Heat pump tariffs for rental properties: what the tenant chooses and what the landlord controls

Who chooses the tariff in a rented home

The person who pays the energy bill chooses the tariff. In most lets that is the tenant, so the landlord pays for the heat pump and the tenant decides what they pay for the electricity that runs it.

Ofgem’s guidance for tenants sets out the position:

• If the tenant pays the energy bills, they can choose to switch supplier or tariff at any time.
• The tenancy may contain a list of suppliers to choose from, which Ofgem calls a default supplier clause. Ofgem’s 2013 statement on tenants’ energy rights says the landlord or letting agent should make tenants aware of any tie-ins, and that where a tenant pays the bill directly the landlord should not prevent them choosing their own supplier.
• The tenant should check whether they need to tell the landlord or letting agent that they want to switch.
• The agreement may contain a notice and return clause, meaning the supply has to be switched back when the tenancy ends.
• If the landlord pays, the landlord deals with the energy supplier directly.

So a landlord who installs a heat pump cannot sign the tenant up to a heat pump tariff, and should not try to lock one in through the tenancy. The tariff is part of the running cost picture, but it is the tenant’s decision.

What a landlord can and cannot control

The landlord controls the system. The tenant controls the tariff and the daily use. Most of what makes a tariff work is in the landlord’s half.

Factor	Who controls it	Why it matters for the tariff
Supplier and tariff	Tenant (if they pay the bills)	Sets the price per kWh and the cheap and peak hours
Flow temperature and radiator sizing	Landlord, through the installer	Sets how much electricity each kWh of heat needs, at any rate
Cylinder size and controls	Landlord, through the installer	Decides whether hot water can be heated in cheap hours
Heating schedule and settings	Shared: installer sets, tenant uses	Decides how much use falls in cheap or peak hours
Handover note	Landlord	Tells the tenant which tariff types suit the system
Bills included lets and HMOs	Landlord	The landlord picks the tariff and pays the bill

A heat pump with a low flow temperature is cheaper on every tariff. A system that can store heat in the cylinder and run to a schedule gets more out of a time of use tariff. Both are design decisions the landlord makes when choosing the installer. See heat pump radiators and hot water in rentals.

Tariff types a tenant may choose between

There are four broad types, and each changes the running cost picture differently.

• Standard variable tariff. The price is capped by Ofgem each quarter. For 1 October to 31 December 2026 the cap is 26.32p per kWh of electricity, with no VAT on electricity from 1 October 2026 to 31 March 2027. The cap is a ceiling on a standard variable tariff, not a fixed price, and it changes each quarter.
• Fixed tariff. The rate is fixed for a term, which may sit above or below the cap. Check exit fees.
• Time of use tariff. Cheaper rates at set hours and a dearer rate at others. These can suit a heat pump that runs to a schedule.
• Heat pump specific tariff. A time of use tariff marketed to homes with a heat pump or other electric heating, often with conditions such as a smart meter.

None of these prices is permanent. Every rate on this page is a snapshot.

Example: Cosy Octopus on 8 October 2026

Octopus Energy describes Cosy Octopus as a heat pump tariff for homes with “a heat pump, electric boiler or electric radiators”. Its own tariff page, read on 8 October 2026, gives three cheap periods a day (4am to 7am, 1pm to 4pm and 10pm to midnight) and a peak from 4pm to 7pm. Octopus says the cheap rate is 51% below the day rate in each region and the peak 50% above it. It needs an Octopus account and a compatible smart meter, and it comes in fixed and flexible versions.

The page itself shows no unit rates, so the rates below come from Octopus’s own published tariff data for the flexible Cosy Octopus product, read on 8 October 2026 and valid for that day. They include VAT, which is zero on electricity until 31 March 2027.

Rate band (local time)	London region	Eastern England region
Cheap: 4am to 7am, 1pm to 4pm, 10pm to midnight	12.44p per kWh	12.46p per kWh
Peak: 4pm to 7pm	38.04p per kWh	38.11p per kWh
All other hours	25.36p per kWh	25.40p per kWh
Standing charge	40.40p a day	49.71p a day

These rates are variable and will change. Check the rates for the property’s own postcode on the supplier’s site before relying on any figure.

How a tariff changes the running cost picture

The tariff changes the average price the household pays per kWh, and that average depends on when the electricity is used.

Worked example (modelled, not a real project)

Inputs: a home needing 12,000 kWh of heat a year, a heat pump with a seasonal efficiency of 3.0, so 4,000 kWh of electricity. Gas comparison: a 90% efficient boiler at 7.97p per kWh. Cosy rates are the London figures above. Standing charges are excluded. The usage splits are assumptions, not measurements.

Scenario	Share in cheap / peak / other hours	Average price	Yearly heat pump cost
Ofgem cap rate	Not time of use	26.32p	£1,053
Cosy, use spread evenly over the day	33% / 13% / 54%	22.64p	£906
Cosy, heating scheduled into cheap hours	50% / 10% / 40%	20.17p	£807
Cosy, heavy use in the peak	25% / 25% / 50%	25.30p	£1,012
Gas boiler for comparison	Not applicable	8.86p per kWh of heat	£1,063

Formula. Average price = (cheap share × 12.44p) + (peak share × 38.04p) + (other share × 25.36p). Yearly cost = 4,000 kWh × average price. The even spread is 8 cheap hours, 3 peak hours and 13 other hours out of 24.

Two points follow from the arithmetic:

• The break-even moves. At the cap rate, a heat pump needs a seasonal efficiency of about 2.97 to match a 90% efficient gas boiler on running cost. At an average of 22.64p it needs about 2.56, and at 20.17p about 2.28. A good tariff widens the range of homes where a heat pump is cheaper to run.
• Peak use costs real money. The peak rate applies to all the household’s electricity, including cooking. A household at home and cooking from 4pm to 7pm may lose much of the gain.

Measured performance matters as much as the tariff. In the DESNZ Electrification of Heat project the median measured efficiency of air source heat pumps was 2.93, so a tariff can be the difference between a heat pump costing more than gas and costing less. See heat pump running costs for tenants for the full cap-rate tables.

How this interacts with the tenant’s right to switch

A tariff that suits the heat pump is only useful if the tenant chooses it, and Ofgem says a tenant who pays the bills can switch at any time. That has three practical consequences for landlords.

1. Explain, do not mandate. Put a short paragraph in the handover note: the system has a cylinder and a schedule, so time of use tariffs may suit it; the tenant should compare tariffs using their own usage; rates change.
2. Disclose any default supplier clause. If the tenancy has one, Ofgem says tenants should be made aware of any supplier tie-ins. A clause should not stop a tenant reaching a tariff that suits the system.
3. Set the system up so it works on any tariff. A low flow temperature and weather compensation help on a standard rate. Scheduling helps on time of use. A tenant who stays on a standard rate should still get a reasonable bill.

When a tenancy ends, the next tenant chooses again. A handover note that sits with the tenancy paperwork does the explaining each time.

Bills included lets and HMOs

Where the rent includes bills, the landlord chooses the tariff and pays the running cost, so the tariff decision is the landlord’s. In that case:

• Compare the cap rate with time of use options using the property’s real usage, not a brochure.
• Schedule heating and hot water into cheap periods where the design allows.
• Remember that tenants’ cooking and other use in the peak is on the same meter.

For shared houses, see the heat pump for an HMO landlord guide.

When a heat pump tariff is not the right answer

A time of use tariff is a poor fit when most of the household’s electricity use falls in the peak, when the system cannot store heat or schedule hot water, or when the tenant prefers a simple fixed price. In those homes a standard capped or fixed tariff may be the better choice.

A tariff also cannot rescue a badly designed system. If the heat pump runs at a high flow temperature on small radiators, the running cost will be high at any rate. Fix the design first. And a tariff does not change the capital cost, which the Energy Saving Trust puts at around £12,000 before any grant for an air source heat pump. See is a heat pump worth it for landlords.

Next step

Try your own numbers in the heat pump landlord calculator. Or send an enquiry and relevant independent firms will contact you, with no charge to you and no obligation.