Shared Ownership - Choice of Energy Suppliers

annetheman

Hi everyone,

Is it usual for a S/O property agreement to restrict the tenant/leaseholder's choice of energy supplier?

I have been with OVO energy for 3+ years and found them to be excellent, reasonably priced and just generally a good supplier for gas & electricity.

The S/O agreement terms state that I will not be able to change supplier for "heating and hot water" and I have to sign up with their supplier of choice. I will stick with OVO for electricity. Is this normal?

How likely is it the terms of a S/O arrangement can be negotiated at a later stage if I sign under these provisions now?

Thanks for any advice 

Edit to add: The S/O heating and hot water charge is 6.0 per kWh unit,  62p per day standing charge.

To put it in context, OVO charges for gas on my energy plan are 0.302 per kWh unit, £7.31 standing charge per month ~ 24p per day. I think that's quite a big difference so would be keen to switch if at all possible; I assume I will have to wait until I staircase to 100% though

annetheman

If anyone in future comes looking for an answer, I've found one!    Getting it in before the thread is closed, correct as of 2020:

According to Ofgem, the energy regulator, if you’re directly responsible for your own energy bills, you’re entitled to switch to a new energy company whenever you want. 
Your landlord or letting agent can’t stop you unless they have a very good reason. Even if they’ve included a ‘preferred supplier’ clause in your lease or rental agreement, they can’t enforce it, and you don’t need to stay with the provider they’ve chosen.
The only time when a landlord can insist on an energy supplier is if they (the landlord) are directly responsible for paying the energy bills. For example, if they:

• Have included energy costs in your rent or charges.
• Pay the energy bills and collect the money from you later.
• Are responsible for paying the bills and keeping the property on supply between tenancies.

You can find out more about your rights as a tenant here.

........

What should I do if there’s a preferred or default supplier named in my rental agreement?

Ofgem says that your landlord should tell you about any named suppliers, and give you details of their tariffs and charges. If there’s a clause in your lease or agreement naming a specific energy provider, talk to the landlord or agent about re-negotiating this. 

Even if they refuse, you’re still entitled to switch energy supplier whenever you want, as long as you’re the person responsible for paying the energy bills.

Webxite

I think there might be some confusion here between energy pricing (standard electricity and gas) in which case you should be able to change supplier, and a district heating system, where heating and hot water are provided centrally but you have no control over supplier. If it’s the latter, and even if otherwise the property is perfect, I would run a mile. I’m a local councillor, and every winter am inundated with people who have no heating or hot water because the communal system is unreliable. If you google, you’ll find plenty of stories about the bills escalating and people being trapped in expensive contracts where none of the normal switching rules apply. 

So please do check whether this is one of those systems. 

annetheman

Webxite said:

I think there might be some confusion here between energy pricing (standard electricity and gas) in which case you should be able to change supplier, and a district heating system, where heating and hot water are provided centrally but you have no control over supplier. If it’s the latter, and even if otherwise the property is perfect, I would run a mile. I’m a local councillor, and every winter am inundated with people who have no heating or hot water because the communal system is unreliable. If you google, you’ll find plenty of stories about the bills escalating and people being trapped in expensive contracts where none of the normal switching rules apply. 

So please do check whether this is one of those systems. 

Wow, very useful to know - thank you. I am not sure which it is so I will ask my solicitor before I sign any contract/exchange. Or is this more of an estate agent question?

At the moment, I have signed a reservation form and paid a reservation fee which states the below:

-does this sound like it is one of those district heating systems?
-can I opt out of it, so I will be responsible for setting up an account for gas with my own supplier?
-there is gas [edit: unsure of this] central heating but not sure how it works relative to the rest of the building. More than half the block (61) are 100% leaseholds, with 23 Shared Ownership flats:

21. HEATING AND HOT  WATER AGREEMENT

To provide heating and hot water to your property, you will be required to enter into an  agreement directly with the XX Management Company Limited. The supplier cannot be changed. ZZ Energy is appointed as a billing and metering provider who with you  will set up payment method. Documents and details of the agreement will be sent to your  solicitor. The energy price as per the current agreement is 6.0 per KWH unit and there is  standing charge of 62p per day which covers administrative costs associated with running,  operating and maintaining the Energy System. The charges are subject to change. XX are not responsible for the billing or the maintenance of this system. You will not be able to change this utility provider.

Webxite

That’s exactly what I feared it would be. That’s a district heating system. You won’t be able to change supplier for your heating and hot water, though it shouldn’t affect your electricity charges.  However heating and hot water will be the greater proportion of your energy costs anyway. Here’s a recent example of the kind of problems I’m referring to and this isn’t unusual:

www.eastlondonadvertiser.co.uk/news/phoenix-works-heating-bills-1-6540434

I doubt there will be any way to opt out of it, as the system will be built into the building. You could make expensive alternations to the property to install an electric heating and hot water system as then at least you could choose your supplier, and you wouldn’t be at the mercy of a monopoly and ever-increasing process, but the installation would be expensive and may not even be allowed until you have staircased to 100%.

I certainly wouldn’t take any advice from the estate agent, as nothing they say is legally binding. Ask your solicitor if it can be opted out of (and do feel free to come back on here with what they say), and do your own research on the company and the type of system. Personally I’ve seen too many excessive bills to ever consider a property with one of these systems. I’m so sorry if that’s disappointing to hear when you’re at the stage you’re at as an FTB, but better to find out now than later!

annetheman

Webxite said:

That’s exactly what I feared it would be. That’s a district heating system. You won’t be able to change supplier for your heating and hot water, though it shouldn’t affect your electricity charges.  However heating and hot water will be the greater proportion of your energy costs anyway. Here’s a recent example of the kind of problems I’m referring to and this isn’t unusual:

www.eastlondonadvertiser.co.uk/news/phoenix-works-heating-bills-1-6540434

I doubt there will be any way to opt out of it, as the system will be built into the building. You could make expensive alternations to the property to install an electric heating and hot water system as then at least you could choose your supplier, and you wouldn’t be at the mercy of a monopoly and ever-increasing process, but the installation would be expensive and may not even be allowed until you have staircased to 100%.

I certainly wouldn’t take any advice from the estate agent, as nothing they say is legally binding. Ask your solicitor if it can be opted out of (and do feel free to come back on here with what they say), and do your own research on the company and the type of system. Personally I’ve seen too many excessive bills to ever consider a property with one of these systems. I’m so sorry if that’s disappointing to hear when you’re at the stage you’re at as an FTB, but better to find out now than later!

I appreciate that, thank you very much! This part of the reservation form was the only thing that I raised an eyebrow at, but I just assumed I could just choose not to sign with the company they named. I'd never heard of district heating but a lot of worrying threads on here about it.

I've just read reviews of the billing management company used and they are appalling! Not many reviews of the actual supplier...

I will see what my solicitor says or can do about this scheme; I wouldn't mind trying it if for example, I can deposit £60 per month into my account and then control how much of that I use within the flat.

But I would want a back-out clause if it turns out the bills are way higher than I expect... £60 per month is what I put into my OVO account monthly now and never use it up even in winter - if it's any more than that in a "high spec", well-insulated, "green" building, I know for a fact I'm being ripped off.

I can't believe these schemes aren't regulated, I imagine regulation for them should come in as they become more popular? Crazy...