Can our company add a margin or an admin fee to the electricity it recharges?

Not to the price of the energy. Ofgem's guidance says the reseller may charge no more than it paid, including standing charges, and may not recover the costs of running its own system through the energy charge. Ofgem says a separate fee for services such as meter reading and billing may be charged. For leaseholders, any such fee also has to be allowed by the lease and reasonable.

Does the rule cover the electricity for the hallways and lift?

No. Ofgem's 2005 guidance says the rule does not apply to energy used in the reseller's own facilities, giving the hallway and stairs in a block of flats as an example. That cost is usually recovered through the service charge under the lease, not resold.

Does it apply to communal heating?

The rule covers the resale of gas and electricity. Selling heat or hot water from a shared boiler is a heat network, which Ofgem has regulated under separate rules since 27 January 2026.

Does it apply in Northern Ireland?

No. The rule is made under the Gas Act 1986 and the Electricity Act 1989, which cover Great Britain. Northern Ireland has its own regulator.

Recharging electricity or gas to flats: Ofgem's maximum resale price rule for block companies

When a block company buys gas or electricity and recharges it to flats, Ofgem's maximum resale price rule says it may charge no more than it paid, standing charges included. The rule has applied in Great Britain since 2003 and Ofgem is reviewing it. Here is how it works in a block.

What happened

Some blocks buy gas or electricity on one supply in the company’s name and recharge it to the flats, either from sub-meters or by sharing out the bill. In Great Britain that is “resale”, and Ofgem sets the most a reseller may charge. Its guidance, in force since 1 January 2003 and last updated on 14 October 2005, says the maximum price “is the same price as that paid by the person who is reselling it”, including any standing charges. It names “leaseholders who buy their gas and electricity from the freeholder” as one of the groups the rule protects.

Ofgem’s current advice to residents says the same thing more plainly: a landlord “cannot profit from the energy they resell to you” and can only charge the price they paid.

The rule is under review. Ofgem asked for views in a call for input published on 9 October 2025, which closed in December 2025, and invited landlords and property managers to respond. Its 2026 to 2027 work programme planned a policy consultation for July to September 2026 and a decision for January to March 2027. We could not find that consultation on Ofgem’s site on 2 November 2026, so the existing rule still applies. Nothing has changed yet.

What it means for your building

If your company recharges energy to residents, the rule is a duty on the company as reseller. In short, from the 2005 guidance:

Price. Charge each flat at the unit prices on the company’s own bill, using the sub-meter reading where there is one. With no meter, use “reasonable endeavours” to estimate a fair share, for example by floor area, and explain the method if asked.
Standing charges. Share them out in proportion to the energy each user takes, including the company’s own use from the same meter.
Show the bills. If a resident asks, the company should be able to show the supplier’s bills and explain how each share was worked out.
Refunds. If a resident turns out to have been overcharged by more than £5 in a year (or a proportionate amount for a shorter period, such as £2.50 for six months), the company must use reasonable endeavours to refund the whole overcharge. It may recover undercharges.
Other costs. The cost of running the system, such as meter reading or billing contracts, cannot be loaded into the unit price. Ofgem says it may be charged separately, for example through the service charge. For leaseholders that also means the lease must allow it and the cost must be reasonable.
Shared areas. Energy for the company’s own facilities, such as hallway and stair lighting, is outside the rule and normally sits in the service charge budget.
VAT. The 2005 guidance says the reseller may pass on only the lower domestic rate of VAT, whatever rate it paid, and cannot pass on the Climate Change Levy to people who pay the lower rate. Domestic electricity in Great Britain currently has a 0% rate until 30 June 2027 (see our story on communal electricity and VAT).

Since 2014 the rule has not applied to electricity resold through dedicated electric vehicle charge points, so charger tariffs in a car park are set differently. Where energy goes from one set of premises to another, the reseller may also need a supply licence or a licence exemption; Ofgem’s call for input explains this in Appendix 2.

A worked example (illustrative figures, before VAT). A converted house of four flats has one electricity supply in the company’s name with a sub-meter for each flat. In a quarter the bill is 3,000 kWh at 25p a unit (£750) plus a £45 standing charge. Flat 1’s sub-meter shows 400 kWh, and the hallway lights used 500 kWh. Flat 1 may be charged 400 × 25p = £100, plus a share of the standing charge in proportion to its use: £45 × 400 ÷ 3,000 = £6. That is £106 at most. The hallway’s £125 of units and £7.50 of standing charge are the company’s own use and go through the service charge, not the resale bills.

Anyone overcharged can go to the small claims court, and the guidance says interest may be payable. This is general information about Ofgem’s guidance, not legal advice: how your arrangement works depends on the lease and the supply contract.

What to do now

Check whether your company resells energy at all. A supply in the company’s name that feeds flats, or bills that the company recharges, are the signs.
If it does, write down the method: meter readings or the apportionment basis, and how standing charges are shared. Keep it with the supplier’s bills.
Check the last year’s recharges against the supplier’s actual bills and refund any overcharge above the £5 threshold.
Keep any meter reading or billing fee separate from the unit price, and check the lease allows it.
If your block recharges heat or hot water from a shared boiler, read our heat network registration story as well: that is a separate regime with a 26 January 2027 deadline.
Watch for Ofgem’s consultation on changes to the rule.

How Freeholdpilot helps

Freeholdpilot’s directors’ portal keeps supplier contracts and bills in the building’s document drive and holds the service charge budget, so the board can show residents the bills behind a recharge and keep shared-area energy in the right budget line.

This is general information about the law in England and Wales unless it says otherwise, not legal advice for your building. For advice, speak to a solicitor or ask us to introduce one of our partner firms.