District heating tariff

snowqueen555

Hello,

I am in the process of buying a small new build 1 bed flat, the site uses district heating so no option of changing supplier and is currently unregulated = no ofgem price caps.

I have received the tariff and it is currently

£1.05p a day standing charge
£0.20 p/kwh

I am really worried about any future increases. I know that the only benefit is that the standing charge covers maintenance, but that is still a crazy amount.

I believe electric is with British Gas so with the electric I do have options.

My main question is, is this enough of a downer to put me off buying? It is probably my biggest issue, secondly being the flat is smaller than I'd like.

EssexHebridean

I'm inclined to think that your final paragraph answers your question here. 

I'd also add
- how much more difficult to sell in the future would it be due to the district heating and others having similar concerns.
- what is contained in the agreement regarding how the costs for that heating can be increased? And come to that, controlling what happens to those costs is energy prices globally fall?
- if the place is smaller than you'd like, how would - for example - another lockdown be if you were limited to spending 23 hours a day there? 

Any new build right now will likely come with some form of electric heating which CAN work out more expensive than using gas - but many will still give you the option of changing that heating to gas in the near future while you still can - this one really doesn't. 

MWT

Personal choice, but I wouldn't ever consider buying property dependent on a district heating scheme due to the lack of regulation and the complete uncertainty over future management and pricing of the service.

... if you are also not happy about the size it feels like the decision has become even more certain...

Are you intending to live there yourself or is this a BTL investment?

stewie_griffin

Where did you hear that all new build developments will have district heating. I’m sure this isn’t true and once no new gas connections are allowed then the majority of heating systems will be heat pumps.

danco

Yes, but if it is a block of flats, the heat pump will be part of the district (or communal) heating.

A few suppliers are members of Heat Trust, which does regulate, and I believe regulation of all systems is due to come in moderately soon.

The district heating approach is supposed to save energy but unfortunately the supply is regarded as non-domestic so unit costs can be high.

I would say don't be put off but do check carefully how charges are worked out.

snowqueen555

MWT said:

Personal choice, but I wouldn't ever consider buying property dependent on a district heating scheme due to the lack of regulation and the complete uncertainty over future management and pricing of the service.

... if you are also not happy about the size it feels like the decision has become even more certain...

Are you intending to live there yourself or is this a BTL investment?

@MWT

I'm having second thoughts due to the reasons you have stated. I am torn because the property has been discounted from an overpriced 230 to 160 and the development is nice and new. Any future sale price would be based on a valuation and 30% discounted off. That flat is never worth 230, only that the gov scheme has inflated it to that 

On the other hand it has all those negatives, as well as the internet also being provided by the obscure OFNL, it means I can't get internet from your usual BT or Virgin.

Developer is also looking to complete by this month which is quite quick as I haven't even heard back from conveyancing so need to wait on that, they have been terrible, but the bank have offered on it now.

EssexHebridean

I still think you are answering all your own questions here. The fact that the developer is trying to hurry you into things should also be a red flag, as is the fact that there has been such a massive decrease in price. If you haven't really begun conveyancing though, there is no way you're going to complete inside a month - it just won't happen. 

Gerry1

I'd never consider a property with district heating, I prefer to be in control, so it would be a red line.  It would be even worse if I had no choice over other utilities such as broadband, so it would be a double red line.  You can be pretty sure that these restrictions will be to the advantage of others but to your disadvantage: a captive customer is seldom a happy customer.

Even if I could tolerate these limitations because of a bargain basement price, I'd be extremely nervous that I'd be trapped there forever because potential buyers would just walk away.

The mad rush to complete should also be a warning.  They're probably aware that buyers are far more concerned about heating costs than they have ever been and don't want to be stuck with a white elephant.

[Deleted User]

Gerry1 said:

I'd never consider a property with district heating, 

I'd be delighted to have a property with a well-designed and well-run district heating system.

Unfortunately (or perhaps just inappropriately at this time) I would have to move to Scandinavia to find one.

snowqueen555

Deleted_User said:

Gerry1 said:

I'd never consider a property with district heating, 

I'd be delighted to have a property with a well-designed and well-run district heating system.

Unfortunately (or perhaps just inappropriately at this time) I would have to move to Scandinavia to find one.

Considering hundreds of thousands of people are stuck in these heating schemes there is very little media presence on it. This system is also the future, the government has a target for 20% of future homes to be heated this way in theory it is much greener. There were some people being charged 500%-1000% their usual price a month or so ago so it isn't working.

Gerry1 said:

I'd never consider a property with district heating, I prefer to be in control, so it would be a red line.  It would be even worse if I had no choice over other utilities such as broadband, so it would be a double red line.  You can be pretty sure that these restrictions will be to the advantage of others but to your disadvantage: a captive customer is seldom a happy customer.

Even if I could tolerate these limitations because of a bargain basement price, I'd be extremely nervous that I'd be trapped there forever because potential buyers would just walk away.

The mad rush to complete should also be a warning.  They're probably aware that buyers are far more concerned about heating costs than they have ever been and don't want to be stuck with a white elephant.

Yeah it is a discounted. The downsides are as you said, if I were to sell it at some point in the future to upgrade I it would struggle to make it's money back due to the new build premium so it is a double edged sword. As you said the s106 restrictions on who can buy it on top of the heating/internet it's turning into a bad deal

I am leaning towards not buying it but I will figure it out once I do the final visit and speak to my conveyancer.

rp1974

So many alarm bells ringing regarding this property and it's developers,that alone would make me walk away instantly.
Then there's the district heating system,most of what others have to say given comments on here isn't positive,usually high bills and cold houses,no personal experience of it though myself.
Unless it's otherwise an absolutely dream flat in every other respect I'd be looking elsewhere.
Lastly as you say yourself OP,it's potentially to small for your needs,I can't help but think buying this flat would leave you with regrets,maybe not initially but longer term.