UK households with communal heating facing 350% rise in energy costs

Read More

Residents in council homes and private flats with communal heating systems are experiencing a “nightmare” rise in their energy bills, with households scrambling to fund increases of up to 350%.

An estimated 480,000 households nationwide are affected, according to government data, as the impact of last autumn’s surge in energy prices filters through to bills for this financial year. Many live in council-owned tower blocks, which house some of the lowest-income families in the country.

MPs and local councillors said they were being contacted by distressed residents, and called on the energy watchdog, Ofgem, to intervene.

Apsana Begum, the Labour MP for Poplar and Limehouse, said: “The cost of living scandal is having a devastating effect on our communities. I have constituents whose gas bills are being increased by 100% or more because they are on a heat network. This is clearly not acceptable.”

Simon Francis, the coordinator of the End Fuel Poverty Coalition, said: “A lot of people on heat networks are among the most vulnerable households. They deserve greater protection from the worst of the energy crisis, not least because they do not have the ability to switch supplier. It’s incredibly concerning to see these people facing huge increases to their bills.”

Buildings with heat networks tend to use energy bought in advance. This means the price rises experienced by most households last winter only started to affect buildings with communal heating last month, at the start of the new financial year. Meanwhile, the ?400 given by the government to every household to cushion the blow last winter is no longer available.

Residents at the Bow Cross West housing association estate in east London said their heating bills had risen nearly 250%.

They were told in a letter from the building owner, Swan Housing, the heating tariff would rise from 2p a kilowatt hour to 22p from mid-April. Standing charges, which are fixed and have to be paid even when no energy is used, have also increased. The changes mean the average heating bill will rise from about ?16 a month to ?57.

More than 3,000 residents in council-run estates in Lambeth, south London, have seen huge rises in their heating charges since April.

At Southwyck House in Brixton, residents were given four weeks’ notice to find an extra ?60 to ?76 a week to pay their service charge, which includes heating and hot water as well as other communal services such as cleaning and maintenance. Tenants in larger flats have been told the combined heating and hot water bill will rise from ?959 last year to ?4,344 for the financial year ending March 2024 – a 350% increase.

For leaseholders who own their flats, the council adds a 16.5% management charge on to all costs of servicing the building, including the heating and hot water.

Tenants at Ward Point in Kennington have also been hit with a 350% increase, with the combined cost of heating and hot water rising in some flats from ?680 to ?3,000 a year.

The government’s energy price guarantee, introduced to help households last winter, caps the average bill at about ?2,500. However, the cap does not apply to homes on heating networks.

Heat network suppliers can apply for government help with costs, and are supposed to pass that to consumers, but the system has been criticised as opaque because bills do not always break down the taxpayer-funded discount.

In a statement Lambeth council, which is Labour-controlled, said: “Last year the council’s long-term contracts meant we were able to keep costs low for residents, compared to the huge increases in prices for people with private heating. Unfortunately, these contracts are now over, and costs have increased in line with the bills that most people in the country have faced in the last year.”

Lambeth said it had directed ?8m in financial aid to residents since the start of the cost of living crisis, and was introducing a further ?10m package, a portion of which was set aside for council tenants.

skip past newsletter promotion

after newsletter promotion

The Green party councillor Scott Ainslie said: “Lambeth did not prepare people in any way at all and it has shocked them.”

Under the London Energy Project, energy buying for Lambeth and 27 other London boroughs is handled by Laser Energy, a broker owned by Kent county council. It also buys energy for London-wide bodies including the fire brigade and Metropolitan police.

Pre-tax profits at Laser Energy’s immediate parent company, Commercial Services Kent, rose to nearly ?2m in 2022, up from ?960,000 the year before. Turnover increased from ?47.8m to ?56.7m.

Residents at Bow Cross West said maintenance charges had also increased – by 83% since 2019 – and that the cladding scandal in the wake of the Grenfell Tower tragedy had made their properties difficult to sell.

One owner-occupier, who asked not to be named, said: “I bought my flat during the pandemic and the communal heating network was touted as an energy and price efficient way to heat our homes.

“I’ve since seen my block’s energy unit prices jump up by almost 1,000%, on top of cladding concerns that I found out about soon after moving in, which now makes my flat really difficult to mortgage and sell on.

“I’m basically stuck … I feel like I’m living a bit of a nightmare with all these bills.”

The Guardian reported in January that lawyers at Leigh Day are investigating the possibility of a legal claim on behalf of residents whose home heating and hot water are supplied through a heat network.

A spokesperson for Swan Housing Association said: “There has been a significant rise in heating costs nationally that has led to an increased charge to residents for communal energy.

“To keep these costs as low as possible, we procure communal gas and electricity in advance through Laser Energy, securing a lower than domestic market price. We understand the pressure of rising costs of living and our dedicated welfare benefits team is available to support residents struggling to make payments.”