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Energy price cap expected to soar by more than £100 later this year, experts warn

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The energy price cap is likely to increase by more than £100 at the next review, experts predict.

The new level will be around £1,250 per year for the winter 2021 cap, according to data from energy analysts, Cornwall Insight.

This would mean an increase of 9.8 per cent for a typical dual fuel direct debit customer.

The rise is thanks to a ‘considerable’ rise in wholesale costs with experts saying it is at the highest levels since the Beast from the East in 2018.

The energy price cap is thought to increase by more than £100 at the next review, experts say

Ofgem, the industry regulator, launched the energy price cap in January 2019 as a way of keeping down the cost for households.

However, many suppliers price to the limit and have been accused of treating the cap as a target.

Despite initially being billed as a temporary measure, it has been in place for over two years with the limit reviewed every six months with the next one due in October of this year.

Now it is thought the price will soar thanks to a hike in wholesale costs.

Dr. Craig Lowrey, senior consultant at Cornwall Insight, said: ‘Wholesale prices have been hit by a combination of factors. 

‘Underlying commodity prices have risen, so, too, have carbon prices reaching a high of €50 per tonne of carbon and more than doubling over the past year.

‘On top of this, underlying gas prices have risen considerably due to a cold winter across Europe and low levels of gas in storage facilities. 

‘Moreover, the rising carbon, oil and LNG prices have further supported this rise in underlying gas prices.

‘More generally, we are experiencing tighter power supply margins than last winter due to unforeseen and prolonged outages of several ageing fossil fuel and nuclear plants.’

Customers are encouraged to use price comparison sites to see if they can save money on their energy bills by switching to a, usually cheaper, fixed tariff or another provider.

However, the experts believe prices will rise across the board later this year.  

Lowrey added: ‘Competitive tariffs are priced around £250 below the level of the cap. 

‘With a substantial increase in the wholesale price, it is extremely likely to expect this to be passed through fairly quickly in terms of prices to new customers.’

‘Although there are still several uncertainties in terms of potential legislative changes and the continued impact of Covid-19 that will impact our forecast – and which will be resolved in the coming weeks and months – the sharp rise in the wholesale market looks set to be the primary driver behind the anticipated increase in the price cap.’

Customers are encouraged to see if they could save money by changing supplier or tariff

Best deals on the market

For those looking to save money on their energy bills straight away, This is Money has compiled a list of the best energy deals currently available.  

The best deal on the market is currently with challenger supplier, Zebra Power, on its Zebra Fixed Rate April 2022 v1 Paperless plan.

The fixed deal will cost an average of £1,000.96 a year but isn’t a green tariff which may deter some customers.

The next best plan is with Avro Energy on its Simple and Select12M deal costing slightly more at £1,010.31 a year. 

Utility Point has the third best tariff – and is also green – with its Just Join Up 21 12M Fixed Wk21 offering at £1,025.05 a year.

Several Big Six suppliers made the list, which is comprised entirely of fixed deals, with EDF, SSE and Ovo making the cut.  

BEST ENERGY DEALS ON THE MARKET 
Supplier Plan Type End date Green Exit fee Average price
Zebra Power Zebra Fixed Rate April 2022 v1 Paperless fixed 12m N 60 1000.96
Avro Energy Simple and Select12M fixed 12m N 0 1010.31
Utility Point Just Join Up 21 12M Fixed Wk21 fixed 12m Y 72 1025.05
GOTO.Energy Direct Control Green May 2022 V5 fixed 12m Y 80 1027.1
HUB Energy HUB Smart Choice Fixed 12 June 22 v3 fixed 30/06/2022 Y 60 1033.32
EDF Energy GoElectric Aug22 fixed 31/08/2022 N 60 1044.55
Utility Warehouse Green Fix 12 fixed 31/05/2022 Y 50 1048.94
Outfox the Market Fix’d 21 12.0 fixed 12m Y 0 1064.82
SSE Energy and Boiler Service 2 fixed 12m Y 30 1073.78
OVO Energy Better Smart fixed 12m Y 60 1080.96
Source: Uswitch (prices correct as of 9 June 2021)           
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Best of the Best shares tumble 30% despite tripling profits

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Shares in Best of the Best tumbled by around 30 per cent after the online competition company said it had seen a decline in customer interest recently, overshadowing its stellar annual results.

Best of the Best, which specialises in luxury sports car ‘raffles’ where people buy tickets hoping to win expensive automobiles, saw profits more than triple last year, its results show. 

Pre-tax profits rose to £14million in the year to the end of April, from £4.2million the year before, after revenues rose to £45.7million, from £17.8million.

Stellar performance: Best of the Best, which specialises in luxury sports car ‘raffles’ where people buy tickets hoping to win expensive automobile, saw profits triple last year

In light of the strong performance, the company hiked its final dividend to 5p per share from 3p, with investors also in line for a special dividend of 50p worth a total of £4.71million.  

But shares in the AIM listed company tumbled by more than 30 per cent at one point this morning. They were down by 27.8 per cent to £19 by midday on Wednesday. 

However, they still remain some 60 per cent higher than last year, and have seen their value jump by around 500 per cent over the past two years.

The massive drop comes as the company said it has seen ‘somewhat of a reduction’ in interest from customers since the lifting of lockdown restrictions in April when shops and restaurants reopened.

Chief executive William Hindmarch said: ‘We are closely monitoring this, but with our flexible model, growth strategy and plans for the year ahead, we expect customer engagement to return to normal levels before too long.’   

Best of the Best closed its last physical competition site at Birmingham airport in July 2019 after 20 years of leasing physical sites at airports and shopping centres across the country. 

These included Heathrow Airport, where its first physical site was located, as well as Gatwick, Edinburgh, Manchester and Dublin airports, and later on, Westfield Shopping Centre in London. 

Hindmarch said that with the benefit of hindsight, the online move was ‘opportune’, given the restrictions on travel that have been in place due to the pandemic. 

‘Having made the strategic decision to exit our predominantly airport-based retail estate and concentrate on a pure online strategy, we have been able to tailor our business, product and pricing specifically to a much more scalable, online only proposition,’ he added.  

BOTB was set up in 1999 and started to take off thanks to the power of social media

BOTB was set up by Hindmarch in 1999 and started to take off thanks to the power of social media. 

People taking part in the competition have to place a marker where they think a football was in a photograph before it was cleverly edited out.  

Its ‘Dream Car’ competition allows customers to buy tickets from £1.60 to win supercars like Jaguars and Tesla, while tickets for its ‘Midweek Car Competition’ start at just 80p.

Customers can also take part in ‘Weekly Lifestyle Competition’ to win luxury watches, motorbikes, holidays and other gadgets. 

Stellar rise: BOTB shares tumbled today, but they are still about 60% higher than last year and have risen by about 500% over the past two years

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ONS: Average UK house price dropped £5k in April but boom isn’t over

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House prices dipped in April as buyers lowered their offers in anticipation of the stamp duty holiday ending, official figures have shown.  

The average property value fell 1.9 per cent between March and April according to the Office for National Statistics’ April House Price Index. 

This meant the average house price fell back around £5,000 to £250,772 – although it was still up £20,000 compared to April 2020, delivering an annual property inflation rate of almost 9 per cent.

The average UK house price has risen 8.9 per cent over the past year, says the ONS

The average house price peaked in March at £256,000, according to the ONS report

Year-on-year, the typical home has increased in value by 8.9 per cent to reach £250,772 since last April, the index revealed. 

However, the rate of growth slowed compared to the previous month when prices rose 9.9 per cent annually.

Housing market experts have said the monthly dip in house prices was a result of buyers putting in lower offers in February and March, when they believed the Government’s stamp duty holiday was going to end on 31 March.

Buyers sought to make up for the fact that they would no longer be making the tax saving, which is up to £15,000 –  although it was later extended at the start of that month.  

Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: ‘House prices dropped in April, which is bound to unsettle homeowners after almost a year of accelerating price rises. 

‘However, this isn’t necessarily the beginning of the end for house price growth, it’s more likely to be a sign of what an arbitrary deadline can do to a market.

‘At this stage we’re not expecting this to be the ultimate turning point for the market, but it’s a useful wake-up call for buyers, and a reminder that house prices aren’t a one-way street.’

The stamp duty holiday was introduced in July 2020 and means that home buyers do not pay the tax on the proportion of a property purchase under £500,000. 

This will continue until 1 July, when the threshold will decrease to £250,000. It will return to the usual level of £125,000 on 1 October.  

This four-bed home in Bath was developed from a folly built in the 1820s. It is listed on Rightmove at £1million, and agents say it has ‘far-reaching views and extensive gardens’

In Staveley near Chesterfield, Derbyshire, this two-bed property complete with sun deck is listed on Rightmove with a guide price of £250,000

Buyers in Chichester, West Sussex, can snap up this four-bed, three bath property which has a guide price of £815,000. It comes with a detached, self-contained garden studio

Downsizers might consider this two-bed bungalow in Bridlington in the East Riding of Yorkshire, which is listed on Rightmove with an asking price of £180,000

In Pembury near Royal Tunbridge Wells, Kent, this four-bed, two bath semi detached home is on the market with an asking price of £625,000. It comes with a large detached outbuilding

Another reason for the recent price growth is high levels of demand for moving house compared to relatively little supply, which was noted in the Royal Institution of Chartered Surveyors’ April 2021 UK Residential Market Survey.

Some experts say that this could help to maintain house price momentum throughout the summer months, even after the incentive of the stamp duty holiday is reduced.  

Paul Stockwell, chief commercial officer at Gatehouse Bank, said: ‘The original stamp duty discount deadline of March has made itself felt with a monthly dip in house prices, but annual growth is still remarkable.

‘There remains a shortage properties coming onto the market in many areas, resulting in intense competition in some cases, and this factor is likely to keep prices pushing upwards throughout the summer.’

Rise and fall: A graph showing house price changes by country since 2017

The UK Property Transactions Statistics showed that in April 2021, on a seasonally adjusted basis, the estimated number of transactions of residential properties with a value of £40,000 or greater was 117,860. 

This is 179.6 per cent higher than a year ago. Between March and April 2021, UK transactions decreased by 35.7 per cent on a seasonally adjusted basis.

House price growth was strongest in the North East where prices increased by 16.9 per cent in the year to April 2021, according to the ONS. 

The lowest annual growth was in London, where prices increased by 3.3 per cent. 

House prices in London are still the highest in the UK, but they dropped from an average of £500,000 in March to an average of £492,000 in April.

At the country level, the largest annual house price growth in the year to April 2021 was recorded in Wales, where house prices increased by 15.6 per cent.

Given the dramatic house price increases of the last year, buyers are being urged to consider whether they are paying over the odds for their homes. 

Miles Robinson, head of mortgages at online mortgage broker Trussle, said: ‘House prices are continuing to grow due to extremely high demand caused by the rush to beat the stamp duty holiday deadline. 

‘While this is great news for those selling a home, buyers are likely paying over the odds when compared with previous years. 

‘As such, any savings from the Stamp Duty Holiday might well be absorbed by the current high cost of homes. 

‘Buyers should look beyond the headline savings and really consider if this is the right choice for them.’

This post first appeared on Daily mail

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Average UK house price drops £5k in April – but experts say property boom not over

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UK house prices dipped in April as buyers lowered their offers in anticipation of the stamp duty holiday ending, official figures have shown.  

Prices fell 1.9 per cent between March and April according to the Office for National Statistics’ April House Price Index. 

This meant the average house price fell back around £5,000 to £250,772 – although it was still up £20,000 compared to April 2020.

The average UK house price is now more than £250,000, according to official data 

Year on year, the typical home has increased in value by 8.9 per cent to reach £250,772 since last April, the index revealed. 

However, the rate of growth slowed compared to the previous month when prices rose 9.9 per cent annually.

Housing market experts have said the monthly dip in house prices was a result of buyers putting in lower offers in February and March, when they believed the Government’s stamp duty holiday was going to end on 31 March.

Buyers sought to make up for the fact that they would no longer be making the tax saving, which is up to £15,000 –  although it was later extended at the start of that month.  

Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: ‘House prices dropped in April, which is bound to unsettle homeowners after almost a year of accelerating price rises. 

‘However, this isn’t necessarily the beginning of the end for house price growth, it’s more likely to be a sign of what an arbitrary deadline can do to a market.

‘At this stage we’re not expecting this to be the ultimate turning point for the market, but it’s a useful wake-up call for buyers, and a reminder that house prices aren’t a one-way street.’

The stamp duty holiday was introduced in July 2020 and means that home buyers do not pay the tax on the proportion of a property purchase under £500,000. 

This will continue until 1 July, when the threshold will decrease to £250,000. It will return to the usual level of £125,000 on 1 October.  

Another reason for the recent price growth is high levels of demand for moving house compared to relatively little supply, which was noted in the Royal Institution of Chartered Surveyors’ April 2021 UK Residential Market Survey.

Some experts say that this could help to maintain house price momentum throughout the summer months, even after the incentive of the stamp duty holiday is reduced.  

Paul Stockwell, chief commercial officer at Gatehouse Bank, said: ‘The original stamp duty discount deadline of March has made itself felt with a monthly dip in house prices, but annual growth is still remarkable.

Rise and fall: A graph showing house price changes by country since 2017

‘There remains a shortage properties coming onto the market in many areas, resulting in intense competition in some cases, and this factor is likely to keep prices pushing upwards throughout the summer.’

The UK Property Transactions Statistics showed that in April 2021, on a seasonally adjusted basis, the estimated number of transactions of residential properties with a value of £40,000 or greater was 117,860. 

This is 179.6 per cent higher than a year ago. Between March and April 2021, UK transactions decreased by 35.7 per cent on a seasonally adjusted basis.

House price growth was strongest in the North East where prices increased by 16.9 per cent in the year to April 2021, according to the ONS. 

The lowest annual growth was in London, where prices increased by 3.3 per cent. 

House prices in London are still the highest in the UK, but they dropped from an average of £500,000 in March to an average of £492,000 in April.

At the country level, the largest annual house price growth in the year to April 2021 was recorded in Wales, where house prices increased by 15.6 per cent.

Given the dramatic house price increases of the last year, buyers are being urged to consider whether they are paying over the odds for their homes. 

Miles Robinson, head of mortgages at online mortgage broker Trussle, said: ‘House prices are continuing to grow due to extremely high demand caused by the rush to beat the stamp duty holiday deadline. 

‘While this is great news for those selling a home, buyers are likely paying over the odds when compared with previous years. 

‘As such, any savings from the Stamp Duty Holiday might well be absorbed by the current high cost of homes. 

‘Buyers should look beyond the headline savings and really consider if this is the right choice for them.’

This post first appeared on Daily mail

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