Last week we heard the news that Ofgem would be increasing the price cap for gas and electricity from October 1st, with another rise expected in January. This takes the average energy bill to over £3,500 representing an 82% rise in the price cap since April.
This rise will impact 24 million households on their gas and electricity providers’ variable tariff. Chancellor Nadhim Zahawi has announced that the government is currently looking at what they can do to support the most vulnerable. Every household will automatically receive a £400 discount to be applied by your supplier over the winter months – £800 for people with disabilities.
Why are prices rising?
There are several factors that have led to this rise in energy prices. The conflict in Ukraine means that there are restrictions on oil and gas imports from Russia which previously accounted for 43% of our supply.
Demand for energy has continued to increase since Covid19 restrictions eased, as there are higher levels of economic activity. In addition, after a hot summer in Asia and cold winter in Europe, there has been further demand for electricity.
Limits on supply and high levels of demand has pushed prices up resulting in UK energy companies paying more for their energy, and this cost has been passed on to households.
If you are worried about the cost of gas and electricity, make sure you’re aware of any support available to you. Many companies are offering grants to people struggling – for example, British Gas offers up to £1,500 to families who are in energy debt regardless of their supplier.
The government is providing people in receipt of working and child tax credits, pensioners and those registered disabled, a cost-of-living payment. Support is also available through the Household Support Fund and the Warm Home Discount Scheme.
Falling behind on bills
Ofgem has implemented rules for suppliers stating that they must offer assistance by way of an affordable payment plan if you’re falling behind on your energy bills.
Reducing your consumption
There are several things you can do to reduce your consumption of energy. First, look at renewable and green energy sources including bio fuel fires instead of gas or electric, air and ground source heat pumps and solar power. Although the cost is high, there are grants available which could pay up to 70% of the costs, with monthly payment plans which could represent the fall in your bills. In addition, try to warm yourself rather than the house using electric blankets and turning off radiators in rooms that are rarely used. Make sure you have draft proofed your windows, avoid using the tumble dryer, turn off appliances left on standby mode, and contact East Renfrewshire to take advantage of their green energy grants whereby you could obtain a free boiler replacement if your boiler is over seven years old, and cavity wall insulation free of charge. Contact them to find out if you qualify.
How will it affect the housing market
The rising cost of living and hike in energy bills could lead to a slowdown in the housing market. Buyer demand is already starting to ease, although this tends to happen every August and it is still above the five-year average.
Rising mortgage rates is expected to have a bigger impact on the housing market, as the average two-year fixed rate deal is now above 4%.
Talk to us about the market here in East Renfrewshire – we can give you an overview of house prices in your area.