Energy price rises and how they could affect you.

Energy Price Rises

And how they could affect you.

• Will homeowners be forced to sell their home as their gas & electric bills are set to double in 2022?
• Who will this hit the hardest - there are 5,911 OAP homeowners in Maghull, what will this mean for them?
• What are their options if people do need to sell?
• And what will that mean for the Maghull property market as a whole?

The wholesale gas price has tripled in 2021. Tripled.

Even if you aren’t on gas at home, half of the UK’s electricity comes from burning gas, so this affects everyone.

Even though domestic bills have been protected from the majority of this with the Government’s price cap, energy bills will rise by at least 50% in April, and they’ve been creeping up for most already. This means the average energy bill will rise by £60 per month in the spring, which has the potential to generate a genuine cost of living crisis.

Why have gas and electric bills increased so much?

The cost of gas (and indirectly electricity) rose during 2021 for a number of reasons. This is a worldwide issue, it isn’t just here in the UK.

To begin with, the winter of 2020 was very cold in Central Europe, which increased demand for gas and used up quantities of stored gas supplies, whilst demand for gas also swelled in China and the Far East.

On the supply side, many European countries rely on Russia for its gas, yet Russia’s supply of gas was lower than expected.

When will gas and electric prices rise?

The Government has an energy price cap which is the maximum amount your gas and electricity supplier can charge you. The energy price cap is set by Ofgem every six months. The next review was due this February but was brought forward this week, and any increases could be introduced from the 1st of April 2022.

The existing energy price cap is £1,277 for an average UK home, which was set in the summer of 2021 and represented a 12% rise on the previous cap. The recent increase looks like another increase of around 50% on that, meaning the cap will increase to just over £2,000 per annum.

There will be people that simply cannot afford the increase in energy prices, and various interventions such as a suspension on VAT for energy bills being put forward.

Who will be the hardest hit by these energy price hikes?

These increases are significant enough to impact all of us, but it’s going to be the most vulnerable of us that are hit the hardest. Pensioners on fixed levels of income could be facing a tougher time ahead than they’d planned for.

For those pensioners who reached state pension age after 2016, their state pension will rise in April by £5.55 per week or £288.60 a year. Considering their energy bills will rise by at least £720 a year, together with the underlying inflation for goods and services rising at 5.4% on top, this could leave many OAP homeowners with difficult decisions to make.

1 in just over 4 people in Maghull are OAPs.

Of the 26,369 population of Maghull, 6,393 of them are 65 years or older, and of those, 5,911 own their own home.

I’ve written before about pressure on older homeowners to downsize once the family has flown the nest – and these price increases could pile that pressure on further, especially for those living in large 3- and 4-bedroom homes with lots of rooms that require heating even though they are not being used.

To give you an idea of the difference of costs:

• The average energy bill of a one or two-bedroom home will rise from £795 per year to £1,435 per year
• The average energy bill of a three-bedroom home will rise from £1,163 per year to £2,104 per year.
• The average energy bill of a four-bedroom home will rise from £1,638 per year to £2,936 per year.

Downsizing would also reduce other outgoings like council tax and building insurance premiums – bundle all of this together and we could see a lot of properties coming to the market in a race to save costs.

Of course, many homeowners will make other choices. This could be a great time to look at other forms of heating like ground source heating and solar panels to reduce dependence on energy from the National Grid.

You could ask a local Energy Assessor to perform an energy audit on your home by tasking them for an Energy Performance Certificate. If you need to know the name of a decent Energy Assessor then just call the office and we can introduce you or arrange one for you.

So, if downsizing is an option, what will that mean for you and the local property market in Maghull?

A big issue will be finding a suitable home to move to.

We very much have a chicken and egg scenario now as waiting for the right property to come on to the market - before – you put your home on the market will probably mean that your ideal property will sell even before the photographs have been taken of your home.

Despite that, many Maghull homeowners are worried if they put their house on the market and it sells, they won’t be able to find another suitable home and get stuck.

Classic chicken and egg – so what do you do first?

There is a third way of doing this - good old fashioned ‘chain building’. We’ve visited and spoken with lots of homeowners who want to sell but either aren’t quite ready or want to wait for their dream home to come on to the market.

We can help them by doing what agents should be doing, developing relationships and building chains – not just listing on a portal and hoping for the best. Sometimes we build a group of people in a chain over many months, and it can take a lot of patience to build a chain downwards and upwards around you.

There is no cost to this and no legal commitment to go through. It can take six, even twelve months to build a chain of people who are prepared to wait for the chain to form - but by playing the long game, everyone gets their next ‘forever home’.

The long-term advantage to everyone else is that a new supply of larger homes will be put onto the market in Maghull. But if you are going to rely on waiting for these properties to appear on Rightmove or Zoopla, you will be sorely disappointed.

According to national research from Denton House Research, 7 out of 8 people who viewed a house through an estate agent in 2021 were not on the mailing list of that agent before they viewed it. That means all these properties sold in a chain built by the agents like this won’t necessarily appear on Rightmove or Zoopla, meaning you will miss out if you’re not on the mailing list of North Wall and other agents in the areas you’re looking in.

Craig Thompson

North Wall