The new energy price cap in the UK, which sets the maximum rates an energy company can charge for gas and electricity, took effect on October 1, 2024. This cap will run until the end of December 2024, when a new, higher, or lower cap will be introduced.
The new cap increased the average household's annual energy bill to £1,717, a 10% increase from the previous cap.
The units pertaining to the new cap on standard variable tariffs are:
- Electricity 24.5p per kWh
- Gas 6.24p per kWh
Energy bills could be higher than the stated average as they are based on usage. If you use more gas and electricity, your bills will be higher. On the flip side, using less than average amounts of energy will lower the bills.
Standing charges have also increased, with gas at 31.66p and electricity at 60.99p per day.
This rise comes as UK households look forward to the colder winter months. Higher monthly bills could result, and where people are struggling, this can have serious consequences.
It can have severe effects on those on low income. Additionally, many pensioners will lose their winter fuel allowance, compounding these issues.
According to the government's own figures, removing the Winter Fuel Allowance could directly cause the deaths of 400 vulnerable pensioners. Add this to the increase in energy costs, and that figure could be significantly higher.
We urge all pensioners who may be entitled to Pension Credit to ensure they apply, in which case they will also receive the Winter Fuel Allowance.
What Can Home Owners Do to Offset the Increases?
Many homeowners will become landlords to realise income from their property, which will help with the cost of living and increases in many items, including energy.
If you have a spare room in your home, it can be a valuable source of income that helps alleviate financial pressure.
If you have a room to rent, you would need to advertise to attract potential tenants. Please register here and post your advert now.
Likewise, for tenants renting a complete property with ever-increasing rent and bills. Have you considered renting a shared property? This will significantly reduce your monthly outgoings with lower rent, inclusive of bills, in most cases. To explore this option, please register as a tenant or find rooms to rent.
How does this change affect Landlords with Rooms To Rent?
The energy price would primarily affect tenants, who are usually responsible for paying bills.
However, bills are generally included in the monthly rent when a landlord lets us rooms to rent or rooms in a shared house, such as an HMO.
The increase in energy bills can have several consequences:
- The landlord could increase the rent to cover the extra amount
- The landlord could decide to sell their rental properties.
- Absorb the increases, reducing the landlord's income.
The first two scenarios indirectly mean the tenant is paying for this increase. If the landlord sells the rented property, this will lower the available stock in the rental sector, potentially pushing up the rent to an even more unaffordable level.
We want to hear whether landlords are considering selling some or all of their portfolios due to increased costs, regulations, and the upcoming Renters Rights Bill. Please let us know your thoughts by contacting us here.
What Factors Affect the UK Energy Cap
Several factors affect the energy cap in the UK.
The main factor driving energy costs is the wholesale price for gas and electricity. When the wholesale cost of energy increases, the cap rises to reflect these changes.
Other factors include, to a lesser extent, the costs of running energy companies. Cost increases are passed on to the customer. The cost of delivering energy to the home can also increase. These network cost increases reflect the cost of maintaining the energy infrastructure, including cables, pipes, and substations.
A portion of the cap is to help fund renewable energy schemes and programs where grants are provided to consumers to increase the energy efficiency of their homes. While many grants may be free at the point of use, these costs need to be paid for.
These combined factors, and others to a lesser extent, will determine the cap level.