Every household in the UK to see £400 cut from their energy bills

Government gives £15 billion to help households cope with cost of living hike, with extra cash for those who are most vulnerable.

The government has unveiled a £15 billion giveaway to help Britons cope with the rising cost of living.

All households will see their energy bills cut by £400, with those on the lowest incomes receiving at least £1,200 in additional support.

The initiative will be paid for through a windfall tax on the “extraordinary” profits being made by oil and gas companies.

Chancellor Rishi Sunak said: “We are raising emergency funds to help millions of the most vulnerable families who are struggling right now.

“All households will benefit from universal support for energy bills of £400 – with not a penny to repay.”

What support is available?

The Chancellor is doubling the help available through the Energy Bills Support Scheme from £200 to £400.

He is also changing the support scheme from a loan that people would have to pay back, to a grant – meaning it does not have to be repaid.

Households will also benefit from the previously announced £150 council tax rebate for homes in England that sit within bands A to D.

As a result, they will be £550 better off overall than before the measures were announced.

What about help for the most vulnerable?

In addition to the Energy Bills Support Scheme, there is also extra help for the most vulnerable.

Low-income households

Around 8 million households on the lowest incomes will receive a one-off Cost of Living Payment of £650.

The money will be given in two payments, the first from July and the second in the autumn. It will be sent straight to the bank accounts of people on means-tested benefits without the need to claim it.

Pensioners

Pensioners are set to receive a one-off Pensioner Cost of Living Payment of £300.

The cash will help more than eight million households who receive the Winter Fuel Payment. They will receive the money in the autumn.

People with disabilities

An estimated 6 million people who receive means-tested disability benefits will be given a one-off Disability Cost of Living Payment of £150 in September.

Many of these people will also receive the £650 Cost of Living Payment for low-income households, bringing the total value of support to £800.

To help people who do not fall into the above categories, the government is also putting an extra £500 million into the Household Support Fund from October.

The fund enables local councils in England to help those most in need with payments towards the cost of food, energy and water bills.

Why is this happening?

Inflation - which measures the rate at which the cost of things increases – is currently running at a 40-year high of 9%.

A combination of supply chain disruption caused by the Covid-19 pandemic, staff shortages in some sectors, and the war in Ukraine have pushed up the price of goods.

Energy bills are one of the areas in which people have been hardest hit, with regulator Ofgem announcing a 54% increase in the energy price cap in April, and recently warning that it is set to rise again in October to stand at £2,800.

How will the support be paid for?

The giveaway will be financed through a new windfall tax on energy companies, known as the Energy Profits Levy, which is expected to raise £5 billion.

It will see the profits made by oil and gas companies taxed at a rate of 25%. Profits made by the sector have surged as a result of soaring energy prices as a result of the conflict in Ukraine.

The tax is temporary and will be phased out once oil and gas prices return to normal levels.

How will it affect the housing market?

The support, while welcome, only goes some way to offset the increase in energy bills people face.

The average household will have seen the cost of their gas and electricity bills increase by nearly £1,200 this year.

This hike comes at a time when higher interest rates are leading to more expensive mortgage repayments and the cost of food is also increasing.

The rising cost of living that households face is expected to slow activity in the housing market during the second half of the year.

But house prices are not expected to fall, as lenders have previously factored higher mortgage and other costs into their affordability criteria.

They are also working closely with borrowers who are struggling to make repayments, to find a solution that enables them to stay in their home.

We expect house price growth to slow down during the year, with property values ending 2022 around 3% higher than they started it.

Key takeaways

• The government has unveiled a £15 billion giveaway to help Brits cope with the rising cost of living
• All households will see their energy bills cut by £400
• Low-income households, pensioners and people with disabilities will receive up to £800 of additional support

by Blackstones

More than 350,000 households take up the Help to Buy scheme

Government lends £22 billion to help to help more than 350,000 households purchase a new home with Help to Buy scheme.

The government has advanced more than £22 billion to help people buy a home through the Help to Buy equity loan scheme.

A total of 355,634 households in England have bought properties, collectively valued at £99 billion, since the initiative was first launched in April 2013.

Nearly 9,000 first-time buyers used Help to Buy to get on to the property ladder during the final three months of 2021 alone.

The scheme enables people to purchase a new-build property with just a 5% deposit, which the government tops up with a 20% equity loan, rising to 40% in London.

The loan is interest-free for the first five years.

The initiative was initially open to all buyers, but it was restricted to people purchasing their first home in April 2021, when regional price caps on the properties that could be bought were also introduced.

First-time buyers who want to take advantage of the scheme have until the end of March 2023 before it closes.

What impact have the changes had?

The number of properties bought through the Help to Buy scheme were 40% lower in the final three months of 2021, compared with the same period of the previous year.

The drop is due to the fact that the scheme is now restricted to first-time buyers only.

The government introduced this rule, along with regional price caps, to ensure the money went to those who would struggle to buy a home on their own.

The average value of properties bought through the scheme has fallen in all regions, apart from London, since the new version of the scheme was introduced.

This is likely to be due in part to the regional price caps, which range from £186,100 in the North East, to £437,600 in the South East.

The maximum value of a home that could be bought through the scheme remained unchanged at £600,000 in London.

At the same time, limiting Help to Buy to first-time buyers will also have impacted the average value of property purchased, due to the fact that this group typically buy lower value homes.

The average household income of buyers using the scheme has also fallen in all regions since the changes were made, as has the average size of the deposit they put down.

The figures suggest the changes to the scheme have been successful in targeting it to those who most need help purchasing a property.

What type of homes are being bought?

Since the new version of the Help to Buy scheme was introduced, there has been a steep fall in the number of detached properties being purchased.

Only 14% of homes bought with the current scheme were detached, down from 32% under the previous version.

Instead, there has been a rise in more typical first-time buyer properties, with 29% of people using the scheme buying flats, up from 18% previously, while 42% bought semi-detached homes, compared with 32% before the changes were introduced.

The exception is London, where the vast majority of properties purchased through the scheme continue to be flats.

Only 8% of properties bought through Help to Buy in all regions have four or more bedrooms, compared with 28% previously, while a third have two-bedrooms, up from 22%.

What other schemes are there?

The Help to Buy equity loan is one of a number of government schemes to help people get on to the property ladder.

Both first-time buyers and home-movers who only have a 5% deposit can also use the 95% mortgage guarantee scheme.

Other initiatives include First Homes, under which first-time buyers, key workers and local people can purchase a home at a 30% discount to its market price.

And there's also Shared Ownership, which enables people to buy a share in a property and pay rent on the rest.

First-time buyers saving for a deposit can also use the Lifetime ISA, under which you can save £4,000 a year. The government then adds a 25% bonus - up to a maximum of £1,000 annually - for free.

The money must be used to either purchase a first home or for retirement.

First-time buyers are also exempt from stamp duty on the first £300,000 of a home purchase on properties costing up to £500,000.

Key takeaways

• The government has loaned more than £22 billion to help people buy a home through Help to Buy
• 355,634 households in England have bought properties through scheme, collectively valued at £99 billion
• First-time buyers have until the end of March 2023 to take advantage of Help to Buy before it closes

by Blackstones

Number of new homes under construction soars by 31%

More than 35,000 new-build homes are under way, including wildlife-friendly garden community homes. And if you fancy renting a new-build, there’s good news too.

Key takeaways

• The number of new homes going up has risen by a third in the last three months, as builders respond to strong demand from buyers
• Love the idea of a new home in a green, wildlife-friendly space? Keep an eye out for a garden community development coming near you
• And in good news for renters, the number of Build to Rent and affordable properties being developed has increased by 10%

by Blackstones

Free money to make your home more energy efficient

There are several home improvement schemes available that'll give you money to reduce your energy bills. Let's take a look.

Key takeaways

• Energy companies will pay for insulation, glazing and even new boilers for people claiming certain benefits under the Energy Company Obligation scheme
• The Boiler Upgrade Scheme offers property owners £5,000 towards the cost of buying and installing an air source heat pump or biomass boiler
• Grants averaging £10,000 are available to certain households to make energy efficiency improvements under the Green Homes Grant Local Authority Delivery Scheme

by Blackstones

Rents on new lets are rising across the UK but it's a highly localised picture

The average rent is now nearly £1,000 a month but there's a wide choice of more affordable markets for people who can be flexible.

The cost of renting a home has reached nearly £1,000 a month as rents rise at their fastest pace for 14 years.

Newly agreed rents averaged £995 a month at the end of March, £88 more per month than at the start of the pandemic, according to our latest Rental Market Report.

The jump is being driven by a shortage of properties to rent at a time when demand is soaring in city centres as students, office workers and international buyers make their return.

But the rental market remains highly localised, and there are still locations where rental properties remain affordable, particularly in rural areas of the country.

As renters face increased pressure on their income due to rises in the cost of living, there has been a marked increase in people staying where they are.

The typical renter now stays in their home for 75 weeks – five months longer than in early 2017.

This trend has extended beyond Covid-19 lockdowns, when moving was difficult, and indicates landlords may not be increasing rents for their existing renters at the same rate as for new ones.

What’s happening to rents?

Rents increased by 11% for newly agreed lets during the past year, after falling by 1% during the previous 12 months.

Increases have been highest in London, where they have soared by 15.7% in the year to the end of March, more than offsetting the previous drop of 10%, on the back of rising demand from students, office workers and people from overseas.

But at the other end of the scale, rents have increased by only 6% in Scotland and 6.9% in the North East, with rents in the latter region averaging just £573 per month.

The jump in rents has left the average single renter spending 37% of their income on housing, and 18.5% for people who share a home, after wage growth peaked at 8.8% last year.

The proportion of income spent on housing jumps to 52% for single renters in London, although it is only 26% for those who share a home.

But for those who have the flexibility to work from anywhere, there are still places where rent remains highly affordable.

For example, in Great Yarmouth in the East of England, South Somerset in the South West, and North East Lincolnshire in Yorkshire and the Humber, rents account for just 15% of joint income for a couple.

Even in London, rents in Bromley are only 19% of a typical couple’s income.

It is also worth noting that wage growth has actually outpaced rental growth since 2016.

What’s the supply and demand for rental homes like?

Demand for homes to rent remains strong across the country, particularly in city and town centres as workers return to the office.

Rental demand is strongest in Scotland, Wales and London, where levels are 68% above the five-year average.

Unfortunately, this demand is not being met by supply, which is pushing rents higher and leading to the typical property taking just 14 days to rent.

The mismatch between supply and demand is particularly acute in London, where the number of homes available to rent is currently only around half the five-year average.

The South West also faces a significant mismatch, with demand up 45%, but supply 32% lower than the long-term average.

Even in the East Midlands, where supply is least constrained at just 6% below the normal level, demand is still 43% higher.

What could this mean for you?

Tenants

The fact that the demand for rental homes is so much higher than the supply is bad news for new renters.

It not only means rents are likely to continue rising in the short-term, but you will also face intense competition for the properties that are available.

But there are still parts of the country where rents are affordable, so if you are not tied to a particular location due to work or schools, it may make sense to consider moving to one of these areas.

Meanwhile, if you already live in a rental property, you may want to stay put, as our research indicates landlords are not raising rents for existing renters as steeply as they are for new ones.

Landlords

The ongoing strong demand for rental homes combined with the shortage of available properties is good news for landlords.

Not only are you likely to be able to achieve your target rent, but you are also unlikely to face long void periods.

However, the market is expected to slow going forward, and combined with the ongoing rise in the cost of living, renters are expected to become more price sensitive.

As a result, it is probably a good idea not to be too ambitious when setting rents for new lets.

What’s the outlook?

In the coming months, the surge caused by post-pandemic pent-up rental demand is expected to ease, which will reduce the upward pressure on rents.

Head of research, said: “Affordability considerations will also start to put a limit on further rental growth, although this may occur at different times depending on location.

“Rents are likely to continue rising for longer in areas which have the most constrained stock levels - currently London, Scotland and the South West.”

Overall, we expect rents across the UK, excluding London, to rise by 4.5% during 2022, and by 3.5% in the capital.

Key takeaways

• The average rent is now £995 a month after rising by 11% during the past year
• The jump is being driven by a shortage of properties to rent at a time when demand in city centres is soaring
• But there are many locations where properties are more affordable

by Blackstones