Landlords Beware: Deemed Contracts with Electricity Suppliers

United Kingdom
Landlords of unoccupied premises, even those where the lease remains in place, are receiving claims from suppliers for the cost of electricity supplied to the property since the tenant vacated.  The electricity is likely to be supplied at an unattractive rate and by the time the landlord realises it may be liable the accrued charges may be significant.  This is yet another thing to add to the list of issues which a landlord needs to consider when a property becomes vacant.

The Electricity Act 1989 provides that where electricity is supplied to any premises otherwise in pursuance of a contract the supplier shall be deemed to have contracted with the occupier (or the owner if the premises are unoccupied) for the supply as from the time when the supply began.  Similar provisions are to be found in the Gas Act 1986.

The creation of a deemed contract for the supply of electricity in a commercial context is an unfortunate (for the landlord at least) consequence of statutory provisions which were designed to ensure, in a residential context, that when someone took up occupation of a new home they would have an electricity supply from the moment they moved in.

In practice a landlord whose tenant vacates should ascertain which company supplied electricity (and indeed gas).  The landlord should contact the supplier immediately to ensure that no deemed contract arises and if the supply is to continue to secure the best tariff available.  The landlord may be left with a liability for utility costs that have already been incurred but, depending on the particular circumstances of the claim, it may be possible to challenge liability based on the provisions of the Electricity Act.  The landlord may where the lease is still subsisting have a right to claim reimbursement from the tenant but this is, of course, of little assistance if, as is often the case in these circumstances, the tenant is insolvent.