The October Energy Price Cap Rise and the VAT Cut: What Landlords Actually Pay From 1 October

Two energy changes land on the same day this year, and they pull in opposite directions. Nobody in the trade press has put them together for a landlord audience, so here's what they actually mean for your numbers.

From 1 October 2026, Ofgem's price cap goes up. On the same day, VAT on domestic electricity comes off. One raises your costs, the other cuts them, and the net effect depends entirely on how you're exposed to energy bills in the first place. If every tenant pays their own supplier and you never have a void, this is mostly background noise. If you let bills-inclusive, run an HMO, or carry any void periods at all, it's worth ten minutes with the actual figures.

The Cap Rise: £1,723 a Year, Up 4%

Ofgem confirmed on 26 August 2026 that the price cap for October to December will rise 4%, from £1,663 to £1,723 a year for a typical Direct Debit household using both gas and electricity. That's roughly £60 a year, or £5 a month, and it's the second consecutive quarterly increase.

The cap isn't a bill. It's a ceiling on the unit rate and standing charge that suppliers can charge on standard variable tariffs, applied to Ofgem's assumed typical consumption. From 1 October, that works out at 26.32p per kWh for electricity with a standing charge of 54.83p a day, and 7.97p per kWh for gas with a standing charge of 29.68p a day.

Ofgem points to higher wholesale gas prices as the driver, tied to continued pressure from the Middle East conflict on global gas markets. Gas costs alone are up around 8% this quarter. Electricity has stayed comparatively flat, and that's not an accident: the VAT cut below is doing some of the work of keeping the electricity side of the bill down, even as the overall cap rises.

Frequently Asked Questions

What is the energy price cap from October 2026?

Ofgem's price cap for 1 October to 31 December 2026 is £1,723 a year for a typical Direct Debit household using both gas and electricity, up 4% (around £60 a year, or £5 a month) from £1,663. It's the second consecutive quarterly rise, driven mainly by higher wholesale gas prices linked to the Middle East conflict.

Does the VAT cut on electricity apply to landlords?

Yes, if you pay the electricity bill yourself, such as on a bills-inclusive let, an HMO where you pay energy directly, or during a void period. VAT on domestic electricity in Great Britain drops from 5% to 0% from 1 October 2026 to 31 March 2027, worth roughly £45 a year to a typical household. It doesn't apply in Northern Ireland, where the 5% rate continues under separate VAT rules.

How much does an empty rental property cost in energy standing charges?

At the October to December 2026 rates, standing charges alone come to about 84.5p a day, roughly £308 a year or £25.70 a month, combining electricity (54.83p a day) and gas (29.68p a day). That's payable on a connected but empty property regardless of consumption, on top of any usage from an alarm, boiler frost protection, or appliances left running.

Why shouldn't I compare the new £1,723 cap to last year's £1,862 figure?

£1,862 used Ofgem's old typical-use assumption, which it changed on 1 July 2026. On the current basis, the same period was £1,663, not £1,862. Comparing £1,723 to £1,862 makes it look like the cap fell £139 when it actually rose 4%. The correct like-for-like sequence is £1,641 (April to June) to £1,663 (July to September) to £1,723 (October to December).