| Energy Bills |
A change of tenancy (COT) for business energy in 2026 transfers the supply contract from the outgoing to the incoming tenant. The new tenant must contact the supplier, provide meter readings, and can choose a new contract. The outgoing tenant remains liable for charges until the COT is completed.
A change of tenancy transfers the business energy contract to the incoming tenant, who must act quickly to avoid liability.
KEY FACTS
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LAST REVIEWED 2026-09-06
What is a change of tenancy in energy terms?
A change of tenancy (COT) is the process of transferring the energy supply contract from the outgoing tenant to the incoming tenant at a business premises. In 2026, this process is governed by the terms of the existing supply contract and industry regulations. The new tenant must notify the supplier of the change and provide a meter reading on the date of the tenancy change.
The COT process ensures that the correct party is billed for energy usage. Without a COT, the outgoing tenant may remain liable for charges, and the incoming tenant may face difficulties establishing a new contract. The supplier will typically require proof of tenancy, such as a lease or rental agreement, to process the change.
It is important to note that the domestic price cap does not apply to non-domestic contracts. Business energy prices are negotiated directly with suppliers or through brokers. The COT process is separate from switching suppliers, although the two can be combined.
For the incoming tenant, the COT is an opportunity to review the existing contract and potentially negotiate better terms. However, the tenant must act promptly to avoid being rolled onto an expensive deemed contract.
Step-by-step: How does the COT process work?
The COT process typically begins with the outgoing tenant notifying the supplier of the tenancy end date. The incoming tenant must then contact the supplier to request a COT. The supplier will ask for details such as the new tenant's name, contact information, and the date of the tenancy change.
Once the supplier has the necessary information, they will arrange for a final meter reading for the outgoing tenant and a start reading for the incoming tenant. This reading is crucial for accurate billing. The supplier will then transfer the supply into the new tenant's name, either on the existing contract terms or a new contract.
If the existing contract has a fixed term, the incoming tenant may be required to take over the remaining term. Alternatively, the supplier may offer a new contract. The incoming tenant should compare options and consider switching to a different supplier if the existing terms are unfavourable.
It is advisable to keep records of all communications and meter readings. The process can take several weeks, so early action is recommended to avoid gaps in supply or billing issues.
| Rule | Detail | Source |
|---|---|---|
| Domestic price cap | does not apply to non-domestic contracts | Ofgem |
| Microbusiness test | fewer than 10 employees and under 2 million euros turnover, or under 100,000 kWh electricity or 293,000 kWh gas a year | Ofgem |
| VAT | 20% standard; 5% reduced rate below 33 kWh electricity or 145 kWh gas a day | HMRC |
| Complaints | Energy Ombudsman after 8 weeks or deadlock letter | Energy Ombudsman |
What is the outgoing tenant liable for?
The outgoing tenant is liable for all energy charges up to the date of the COT. This includes any outstanding bills, standing charges, and other fees as per the contract. After the COT date, the incoming tenant becomes responsible for the supply.
However, if the outgoing tenant fails to notify the supplier or provide accurate meter readings, they may continue to be billed. It is essential to provide a final meter reading on the tenancy end date to ensure the final bill is accurate.
In some cases, the outgoing tenant may be liable for early termination fees if they are ending a fixed-term contract before its expiry. These fees are typically outlined in the contract terms. The outgoing tenant should review their contract to understand any potential charges.
If the property becomes vacant, the landlord or the outgoing tenant may be responsible for energy charges until a new tenant takes over. This is known as the vacant property trap, and it can lead to unexpected costs.
What is the vacant property trap?
The vacant property trap occurs when a business property is left empty and no one takes responsibility for the energy supply. In such cases, the landlord or the last tenant may be liable for standing charges and any energy used during the vacancy.
Suppliers may charge a deemed rate for vacant properties, which is often higher than standard business rates. This can result in significant costs if the property remains empty for an extended period. To avoid this, the landlord or outgoing tenant should inform the supplier of the vacancy and consider having the supply disconnected or transferred to a vacant property tariff.
In 2026, the rules around vacant properties remain unchanged. The domestic price cap does not apply, so the supplier can charge commercial rates. It is important to check the contract terms for any vacancy provisions.
If a new tenant is found, the COT process can be initiated to transfer the supply. Until then, the responsible party should monitor the property to prevent unauthorised energy use.
Can the incoming tenant switch away from the inherited supplier?
Yes, the incoming tenant can switch away from the inherited supplier after the COT is completed. Once the supply is in the new tenant's name, they are free to choose a different supplier or tariff. However, if the existing contract has a fixed term, the tenant may need to wait until the term ends or pay an exit fee.
Switching suppliers can be done through a broker or directly with the new supplier. The new supplier will handle the transfer process, which typically takes a few weeks. It is advisable to compare offers from multiple suppliers to ensure competitive rates.
During the switching process, the incoming tenant should ensure that there is no gap in supply. The supplier will coordinate the transfer with the existing supplier. The tenant should also provide accurate meter readings to avoid billing errors.
It is important to note that the domestic price cap does not apply to business contracts, so prices are not regulated. The tenant should carefully review the terms and conditions of any new contract.
What are the rules for non-domestic energy contracts?
Non-domestic energy contracts are subject to different rules than domestic contracts. The domestic price cap does not apply to business contracts, meaning suppliers can set prices based on market conditions. However, there are regulations to protect microbusinesses.
A microbusiness is defined as having fewer than 10 employees and an annual turnover of under 2 million euros, or consuming less than 100,000 kWh of electricity or 293,000 kWh of gas per year. These businesses are entitled to certain protections, such as clear contract terms and a 30-day notice period for price changes.
VAT on business energy is typically 20%, but a reduced rate of 5% applies if consumption is below 33 kWh of electricity or 145 kWh of gas per day. This is important for small businesses to consider when budgeting.
If a dispute arises, the business can complain to the supplier and, if unresolved after 8 weeks or a deadlock letter, escalate to the Energy Ombudsman.
| Date | Event | Source |
|---|---|---|
| January 2019 | Default tariff cap introduced | Ofgem |
| October 2022 | Cap moves to quarterly reviews | Ofgem |
| July 2026 | Typical consumption values reset to 2,500 kWh electricity and 9,500 kWh gas | Ofgem |
| 26 August 2026 | Q4 2026 cap announced at £1,723 | Ofgem |
| 1 October 2026 | Q4 cap in force; VAT on domestic electricity cut to 0% until 31 March 2027 | Ofgem |
How does the UK energy price cap affect business tenancies?
The UK energy price cap is a domestic measure and does not apply to non-domestic contracts. However, it can indirectly affect business energy prices by influencing wholesale market trends. The cap was introduced in January 2019 and moved to quarterly reviews in October 2022.
In July 2026, the typical consumption values used for the cap were reset to 2,500 kWh of electricity and 9,500 kWh of gas. On 26 August 2026, the Q4 2026 cap was announced at £1,723. This cap came into force on 1 October 2026, and the VAT on domestic electricity was cut to 0% until 31 March 2027.
For business tenants, these changes do not directly affect their bills, but they may influence supplier pricing strategies. It is essential for businesses to shop around for the best deals, as there is no cap to protect them.
When taking over a tenancy, the incoming tenant should be aware that the inherited contract may have prices higher than the domestic cap. They should consider negotiating or switching to a more competitive tariff.
What should the incoming tenant check before completing a COT?
Before completing a change of tenancy, the incoming tenant should verify several key details. First, they should obtain a meter reading on the day of the tenancy change to ensure accurate billing. They should also review the existing contract terms, including the tariff, contract length, and any exit fees.
The tenant should check whether the property has any outstanding energy debts, as these may become their responsibility if not resolved. They should also confirm that the supplier has been notified of the change and that the COT is processed correctly.
It is advisable to compare energy deals from other suppliers before committing to the inherited contract. The tenant may find better rates by switching. They should also consider the property's energy efficiency and potential usage patterns.
Finally, the tenant should keep copies of all correspondence and documents related to the COT for future reference.
What are the common pitfalls in a change of tenancy?
Common pitfalls in a change of tenancy include failing to notify the supplier promptly, which can lead to billing issues. Another pitfall is not taking a meter reading on the change date, resulting in estimated bills that may be inaccurate.
Some tenants may be unaware that they are liable for the previous tenant's debts if the supply is not properly transferred. This can be avoided by ensuring the COT is completed correctly.
Another issue is being placed on a deemed contract if the tenant does not actively choose a new tariff. Deemed contracts often have higher rates. To avoid this, the tenant should contact the supplier immediately and negotiate a suitable contract.
Finally, tenants may overlook the vacant property trap if there is a gap between tenancies. Landlords should be aware of their responsibilities during vacancy.
How can a business avoid disputes during a COT?
To avoid disputes during a change of tenancy, clear communication between the outgoing tenant, incoming tenant, and supplier is essential. Both tenants should agree on the change date and ensure that meter readings are taken on that day.
The outgoing tenant should settle any outstanding bills before the COT to avoid complications. The incoming tenant should obtain written confirmation from the supplier that the COT has been processed.
If a dispute arises, the first step is to contact the supplier's complaints team. If the issue is not resolved within 8 weeks or a deadlock letter is issued, the matter can be referred to the Energy Ombudsman.
Keeping detailed records of all communications and meter readings can help resolve disputes quickly. It is also advisable to seek legal advice if the dispute involves significant sums.
Glossary: the terms on an energy bill explained
Change of Tenancy (COT): The process of transferring an energy supply contract from one tenant to another at a business premises.
Deemed contract: A default contract applied by a supplier when a customer does not actively choose a tariff, often at higher rates.
Microbusiness: A business with fewer than 10 employees and low energy consumption, entitled to certain supplier protections.
Standing charge: A fixed daily charge on energy bills that covers the cost of connecting to the supply network.
Energy Ombudsman: An independent body that resolves disputes between energy customers and suppliers after complaints are exhausted.
Vacant property: A property that is unoccupied and may still incur energy charges if the supply remains connected.
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Disclaimer. This guide is editorial information drawn from primary sources. It is not financial, legal or tax advice and does not recommend any provider. Figures are those published by the named sources on the review date and may change. Kael Tripton Ltd receives no commission, referral fee or lead payment from any provider named on this page. |
Frequently asked questions
What is a change of tenancy in business energy?
A change of tenancy is the process of transferring the energy supply contract from the outgoing tenant to the incoming tenant. It ensures that the correct party is billed for energy usage. The incoming tenant must contact the supplier, provide a meter reading, and may need to take over the existing contract or negotiate a new one.
Who is responsible for energy bills during a change of tenancy?
The outgoing tenant is responsible for bills up to the date of the change of tenancy. After that, the incoming tenant becomes responsible. If the property is vacant, the landlord or last tenant may be liable for charges until a new tenant takes over.
Can I switch suppliers after a change of tenancy?
Yes, once the supply is in your name, you can switch to a different supplier. However, if the existing contract has a fixed term, you may need to wait until it ends or pay an exit fee. Compare offers to find the best deal.
What happens if I don't notify the supplier of a change of tenancy?
If you don't notify the supplier, the outgoing tenant may continue to be billed, and the incoming tenant may not have a formal contract. This can lead to disputes and higher charges. It is essential to notify the supplier promptly.
Are business energy prices capped?
No, the domestic price cap does not apply to non-domestic contracts. Business energy prices are negotiated directly with suppliers. However, microbusinesses have some protections, such as clear contract terms and notice periods.
What is a deemed contract?
A deemed contract is a default tariff applied by a supplier when a customer does not actively choose a plan. It often has higher rates. To avoid this, contact the supplier immediately after a change of tenancy and negotiate a contract.
