hot water and working out how we make sure that this is stuck to as opposed to constantly changed by the tenants. More on this to follow as our experiments run their course.
Ensuring immersion heaters haven’t been accidentally clicked on to ‘constantly on’.
Ensuring that we are submitting meter readings every month across the entire portfolio and never replying on estimates. Only then can we be clear on usage. We are also building vastly more intelligent usage dashboards that will also track temperature in each city so that we can start to spot patters and make better estimates.
A detailed ‘Energy Due Diligence’ framework to be used when acquiring buildings. We are still working on this and will share this once it is finalised.
A few things to keep in mind that currently (to us) seem to (probably) be true (on average):
Gas is cheaper than electricity per unit
HMOs use about 30-35 kWh of electricity per day
HMO’s use about 100 kWh of gas per day
HMO’s on average will probably pay £15 per month (each) for their gas and electricity standing charges.
A (large’ish) HMO uses about 1 mWh of Electricity per month and 3 mWh of Gas per month
Average monthly electricity bill (at current rates of around 40 pence) will be around £400
Average monthly gas bill (at current rates of around 15 pence) will be around £450
