Change of Tenancy - Moving business premises and your energy contract

Moving to new business premises is an exciting, positive step for your business. But the amount of stuff you need to sort - shifting stock and equipment, sorting your internet connection, and notifying insurers, to name a few things - can mean moving is a bit of a headache.

With all that and more going on, sorting your business energy contract could well be the last thing on your mind - as long as the property has a gas and electricity supply, you're good to go. Right? Sort of. 

While it's true you'll not go without power, not sorting out a new contract before you move in will almost certainly see you overpaying for energy.

What is a Change of Tenancy (COT)?

A Change of Tenancy (COT) is when a business moves in or out of premises, transferring the responsibility for the energy supply to a new occupant. There are two types of COT:

• Incoming COT: When your business moves into new premises and takes over the energy supply.
• Outgoing COT: When your business vacates premises and needs to end the energy contract associated with that location.

In either case, you must inform your energy supplier about the change. This ensures a smooth transition and helps prevent unnecessary charges.

The Incoming COT Process

If your business is moving into new premises, follow these steps:

1. Complete a COT form: Provide details about your business, the outgoing tenant, and the landlord.
2. Sign a Letter of Authority: If you're using a Third-Party Intermediary (TPI) to sort your energy contracts, signing an LOA allows your broker or agent to represent your business in supplier communications.
3. Submit proof of tenancy change: This involves sharing a fully signed and dated lease agreement, typically a signed lease or tenancy agreement, Land Registry document, or property sales agreement.
4. Provide other supporting documents: You may need to provide additional information, such as business rates, solicitor’s or accountant’s letters, or an incorporation certificate for limited companies.
5. Get supplier validation: Your supplier will verify the details using the lease agreement and may contact the landlord or outgoing tenant for confirmation.
6. Account setup: Once the supplier validates and accepts the change, they will set up your business account. From here, you can either agree to a new contract or compare energy quotes and switch suppliers.

When moving premises, you also need to consider the following:

• Suppliers only process a COT when a business physically relocates to a new property. Changes to a business name or legal entity don't qualify as a COT.
• If your business undergoes a name or entity change, your current energy contract will stay in place, with updates applied to reflect the new details until the contract’s end date.

It's also worth taking a photo of the meter on the date of handover. You can then give your new supplier this opening meter reading to ensure billing starts from the correct date

Start your move on the right foot by staying informed and ensuring all the necessary steps are taken for a seamless energy transition.

The outgoing COT process

• Complete a COT form: This includes details of the outgoing tenant/business, landlord (if space was rented), and the new business or entity taking over.
• Sign a Letter of Authority: If you're using a Third-Party Intermediary (TPI) to sort your energy contracts, provide a signed Letter of Authority (LOA) allowing the broker or agent to communicate with the supplier on the business's behalf.
• Provide other supporting documents: Submit supporting documentation, which typically includes surrender of lease/end of tenancy letter, evidence of vacating (such as a photo of the meter with serial number and final reads), and sometimes proof via business rates or a letter from your solicitor or accountant.
• Get supplier validation: The completed documents are submitted to the supplier for processing and validation. Some suppliers may have specific requirements or request direct communication with the outgoing tenant.

Once this information has been processed, the supplier will confirm the contract end date and generate a final invoice. The account will then be closed when any remaining balance is paid off.

What happens when you move out of your old premises?

Your business electricity and gas contracts will end on the day you leave your old building. This is because your energy deal is linked to your supply point.

Suppliers don't usually charge a penalty fee for exiting a contract early because you’re moving premises, but check the terms and conditions to make sure. As outlined above, you may need to provide your old supplier with proof that you are moving out of the building.

On the day you move out, note down or take a photo of your electricity and gas meter readings and give it to your old suppliers so they can process your Change of Tenancy notification. Depending on the balance of your account, you’ll either be charged a final bill or get a refund. It’s a good idea to leave any Direct Debits in place until you get these final bills.

To help things go as smoothly as possible, give your business energy suppliers at least one month’s notice of your planned moving date and make sure they have your new address so they can send your final bills.

Can you transfer your current energy deal to your new premises?

You can't usually transfer your current energy deal to new premises as your supply contract takes things like location and business size into account. If you’d like to transfer your business’s current energy deal to your new address, you’ll need to talk to your supplier. 

But it's more likely that you’ll have to arrange a new contract, so moving business premises can offer a good opportunity to negotiate a better energy deal.

What happens when you move into a new business premises?

On the day you move your business into new premises, you should take a note or a photo of your new meter readings and submit them to the current suppliers of your new property and your chosen new suppliers.

To find out who is currently supplying your premises with gas, call the meter number helpline on 0800 088 6986. For electricity, phone the Local Electricity Distribution Company for your area.

When you move into your new premises, you’ll automatically be transferred onto a ‘deemed’ rate with the building’s current suppliers. These are usually among a supplier's most expensive rates, so it’s important to switch to a fixed rate deal as soon as possible. The good news is, you can switch from deemed rates straight away.

In some cases, the supply to your new building may have been disconnected because the old tenant failed to pay their bills. You may have to pay a reconnection fee or a deposit to get it reinstated. If your building is brand new, you may need to pay a connection charge, and the supply could take some time to set up - plan ahead if you're going to be the first occupant of a new property.

And make sure the building has a valid commercial Energy Performance Certificate (EPC). This gives the building an energy rating from A (very efficient) to G (very inefficient) and includes suggestions on how to improve energy performance.

Buildings must have a minimum EPC rating of E to be let commercially in England and Wales, and having an EPC will help your business stay legally compliant and avoid potential fines. 

Who pays your business energy bills?

The terms of your tenancy agreement may stipulate that you pay your business energy bills directly to your landlord, who then pays the supplier. You’ll need to talk to your landlord if you wish to change energy suppliers or deal, although this may not always be possible.

Even if your landlord pays the supplier, you will still be responsible for making sure your energy accounts stay in balance. Check the terms of your tenancy agreement thoroughly so you’re aware of how your energy bills are managed.

What is a Deemed Contract?

A deemed contract is an energy agreement that applies when a business moves into new premises and has not yet arranged a fixed-rate energy deal with a supplier.

Deemed rates are variable and typically among the most expensive tariffs offered by suppliers. The good news is that you can compare quotes and switch to a more cost-effective fixed-rate deal at any time, helping you save on your energy bills.

How to compare business energy deals

Moving business premises is a good time to see what energy deals are on offer. 

You can do this by contacting suppliers individually to request bespoke quotes. Dual energy contracts aren’t available for business customers, so you’ll have to do this for both your business gas and electricity supplies. This can be very time-consuming. You need to factor in unit rates and standing charges and be prepared to negotiate between several suppliers to make sure you're getting the best rates. 

Or you can get some expert help to save time.

MoneySuperMarket has teamed up with Bionic to help take the hassle out of business energy comparison. The tech-enabled experts help you compare rates from a range of suppliers and support you through the switch - so you can concentrate on running your business.

Call Bionic today on 0800 140 4667 to hear more about how the tech-enabled business energy can save your business money by switching your energy deals.