14 July: Rents Record Biggest Annual Rise In 16 Years

• Average monthly rent £1,126
• Rents up 11.8% in year to June
• Annual growth fastest in London

The average cost of renting a home in the UK (outside London) increased by 3.5% in the second quarter of the year compared to the first quarter, writes Bethany Garner.

Annually, the cost of rent was 11.8% higher in June 2022 than 12 months ago, according to data from Rightmove, which analysed 332,460 rent charges. Inflation in the UK currently stands at 9.1%.

The figures mark the highest annual increase the property website has recorded in 16 years.

The average monthly cost of renting stood at a record £1,126 in the second quarter of the year, while in Greater London this figure was £2,257. 

Annual rental growth in the capital, at 15.8%, was the highest ever annual rise of any region.

By the end of the year, Rightmove predicts average asking rent growth to reach 8%, revised upwards from the 5% it predicted at the start of the year.

Driving the sharp increases is a shortage of available properties and high tenant demand. The number of available rental properties has fallen by 26% year-on-year, while demand is up 6%.

Tim Bannister, director of property science at Rightmove, said: “The story of the rental market continues to be one of high tenant demand but not enough available homes to meet that demand.

“While stock levels are beginning to improve, with June seeing the highest number of new rental listings coming to market so far this year, the wide gap that has been created between supply and demand over the last two years will take time to narrow. Until then, this imbalance will continue to support asking rent growth.”

This gap between supply and demand is beginning to show signs of narrowing — albeit slowly — with the number of available rental properties rising 8% in the year to June. 

Rightmove also found that 34% of landlords are planning to expand their property portfolio over the next 12 months.

7 July: Halifax Reports Record Average Property Price

• Average property worth record £294,845
• Prices up 13% in year to June 
• Annual growth strongest in Northern Ireland

The average UK property rose in price by 13% to a record £294,845 in the year to June 2022, according to the latest property market data from Halifax, part of the Lloyds banking group, writes Andrew Michael.

The company said the annual growth figure is the highest since 2004 and described the UK housing market as defying “any expectations of a slowdown”.

It added that house prices jumped by 1.8% in June this year, the 12^th monthly price rise in a row, and the largest month-on-month increase in 15 years.

Regionally, the largest annual rises in June were recorded in Northern Ireland where the average property price increased by 15.2% to £187,833. This was followed by Wales, where prices now stand at £219,281, a rise of 14.3%.

The South West was England’s strongest performer with average properties worth £308,128, a hike of 14.2% on the year.  

The latest house price figures are set against a backdrop of rising UK interest rates and steepling inflation – currently at 9.1% and expected to climb higher – plus a wider cost-of-living crisis raising fears of recession.

Russell Galley, Halifax managing director, blamed the UK’s current supply-demand imbalance as the continued reason behind the nation’s surging house prices: “Demand is still strong, though activity levels have slowed to be in line with pre-Covid averages, while the stock of available properties for sale remains extremely low.”

Nicky Stevenson, managing director of national estate agents Fine & Country, said: “We are seeing house price growth continue to spike even as the UK economy edges closer to recession. The slowdown predicted by so many has yet to materialise in any real sense, despite an increase in borrowing costs and a squeeze on household incomes.

“Existing homeowners continue to make huge gains with competition among buyers still at fever pitch. While a more aggressive tightening of monetary policy is anticipated later in the year, the cooling effect is likely to be gradual given the acute shortage of housing stock which persists right around the country.”

1 July: Zoopla Sees Lowest Monthly Price Growth Since 2019

• Average prices in May at £251,550
• Year-on-year growth drops to 8.4%
• Wales sees highest annual growth of 11.4%

The price of an average UK home rose by 8.4% in the 12 months to May 2022, according to Zoopla’s latest house price index, out today. This is down on the April figure of 9.2%.

A typical UK property now costs £251,550, which is just 0.1% higher than April’s average. This represents the lowest monthly growth rate recorded by the property portal since December 2019. 

It says demand for homes is 40% higher than the UK’s five-year average, but is beginning to fall to typical levels. 

Gráinne Gilmore, head of research at Zoopla, said: “There are many factors supporting the price growth seen since the start of the pandemic, not least the continued imbalance between demand and supply, but the increasing cost of living, increasing mortgage rates for buyers and cloudier economic outlook will act as a brake on house price growth through the rest of the year.”

Wales leads price growth

Wales has experienced steeper price growth than any other UK region, with the cost of a typical home rising 11.4% year-on-year. The average house in Wales now costs £192,500, an increase of £32,000 compared with 24 months ago. 

London has seen the slowest growth, with an annual price rise of just 3.9%. However, London remains the most expensive region overall, with an average home costing £516,100. 

Of UK cities, Nottingham experienced the steepest year-on-year house price growth (10.4%) Zoopla found, followed closely by Bournemouth (10.2%). 

Edinburgh underwent the smallest year-on-year price increase, outside London, of 4.3%, while Aberdeen was the only UK city where average house prices have dropped year-on-year, by 2.5%.

Rising mortgage rates

Zoopla suggests market growth is trailing off in part due to the increasing cost of mortgages. Following the Bank of England’s decision to increase its base rate, mortgage rates have risen in turn. 

For a £250,000 mortgage with a 25% deposit, buyers can now expect an average rate of 3.37% on a five year fixed-rate loan, compared with the 2.64% average seen in December 2021. In practice, this equates to an extra £870 in annual mortgage payments.

Nick Leeming, chairman of estate agent Jackson-Stops, said: “The slower pace of growth overall is a sign that economic headwinds are coming down the tracks.

“What we are seeing is more supply coming to the market in most regions, partly in the belief that house prices are peaking, but also to lock in the best mortgage based on a 25% deposit and an average-price home.”

With the base rate expected to rise further in 2022, Ms Gilmore says buyers should avoid delaying their purchase: “Those who want to make a move should investigate their options sooner rather than later. Mortgage rates are likely to continue to climb, so locking into a rate shortly could save hundreds (of pounds) over the long-term.”

30 June: Price Growth Still Double Digit, Pace Begins To Slow

• Average property worth £271,613
• Prices up 10.7% in year to June 
• Annual growth strongest in South West

Average UK house prices grew by 0.3% in June, marking the 11th consecutive monthly increase recorded by Nationwide. Year-on-year, the cost of a typical UK home has increased by 10.7%.

Although prices continue to rise, growth is slowing down. In May, prices grew by 0.9%, and year-on-year growth stood at 11.2%.

Robert Gardner, chief economist at Nationwide, said: “The price of a typical UK home climbed to a new record high of £271,613, with average prices increasing by over £26,000 in the past year.

“There are tentative signs of a slowdown, with the number of mortgages approved for house purchases falling back towards pre-pandemic levels in April and surveyors reporting some softening in new buyer enquiries. 

“Nevertheless, the housing market has retained a surprising amount of momentum given the mounting pressure on household budgets from high inflation.”

Regional differences

South West England has overtaken Wales as the UK region with the strongest annual price growth. 

House prices in the South West have grown 14.7% year-on-year, closely followed by East Anglia, where the average price has risen by 14.2% in the last 12 months.

In Wales, year-on-year growth stands at 13.4% – a 1.9% drop compared with the first quarter of 2022. 

House prices in London grew by 6% year-on-year, down from 7.4% recorded in the first quarter of 2022.

Mr Gardner said: “These trends may reflect a shift in housing preferences. Our housing market surveys have pointed to the majority of people looking to move to less urban areas.”

In Scotland, too, house prices are growing at a rate below the UK average. The price of a typical home in Scotland has risen by a comparatively low 9.5% year-on-year. 

House prices in Northern Ireland have grown by 11% year-on-year – similar to the growth experienced last quarter.

Downward drift

Commenting on Nationwide’s latest figures Nicky Stevenson, managing director of estate agent Fine & Country said: “House price growth continues to drift downward in response to mounting pressures in the broader economy.

“Increased borrowing costs have come at a time when disposable incomes are already shrinking and the UK is edging closer to recession. These pressures are bound to stretch affordability in the months ahead with inflation still to peak and more aggressive monetary tightening now being signalled by the Bank of England.”

Lawrence Bowles, director of research at Savills, expects house price growth to keep slowing down: “As the Bank of England warns it may hike the base rate by 0.5% in August, the outlook for the rest of the year becomes ever more contingent on mortgage costs.

“We predict that rising rates and an evening-out of supply and demand mean we’ll see price growth ease back to 7.5% by the end of this year.”

25 June: Halifax Sees UK Home Affordability Slump To Record Low

Buying a home is more difficult than ever, thanks to rapidly-rising property prices continuing to outstrip average earnings, says mortgage lender Halifax.

According to its monthly house price index, a typical home now costs 7.1 times the average income of a full-time worker in the UK. This marks the highest house price-to-earnings ratio since Halifax – once the world’s largest building society, now part of Bank of Scotland – began collecting data in 1983.

Homes have become less affordable even since 2020, when a typical home cost 6.1 times average salary.

That’s because, between the start of 2020 and the first quarter of 2022, average house prices rose by 16.8% compared to a 2.7% average growth in income, the research found.

The average cost of a UK home in the first quarter of this year stood at £279,431, while earnings for a full-time employee stood at £39,402.

Andrew Asaam, mortgages director at Halifax, says he expects the trend to reverse: “With interest rates on the rise as a means of combatting inflation, it’s unlikely house prices will continue to grow at the pace we’ve seen recently. This should see the gap between average earnings and property prices narrowing over time.”

Increase in first-time buyers

Despite low levels of affordability, the UK housing market has been highly active in the last 18 months. Last year, more than 409,370 first-time buyers purchased a home – a 35% increase compared to 2020 and a record high, said Halifax.

Mr Asaam added: “There’s no question that the economics of buying a home have changed significantly over the last couple of years. Soaring property prices and slower wage growth have combined to stretch traditional measures of housing affordability. 

“However, we also know from strong transaction levels that demand has remained extremely strong over that period.”

Most and least affordable areas

According to Halifax analysis, homes in London remain the least affordable in the UK, costing 9.7 times what the average Londoner earns in a year. Homes in the South East of England were only slightly more affordable, at a price-to-earnings ratio of 9.3.

Homes in Northern Ireland and Scotland were found to be the most affordable, costing 5.1 times the average regional salary.

Homes are most affordable in Scotland’s Inverclyde, where average property costs just 3.1 times what locals typically earn.

The region with the biggest drop in affordability between 2020 and 2022 was Pembrokeshire. In the first quarter of 2022, the area’s price-to-earnings ratio stood at 6.9, compared with 4.3 at the beginning of 2020. 

Halifax suggests increased demand for rural homes is the main driver for this change.

Despite having the least affordable homes in the UK overall, Westminster and the City of London have experienced the greatest improvement in affordability since the start of 2020. 

The average home in these districts now costs 14.5 times the local annual income, compared with 16.8 times at the start of the pandemic. 

22 June: ONS Reports 12.4% Rise In Property Prices 

• Average UK property worth £281,161
• Prices up 12.4% in year to April 2022
• Annual growth highest in Wales and Scotland at 16.2%

Today’s house price data from the Office of National Statistics (ONS) shows property prices continuing to rise, with a 1.1% increase in March alone and a higher-than-expected 12.4% leap in the year to April.

Kevin Roberts, director at Legal & General Mortgage Club, said: “Even following last year’s frenetic levels of activity, it is clear to see that the UK housing market hasn’t yet run out of steam, even if there are signs that momentum is starting to stabilise.”

The annual increase in property prices had previously slowed from 11.3% in the year to February 2022 to 9.8% in March. 

In terms of regional variations, England experienced an annual increase of 11.9% compared to 16.2% for both Wales and Scotland. However, average house prices remain higher in England at £299,249 compared to £211,990 in Wales and £187,954 in Scotland.

The South-West posted the highest yearly price increase in England of 14.1%, followed by 13.3% in the North West. 

London continued to experience the lowest annual growth of 7.9%, while the East Midlands and the South East saw monthly price falls of 0.5% and 0.3% respectively in March.

House prices increased by 15% for detached properties, compared to 8% for flats.

This report is likely to put further pressure on prospective house buyers who are already facing higher interest rates and inflationary increases in everyday spending.

However, the property market is expected to start to cool over the coming months. Lawrence Bowles, director of research at Savills, forecasts “average values to rise by a total of 7.5% in 2022, as affordability pressures are expected to substantially moderate further price growth for the remainder of this year.” 

But he also warns that the “news that the Bank of England will remove current affordability testing from August could mitigate some of the impact of higher interest rates, and, in theory, could open a little more capacity for house price growth beyond this year.”

The next ONS house price report is due on 20 July.

20 June: Rightmove Reports Record Average Property Price

• Average UK property worth record £368,814
• Prices rose 9.7% in year to June 2022
• Annual growth strongest in Wales at 15.3%

The average UK property rose in price by 9.7% to a record £368,814 in the year to June 2022, according to the latest house price index from Rightmove.

The property portal says average prices grew by 0.3%, or £1,113, in June, the fifth consecutive month that UK property values have increased.

But Rightmove added that the latest increase was the smallest since January this year and predicted that affordability constraints – caused by a growing cost-of-living crisis, rising interest rates and strong inflationary headwinds – will have a greater influence on market behaviour in the coming months.

The company says the prevailing economic climate, coupled with more properties coming onto the market, would likely lead to several month-on-month price falls during the second half of the year.

Rightmove predicted that annual house price growth by the end of the year would stand at about 5%.

Last week, the Bank of England raised interest rates to 1.25% in a bid to stave off runaway UK inflation. Consumer prices rose by 9% in the year to April 2022 and the expectation is that this figure will continue to increase in the coming months before levelling-off in 2023.

Rightmove is warning that a “conveyancing log-jam” means those looking to move this year would need to act soon. It is currently taking 150 days on average to complete a purchase after agreeing a sale, 50 days longer compared with the same period in 2019.

At a regional level Wales, with a figure of 15.3%, recorded the strongest annual house price growth to June. Next came the South West of England (12.9%), followed by the East Midlands (12.5%), and the West Midlands (11.5%). The slowest growth over the past 12 months was recorded in London (4.9%).

Rightmove’s Tim Bannister said: “The exceptional pace of the market is easing a little, as demand gradually normalises and price rises begin to slow, which is very much to be expected given the many record-breaking numbers over the past two years.

“Entering the second half of the year, we anticipate some further slowdown in the pace of price rises, particularly given the worsening affordability challenges that people are facing.”

16 June: Renters Reform Bill To End No-Fault Evictions

The government will today (16 June) publish its Renters Reform Bill, which is set to offer greater protection to residents in England’s 4.4 million privately rented households. 

The bill was first proposed in April 2019, but delayed due to the impact of coronavirus on the housing sector. Separate rules apply in the other UK nations.

The White Paper introducing the Bill promises greater protection for private tenants in England including:

• An end to no-fault evictions

No-fault evictions allow landlords in England to evict tenants without reason, with as little as eight weeks’ notice.

According to housing charity Shelter, over 200,000 private renters in England were served a no-fault eviction notice between April 2019 and April 2022. 

The Bill will bring this practice to an end, meaning landlords in England cannot evict their tenants without a legitimate reason.

No-fault evictions were banned in Scotland in 2017.

• Renting to families and benefits recipients

Private landlords will no longer be able to refuse to rent to families, or people who receive benefits. 

They must in future consider all applications, and cannot place a blanket ban on applicants receiving benefits. 

• Expanding the Decent Homes Standard

The set of standards that rented social housing must meet — the Decent Homes Standard — will be extended to private sector rented homes. 

These will all have to be in a good state of repair, be free from serious health and safety hazards, and have clean and appropriate facilities. 

The government will also explore the possibility of introducing a landlord register, similar to the register in Scotland. 

This would help local authorities keep track of landlords operating in the area to help uphold housing standards. 

• Pets

Private tenants will be able to request to keep a pet in their home. Landlords will be legally required to consider the request, and cannot refuse without a good reason. 

• Periodic tenancies

All private tenants are set to be moved onto a periodic tenancy – often referred to as a ‘rolling contract’.

This means the tenancy is automatically renewed at the end of a defined period, unless the tenant decides to end it, or the landlord ends it for a valid reason. 

Polly Neate, chief executive of Shelter, said: “The Bill is a gamechanger for England’s 11 million private renters. Scrapping unfair evictions will level the playing field. For the first time in a long time, tenants will be able to stand up to bad behaviour instead of living in fear.”

June 14: Cost Of Renting Soars To Record High

Average rental costs in the UK reached an all-time high in May, standing at £1,103 per calendar month. The figure is 1.1% higher than in April and 10.6% up on this time last year.

The figures are from the latest Rental Index from Homelet, which uses data on ‘achieved rents’ for recently-agreed tenancies in the private rented sector.

It found that every region in the UK has seen annual rental growth, while every region with the exception of the North East (where rents fell in May by 0.7%) has seen monthly rental growth.

In London, average rents in May stood at £1,832 per calendar month – an increase of 1.6% compared to April and a staggering 15.7% up on last year.

The capital was the region with the highest annual rental growth.When London is stripped out of the UK average, rents stand at a typical £928 a month – still a rise of 0.9% compared to April, and 8.7% higher than 12 months ago.

Northern Ireland saw the largest monthly rise, with rents 1.7% up in May on the previous month to an average cost of £733.

Commenting on the latest figures, Mike Dawson sales director at Homelet, said: “With continued universal pressure on households, we’ve been seeing tenants stay in properties for more extended periods.

“However, as the summer months approach – when we tend to see the highest volumes of new tenancies – average rents for new tenancy agreements will continue on an upward trajectory. ”

Just over 4.4 million households live in the private rented sector in England, according to the most recent English Housing Market Survey, accounting for around 19% of all households. A further 4 million (17% of households) live in the social rented sector while 15.4 million (around 65%) own the home they live in.

9 June: Govt Extends Right To Buy To Housing Association Tenants

Prime Minister Boris Johnson today announced plans to expand the government’s Right to Buy scheme to enable housing association tenants to purchase their home. 

This will extend the scheme, under which council house tenants can buy their property, to an additional two million people. 

Mr Johnson has proposed that housing benefits could be counted as income for would-be buyers when applying for a mortgage.

Commenting on the change a spokesperson from Santander, one of the UK’s biggest mortgage providers, said: “We welcome any initiative that will support more people in buying their own home. As a responsible lender, we will be looking at the proposals to understand the detail and the impact on affordability.”

Changes may also be made to housing benefit rules so that recipients could build up savings for a deposit via a Lifetime ISA or Help to Buy ISA. At present, those with more than £16,000 in savings are not eligible for housing benefit.

The Centre for Policy Research (CPR), a right-of-centre political think tank, welcomed the move. Robert Colvile, director of the CPR, said: “The government’s commitment to home ownership, and the Right to Buy, is hugely welcome. However, we also urge the Government to go further in boosting ownership among tenants of all tenures.”

Labour’s shadow levelling up secretary, Lisa Nandy, says the Right to Buy plans could worsen the housing crisis by removing affordable rented housing from the UK market.

Polly Neate, chief executive of the housing charity Shelter, commented: “Hatching reckless plans to extend Right to Buy will put our rapidly shrinking supply of social homes at even greater risk.”

The government says this risk would be mitigated by setting a cap on the number of housing association properties that can be sold, while committing to replacing each home sold.

When the Right to Buy scheme was first introduced in 1980, around 4.5 million council house tenants purchased their home. In the period from 2020 to 2021, however, just 9,319 social tenants made use of the scheme. 

By extending the policy to housing association tenants, the government hopes to increase home ownership rates. According to a 2021 Ipsos Mori poll, 81% of people want to own their own home rather than rent.

8 June: Lack Of Homes Props Up Slowing Market – Halifax

• Prices increased by 1% in May – the 11th consecutive monthly rise
• Annual inflation slows to 10.5%
• Average property in May worth a record £289,099
• House prices increase 74% in 10 years

Average house prices grew by 1% in May – or £2,857 – representing the 11th consecutive monthly rise, according to the latest house price report from Halifax.

The annual rate of inflation remained in double digits at 10.5%, although this marked the lowest rise since the start of the year.

Average house prices now stand at a fresh all-time high of £289,099, said the UK’s largest mortgage lender and in the last decade have climbed by a staggering 74% (or £123,016).

Despite mounting cost of living pressures, the imbalance between supply and demand for homes is the main driver behind the continued climb in property prices. 

However, according to Russell Galley, chief economist at Halifax, the impact of this varies according to the type of home that house hunters are searching for: “Compared to May last year, you’d need around £10,000 more to buy a flat, but an additional £50,000 for a detached home,” he said.

Regional splits for house price inflation

The biggest annual rises in May were recorded in Northern Ireland where the value of an average property increased by 15.2% to a current £185,386. 

The South West of England also recorded a strong rate of annual growth at 14.5%, with an average property costing £305,173. Wales posted rises of 13.7%, taking typical values to £216,120. 

Annual growth was slowest in London at 6.3%, yet the cost of a home in the capital still stands at a heady £541,942 on average. 

In Scotland, growth was also slower relative to the rest of the UK, with annual inflation at 8.3%. A home in the country now costs an average £198,288. 

Further evidence of a cooling market

Reflecting other recent house price reports, Halifax’s house price index for May shows signs of a cooling market, due largely to mounting inflationary pressures feeding into reduced mortgage activity.

Amanda Aumonier, head of mortgage operations at broker Trussle, said of today’s report: “The current economic backdrop is extremely challenging, and households have already taken the brunt of soaring inflation and an unprecedented increase in the cost of living. 

“An increase in interest rates by the Bank of England has already added over £1,000 to mortgages this year and with the BoE’s target to increase interest rates to 2% by the end of the year, homeowners should expect to be paying much higher monthly payments.

She added that, for this reason, homeowners may want to look to find certainty where they can. “Long-term mortgage deals are very competitive at the moment. There is just 0.45% interest separating a 2-year fix from a 10-year fix. And with interest rate hikes all but a certainty, buyers might want to think long term when selecting their mortgage deals.”

1 June: Double-Digit House Price Growth, But Market Set To Slow

• Annual house prices up 11.2% in May
• Rate of annual growth slower than last month
• Average UK home costs £269,914 – 6.9 times average earnings

House price increases in May remained firmly in double digits with average values 11.2% higher than 12 months ago. However, in further evidence of a cooling market, the figure was down on April’s 12.1%, according to the latest house price data from Nationwide.

On a monthly basis however, seasonally-adjusted prices were 0.9% higher in May than April – a bigger rise than the 0.4% recorded between April and March, said the UK’s largest building society.

Following 10 consecutive monthly rises, the average cost of a UK property now stands at £269,914.

Robert Gardner, chief economist at Nationwide, said: “Despite growing headwinds from the squeeze on household budgets due to high inflation and a steady increase in borrowing costs, the housing market has retained a surprising amount of momentum.

“Demand is being supported by strong labour market conditions, where the unemployment rate has fallen towards 50-year lows, with the number of job vacancies at a record high. At the same time, the stock of homes on the market has remained low, keeping upward pressure on house prices.”

Mr Gardner said he expected the housing market to slow as the year unfolds with household finances likely to remain under pressure and inflation – which stood at 9% in the 12 months to April – set to reach double digits if the cost of energy remains high.

He added that measures of consumer confidence have already fallen towards ‘record lows’, while interest rates are widely expected to rise further, feeding through to the cost of mortgages. Bank rate is currently at 1%, having risen from 0.1% since the end of last year, with the next decision scheduled for 16 June.

Housing market in 1952

To mark the Queen’s Platinum Jubilee, Nationwide also illustrated the stark differences in the housing market between today and 70 years ago when the lender also began to produce its first house price data.

Mr Gardner said that, “the housing market was very different back in 1952, with just 32% of households owning their own home, compared to 65% today.”

He added that in 1952, the UK average house price was £1,891 (around £62,000 in today’s money) which was around four times’ average earnings. Today, the average property costs £269,914, according to Nationwide’s latest figures, around 6.9 times average earnings – a record high.

However, borrowing costs were higher back then, says Mr Gardner, with Bank Rate at 4%, compared to 1% currently.

30 May: April Property Market Still Hot But Clear Signs Of Cooling, Says Zoopla

• Average house prices in April top £250,000
• Annual rises slow to 8.4% from 9% in March
• Time to sell increasing as demand cools

Average property prices exceeded £250,000 for the first time in April, according to the latest report from Zoopla – but the market is reaching a ‘natural ceiling’ as pandemic-fuelled rocketing house prices begin to cool. 

Data from the property portal showed that average house prices in April hit £250,200, marking an annual inflation rate of 8.4% compared to 9% in March. And Zoopla forecasts that annual house price inflation will fall to +3% by the end of the year.

More than one-in-20 homes had its asking price slashed in April by an average of 9% or £22,500 – the widest discount margin seen for the last 18 months – while properties for sale are remaining on the market for longer. 

The average time a three-bedroom property is taking to sell increased to 18 days in April, up from 16 days in March. In London the increase was greater – from 17 days to 21 days.

Gráinne Gilmore, head of research at Zoopla said that, while current high levels of buyer demand is causing the market to move quickly, selling times will steadily increase as demand levels start to fall due to “changing sentiment around the cost of living and personal finances.”

The property market remains strongest in Wales in April for the 15th consecutive month, with house prices 11.6% up on last year, while annual growth in London is slowest at 3.6%, according to Zoopla, which bases its data on a combination of sold prices, mortgage valuations and agreed sales.

The cost of monthly mortgage repayments on a typical UK home (for a new mortgage deal) has risen by £71 a month to £852, since the start of the pandemic (April 2020) squeezing households already impacted by the cost of living crisis.

25 May: More Than A Quarter Of Lockdown Movers Regret Their Relocation

More than a quarter (27%) of people who moved during the pandemic in a bid for more green space now regret their decision, according to a recent survey by our online mortgage broker partner, Trussle.

During the UK’s lengthy Covid lockdowns, waves of urban dwellers opted to move to more rural areas, spurred on by opportunities to work remotely. 

But, two years on, 12% of the 2,000 movers surveyed by Trussle in May believed they rushed into the decision and a further 15% are considering moving again. 

Just under a third of homemovers (30%) believe moving in the last two years was definitely the right decision, while a further 18% said they are happy with the move but it’s taking longer than expected to adjust. 

Amanda Aumonier, head of mortgage operations at Trussle, commented: “There is no doubt that Covid-19 shifted homeowner priorities and, with the return to the office and normal life very much underway, it is understandable that many people are feeling unsure of their decisions.”

But Ms Aumonier also cautioned those who regret their move against charging into another: “Homeowners who are looking to buy should do so with caution as, with the market expected to slow, there is a real possibility of negative equity in the years to come. 

“Alongside this, the costs of moving properties should not be understated, especially at a time when household expenses are already stretched.”

The Trussle survey revealed that 24% of homeowners are considering remortgaging their property instead to fund home upgrades. This number has doubled over the last two years.

About a third (33%) of homeowners who planned to carry out home improvements intend to fit a new kitchen, making it the most popular form of improvement.

A further 28% planned to upgrade their bathroom, and 24% want to landscape the garden. 

It is unsurprising to see outdoor improvements so high on homeowners’ list of priorities, since 76% of adults surveyed by Trussle prioritise having a garden over access to a rail station or other public transport. 

The desire to carry out home improvements was highest among 18 to 35 year olds, with 49% of this group planning a remortgage to fund renovations.

23 May: Rightmove Reports Record Average House Price

• Average UK property price hits £367,501
• 10.2% price growth in year to May
• Stock of properties down 55% in three years

The average price of a UK home hit a record level for the fourth month in a row in May 2022, according to data from property portal Rightmove.

Its latest house price index shows that asking prices rose by 2.1% month-on-month, taking the average value to £367,701. Annual price growth to May this year stood at 10.2%, compared with 9.9% in April.

Rightmove says average properties jumped in price by £55,551 over the past two years, a period dominated by Covid-19. In the two years prior to the pandemic, average prices rose by £6,000.

The fourth consecutive monthly price record comes against a backdrop of rising interest rates as the UK grapples with steepling inflation that has led to a cost-of living crisis amongst millions of households.

Rightmove said neither the financial pressures being faced by UK households, nor the latest rise in the Bank of England bank rate – to 1%, announced earlier this month – do not appear “to have dented the motivation and urgency to move that are being felt by many”.

However, the company added there were signs that the housing market is beginning to ease. It said that the number of properties available to buy is 55% down on the levels recorded in 2019 and warned that UK supply and demand is likely to remain “out of kilter” for the remainder of this year.

Tim Bannister, Rightmove director, said: “People may be wondering why the housing market is seemingly running in the opposite direction to the wider economy at the moment. What the data is showing us right now is that those who have the ability to do so are prioritising their home and moving, and the imbalance between supply and demand is supporting rising prices.”

18 May: ONS – Annual House Price Inflation Eases In March

Rocketing house price inflation since the start of the pandemic in 2020 could be showing the first signs easing.

Average house prices in the UK increased by 9.8% over the year to March 2022, compared to 11.3% in the year to February. 

This is according to the latest house price report from the Office for National Statistics (ONS) which is based on completed sales data, rather than mortgage approvals or asking prices.

However, the latest rise still puts the cost of the average UK property at £278,000, which is £24,000 higher than in March 2021.

Regional split

Wales saw the biggest average increases, up 11.7% to £206,000, according to the ONS. It was followed by Northern Ireland which saw average increases of 10.4% to £165,000. 

England was next with average prices up 9.9% to £298,000, while Scotland saw the smallest average increase at 8.0%, up to £181,000.

London, once again, recorded the lowest annual growth of 4.8%.

Jonathan Hopper, chief executive of Garrington Property Finders, described the latest figures as “economic gravity finally catching up with the property market”, pointing out that the slowdown has been sharpest in the nations that had previously seen the fastest rises. 

“The value of an average home in Scotland rose by a modest 8% in the year to the end of March. Just a month earlier, annual price rises north of the border were running at over 12%.”

What’s the outlook?

Amanda Aumonier, head of mortgage operations at online mortgage broker Trussle, said that we are beginning to see “key indicators that a shrink in house prices is on the horizon”. 

As an example, she cites the ratio of average house prices to average earnings (HPE), which currently stands at 7.7– above even the previous peak of 7.5 seen just prior to the 2008 financial crash.

The mortgage market has also become increasingly challenging for buyers, according to Ms Aumonier: “We’ve seen Interest rates add over £1,000 to mortgages annually, and they are set to rise further to 2% by the end of the year. This could put homeowners under a tremendous burden if they have stretched themselves on short-term deals.”

She added: “The good news is that long term deals are very competitive at the moment. There is just 0.34% interest separating a 2-year fix from a 10-year fix. With interest rate hikes likely, buyers might want to think in the long term when selecting their mortgage deals.”

6 May: Halifax Reports Record Prices

• Average property worth record £286,079
• Prices rose 10.8% in year to April
• Growth strongest in Northern Ireland

The average UK house price grew by 10.8% in the year to April 2022, taking it to a record high of £286,079, according to the latest house price index from Halifax.

The mortgage lender says average prices grew by 1.1%, or £3,078, in April – this is the tenth month in a row that UK property values have increased, the longest run of continuous gains in six years.

Halifax adds that average property prices have risen in value by £47, 568 over the past two years.

It says housing transactions and mortgage approvals remain above pre-pandemic levels and a continued growth in new buyer enquiries suggests activity will remain heightened in the short-term.

Yesterday, in a bid to counter steepling inflation, the Bank of England raised interest rates to 1%, the UK’s fourth rate rise in less than six months. The increase means dearer home loans for customers with tracker and variable-rate mortgages in the short term, and more expensive fixed rates in the future. 

Halifax’s managing director, Russell Galley, acknowledged that “the headwinds facing the wider economy cannot be ignored”.

Galley added: “The house price to income ratio is already at its highest-ever level, and with interest rates on the rise and inflation further squeezing household budgets, it remains likely that the rate of house price growth will slow by the end of this year”.

Halifax reported that Northern Ireland, at 14.9%, overtook the South West of England (14.8%) in April as the UK’s strongest region for annual house price growth.

Elsewhere, several other regions also posted double-digit performance in April, including: Wales (14.2%); East Midlands (12.8%); and the South East (12.1%). The London region was responsible for the weakest growth (6.2%), although this figure was up on the 5.9% recorded a month earlier.

Amanda Aumonier, head of mortgage operations at Trussle, our online mortgage broking partner, said: “It’s only a matter of time until the cost-of-living crisis begins to catch up with the housing market. 

“Households are beginning to feel the effect of inflation, higher energy bills and the soaring cost of living and so are cutting back on day-to-day essentials. This will likely get worse with increasing interest rates.

“High loan-to-value mortgages will be a lifeline for those unable to save during this difficult financial period. As it stands, there are only fifty-six 95% mortgages available. As such, we would urge lenders to do all they can to responsibly look at introducing more high LTV deals to the market so that everyone can aspire to own their own home.”

5 May: What The Bank Rate Hike Means For Mortgages

Laura Howard, Forbes Advisor’s spokesperson, responds to today’s announcement of an increase in the UK Bank rate:

“Today’s decision by the Bank of England to raise interest rates to 1% came as little surprise. After all, the previous rise – back in March, to 0.75% – was the result of a vast majority (8-1) vote in favour by the Bank’s Monetary Policy Committee.

“The Bank uses interest rates as a tool to control rising inflation and CPI  stood at 7% in the 12 months to March 2022 – way above the government’s 2% target and the highest recorded for 30 years.

“It’s the same story in the US, which – just yesterday – saw the Federal Reserve increase rates from 0.5% to 1% in the wake of the highest inflation the country has seen in 40 years.

“While widely anticipated, the latest rise will come as worrying news for the nation’s millions of UK mortgage holders who are already grappling – or even unable to meet – the relentless rising cost of essentials, from energy bills and petrol, to the grocery shopping.

“Anyone paying their lender’s standard variable rate (SVR), or on any mortgage deal that’s linked to the Bank rate, will have to absorb an almost immediate impact in the cost of their monthly payments.

“As an example, the latest 0.25 percentage point rise will add around £25 onto the monthly cost of a £200,000 mortgage priced at a variable 2.5%. But for these borrowers, it’s the fourth blow of its kind since December last year – when the Bank rate stood at a much leaner 0.1%.

“First-time buyers and those looking to remortgage are likely to find that this, and previous, interest rate rises have already been factored into the cost of new mortgages.

“And, while homeowners who are part-way through a fixed-rate deal will be sheltered from rises for now, when the agreed term ends they are likely to land in an environment where new mortgage deals are considerably more expensive.

“With the rising cost of living not looking to dissipate any time soon, the fact this is also likely to result in further interest rate rises is something of a double whammy.

“In light of this fact, it might be worth considering reserving your next mortgage deal which you can typically do between three and six months in advance of it starting. This means essentially, securing rates as they are today and taking advantage of them in what is likely to be a higher interest rate environment later in the year. There is no obligation to take the deal so there’s nothing to lose if you change your mind.”

Financial pressure

Amanda Aumonier at our online mortgage broker partner, Trussle, added: “Homeowners are under incredible financial pressure and this interest rate rise will only add further fuel to the fire in the short term. Of course, the Bank of England needs to look long term, but for many this will be the straw that breaks the camel’s back.

“It is crucial that homeowners understand their options. In recent years, there was a credible case for a ‘wait and see’ approach that saw many households drift onto expensive SVRs in the hope that interest rates would fall even further. However, those days are well and truly behind us and the only way is up for interest rates.

“Therefore, we would urge anyone approaching the end of their mortgage term to speak to a broker. Our research shows remortgaging can save homeowners £4,000 per year.

Prior to the BOE adopting a new position in December 2021, interest rates had been at a historic low of 0.1% as the Bank tried to alleviate economic pressure from the pandemic. However, interest rates now stand at 1%, their highest rate since 2009.

4 May: Majority Of First-Time Buyers Delayed By Cost Of Living Crisis

The majority of first-time home buyers are putting off their purchase due to concerns over cost, according to a survey by Nationwide Building Society. 

Nationwide’s poll found that 70% of people who had planned to buy their first home in the next 12 to 24 months are delaying the purchase due to difficulties saving for a deposit. 

On average, these buyers expect to delay their purchase almost two years, while 19% said they would delay by at least three years.

The survey, which gathered responses from more than 2,000 people planning to buy their first home in the next five years, found the ongoing cost-of-living crisis is having a significant impact on people’s ability to save for a home. 

The majority (88%) of respondents say the crisis will affect their saving plans, while almost half (48%) have already reduced the amount they’re saving towards a deposit. A further 38% report dipping into their deposit fund to cover another expense.

Saving for a deposit is seen as the single biggest barrier to homeownership, with 28% of people in the Nationwide survey citing it as their main concern.

According to the Office for National Statistics (ONS), a 10% deposit on a typical first-time buyer home represents 60% of the buyer’s gross annual income, so this difficulty is unsurprising.

Faced with record- high house prices, 69% of people surveyed by Nationwide say they would consider moving to a different area to get on the property ladder. In Greater London, where house prices remain the highest in the UK, 79% of people say they would consider moving. 

Paul Archer, senior mortgage manager at Nationwide, says: “Building a deposit remains the single biggest barrier to homeownership today, with many people starting out facing a long uphill battle to save.

“The rising cost of living has made this even harder.”

4 May: Zoopla Reports Record Average Price

• Average UK home worth £249,700
• Average price up 8.3% in year to March 2022
• Wales records highest regional growth

The average price of a UK residential property rose to a record £249,700 in March this year, according to the latest data from Zoopla.

The property website’s house price index shows that average prices grew by 8.3% in the year to March 2022, down slightly from the 8.8% recorded a month earlier. Zoopla says that average price growth since the start of the pandemic in March 2020 stood at 13%, equal to a rise of about £29,000 over the two-year period.

The company believes house prices are being pushed up because buyer demand remains strong in the face of constrained supply. It says higher demand has also driven more transactions, with current levels of sales agreed running more than 20% higher than pre-pandemic levels.

Zoopla calculates that rising house prices mean 4.3 million UK homes have been pushed into a higher stamp duty (or national equivalent) bracket since March 2020.

The company reports that over a quarter (28%) of these properties, around 1.2 million homes, located in England and Northern Ireland have now exceeded the initial stamp duty threshold of £125,000.

In Wales and Scotland, rising house prices mean a further 360,000 homes have also breached the initial threshold where stamp duty becomes payable – £145,000 in Scotland and £180,000 in Wales.

At a regional level Wales, with a figure of 12.1%, recorded the strongest annual house price growth around the UK, the thirteenth month in a row it has hit this mark.

Zoopla reports that prices in the south west of England also achieved a double-digit return, up by 10.6% in the year to March. In contrast, annual price growth in London stood at 3.6% over the same period.

Gráinne Gilmore, head of research at Zoopla, said: “Buyer demand has been very strong since the end of the first lockdown in 2020, and the start of this year has been no exception. This has pushed millions more homes into higher stamp duty brackets, meaning that if they come to market, there is an additional cost for buyers.”

29 April: House price growth slows but market still ‘surprisingly’ buoyant

• Annual house price growth slows in April to 12.1%
• Average UK property is now worth £267,620
• 38% of people are ‘actively moving’ or ‘considering a move’

Average house price growth slowed in the year to April to 12.1%, from 14.3% recorded in March. However, it still marks the 11th time in the last 12 months that the rate of annual growth has been in double digits, according to the latest house price report from Nationwide – which puts the average value of a UK property at £267,620.

On a monthly basis, prices increased by 0.3% in April. This marked the ninth successive monthly rise, but was also the smallest gain since September last year.

Robert Gardner, chief economist at Nationwide, said: “Continued demand is being supported by robust labour market conditions, where employment growth has remained strong and the unemployment rate has fallen back to a pre-pandemic low.”

He added that the stock of homes available on the market is also still low, which is applying continued upward pressure on house prices.

More than a third either moving – or thinking about it

This month, along with the publication of its regular house price index, Nationwide conducted a survey of around 3,000 consumers which revealed that 38% were either in the process of moving or considering a house move.

This proportion was particularly high in London, where almost half said they were moving – or thinking about doing so. Motivation for around a quarter (24%) was to secure a larger property – a similar result to in April 2021. The exception was those aged 55 and above, where nearly 40% are looking for a smaller property and only 7% are in the market for a bigger one.

However, the proportion of those citing a ‘desire to get away from city or urban life or access to a garden’ and/or for ‘more outside space’ – largely a legacy of the pandemic – declined substantially to 12% and 15%, down from 25% and 28% in April 2021.

Cost of living crisis

With the housing market activity remaining ‘solid’ in April and mortgage approvals continuing to run above pre-Covid levels, Gardner said it’s ‘surprising’ that conditions have remained so buoyant given that mounting pressure on household budgets has severely ‘dented consumer confidence’.

He said: “Indeed, consumers’ expectations of their own personal finances over the next 12 months has dropped to levels last seen during the depths of the global financial crisis more than a decade ago.

“Moreover, housing affordability has deteriorated because house price growth has been outstripping income growth by a wide margin over the past two years, while more recently borrowing costs have increased – though they remain low by historic standards.”

However, according to Nationwide’s survey, 17% of those moving or considering a move said they were doing so at least in part to reduce spending on housing by either moving to a different area and/or to a smaller home. Mr Gardner also forecasts a slowdown in housing market growth as the rest of this year plays out.

He said: “The squeeze on household incomes is set to intensify with inflation expected to rise further, perhaps reaching double digits in the quarters ahead if global energy prices remain high.

“Moreover, assuming that labour market conditions remain strong, the Bank of England is likely to raise interest rates further, which will also exert a drag on the market if this feeds through to mortgage rates.”

Effects of inflation

Amanda Aumonier at our mortgage partner Trussle said: “It’s only a matter of time until the cost of living crisis begins to catch up with the housing market, and we can see signs of house prices beginning to slow in April.

“Households are beginning to feel the effect of inflation, higher energy bills and the soaring cost of living, and so are cutting back on day-to-day essentials. Therefore, it is absurd to think that the housing market will continue to defy this trend for much longer.

“The disparity between the housing market and the financial climate could be explained by the time it takes to purchase a home. It generally takes between six and 12 weeks to complete the buying process, so the market isn’t always reflective of the current situation – many people will have started the journey before they felt any financial pressure. 

“Given that affordability and an inability to save large deposits is set to become the key factor preventing people moving homes, it is essential that mortgage products reflect this. In particular, high loan-to-value mortgages will be a lifeline for those unable to save during this difficult financial period.

“As it stands, there are only 56 95% mortgages available, and we are urging lenders to do all they can to responsibly look at introducing more high loan-to-value deals to the market so that everyone can aspire to own their own home.”

April 25: Rightmove Reports Record Average Prices Topping £360,000

• Average property price hits record £360,101
• 9.9% price growth in year to April
• Properties selling faster than ever 
• 73% of transactions chain-free so far in 2022

The average price of a UK home hit a record level for the third month in a row in April 2022, according to data from property portal Rightmove.

Its house price index shows asking prices growing 1.6% month-on-month, or £5,537, bringing the average property price to £360,101 in April. Annual price growth stood at 9.9%.

Rightmove says the average property price has jumped by more than £19,000 in the past three months, the largest quarterly increase it has recorded. And property values are at record levels in each of the three market sectors it covers – lower, middle and upper – only the second time since 2007 the company had reported this scenario.

Quick sales

It adds that properties are selling faster than ever. In April this year, the average length of time to sell was 33 days, less than half the 67 days recorded in the same month three years ago. Rightmove says more than half (53%) of properties are selling for over their final, advertised asking price.

Tim Bannister, Rightmove director of property data, said: “With three new monthly price records in a row, 2022 has started with price-rise momentum even greater than during the stamp duty holiday-fuelled market of last year.

“The economic headwinds of strongly rising inflation and modestly rising interest rates are being kept at bay by the even stronger tailwind of property market momentum that has carried over from last year.”

Chain-free transactions

A separate report from estate agents Hamptons, has found that a record proportion of UK homes are being bought by buyers without a home to sell.

It found that, so far in 2022, nearly three-quarters (73%) of all buyers have been chain-free. This compares with 69% in 2021 and a low of 65% in 2010.

Hamptons attributes the rise in chain-free buyers to an increase in the proportion of homes bought by first-time buyers and investors.

Aneisha Beveridge, head of research at Hamptons, said: “Given chain-free buyers tend to complete quicker and sales are less likely to fall through, they are fast becoming the preferred option for sellers.”

23 April: First-Time Buyers To Be ‘Paying Mortgage In Retirement’

The next generation of homeowners may be paying off their mortgages into retirement, new data from our mortgage partner Trussle has revealed.

According to Trussle, house price inflation which has caused the average age of a first time buyer to rise to 32 from 29 a decade ago is to blame. 

Equally, a 75% year-on-year increase in first-time buyers taking out 35-year mortgages during the stamp duty holiday, in order to combat rising house prices. Over 60,000 first-time buyers did so.

The stamp duty holiday was introduced 8 July 2020 to encourage the purchase of property and buoy the housing market. The holiday came to an end on 30 September 2021 for England with the equivalent Land and Buildings Transaction Tax (LTT) holiday in Northern Ireland simultaneously ending.The  LTT holiday in Scotland drew to a close on 31 March 2021 and on 30 June 2021 in Wales.

The average house price in the UK is now £277,000 according to the latest Office for National Statistics figures, and according to Trussle most mortgage lenders require a minimum of a 10% deposit on a property.

A homebuyer purchasing a property for £277,000, who provides a 10% deposit on a 2.25%  rate mortgage can expect to pay £860 per month over the course of 35 years.

Alarming trend

Amanda Aumonier at Trussle says: “This is an alarming trend that has been brewing for years. When purchasing a home, buyers naturally think about the here and now, which typically means looking for ways to keep their payments as low as possible. 

“But, while taking out a longer term mortgage can be an effective way to keep short term costs low, you will end up paying more back in the long term. Not only this, but you could also still be paying off your mortgage during a period of life when your income begins to drop.”

However she says overpaying on your mortgage even by a little can help clear your debt faster: “For those able to get ahead of their mortgage payment, overpaying on your mortgage can significantly cut the term and therefore overall cost of your mortgage. Overpaying by as little as £50 each month can shave two years off your mortgage and save you £5,000.”

22 April: No More Ground Rent For New Leaseholders From June

Homebuyers in the market for a leasehold property in England and Wales will soon be able to cross the cost of ground rent off their list of annual outgoings.

In the first of a series of reforms to an antiquated leasehold system, the government has confirmed that the long-awaited ban on all new residential long leases will take effect from 30 June 2022. It will apply to retirement homes from no later than April 2023.

Annual ground rent has long been a controversial charge for owners of leasehold flats and houses. With no regulation and varying from lease to lease, freeholders and landlords can charge hundreds of pounds a year and provide no clear service in return.

Ground rents can also be set to escalate regularly after a given number of years, while some homeowners who bought directly from developers have seen costs double annually.

The government’s Leasehold Minister, Lord Stephen Greenhalgh said: “This is an important milestone in our work to fix the leasehold system and to level up home ownership. Abolishing these unreasonable costs will make the dream of home ownership a more affordable reality for the next generation of home buyers.”

Lord Greenhalgh said he ‘welcomed the move’ from many landlords who have already set ground rent on their new leases to zero, and he urged others to follow suit ahead of the June ban. Anyone preparing to sign a new lease on a home in the next two months should speak to their landlord to ensure their ground rent rate reflects the upcoming changes, he said.

Separate measures, announced by the government last year, include a new right for leaseholders to extend their leases to 990 years at zero ground rent, and an online calculator to help leaseholders find out how much it would cost to buy their freehold or extend their lease.

Timothy Douglas, policy and campaigns manager for trade body Propertymark, welcomed the news: “These unfair and restrictive charges levied on leasehold homeowners have in some cases been allowed to become a cash-cow and abolishing them has been a long time coming.”

The problems within the leasehold sector run much deeper than unreasonable ground rent charges, however.

A recent survey from Propertymark of more than 1,000 leaseholders revealed that, in some leasehold agreements, the freehold stipulates that homeowners must seek permission to make cosmetic alterations – with 10% being charged for doing so.

It found that, on average, freeholders charged homeowners £1,422 to enquire about installing double glazing, £887 to change the kitchen units, and £689 to replace the flooring.

Some even faced charges for changing the blinds (£526), and installing a new front door (£410).Mr Douglas said:  “These changes only legally restrict ground rents on new leases, so we hope they are a catalyst for further reform by the housebuilding sector itself and the UK Government that will release the estimated over one million existing homeowners who remain locked into these agreements.”

14 April: Record Rent Increases For Tenants In Britain

Private rents in Britain rose sharply in the last 12 months to reach an average £1,088 per calendar month (pcm) for properties outside London, according to data from Rightmove. 

This 10.8% increase from £982 pcm is the largest annual jump recorded by the property website.

Manchester and Liverpool saw the steepest increases, with average rents growing by 19.3% and 17.1% respectively. 

In the capital, rents reached a record average of £2,193 pcm in the first quarter of 2022. This represents an increase of 14.3% compared with this time last year, when the average London rent was £1,919.

According to Tim Bannister, director of property data at Rightmove, soaring rents are the result of increased demand and diminished supply: “On the supply side, we’re hearing from agents and landlords that tenants are signing longer leases, which has prevented some of the stock that would normally come back onto the market from doing so.

“When it comes to demand, we’re still seeing the effects of the pandemic, whereby tenants are balancing what they need from a home and how close they need to live to work with where they can afford.”

These record highs come at a time when many households are already feeling the pressure of an ongoing cost-of-living crisis, fuelled by rising prices across the board, from energy and fuel to groceries and Council Tax.

13 April: Annual House Price Inflation Soars To 10.9%

• Average price up 10.9% in year to February 
• Average cost of UK home at £277,000
• Wales is best-performing area

Average UK house prices rose by 10.9% in the year to February 2022, up from the 10.2% the previous month, according to the latest figures from the Office for National Statistics (ONS).

The ONS said the price of an average UK home stood at £277,000 in February, an increase of £27,000 on the same month last year.

Wales led the way in terms of the largest national house price increase, with the average property climbing in value by 14.2% to £205,000 in the 12 months to February.

Next came Scotland, which recorded a price rise of 11.7% to £181,000. England registered a rise of 10.7% to £296,000, while prices in Northern Ireland climbed 7.9% to £159,000.

In terms of UK regional performance, the South West and East of England each recorded the strongest annual growth with prices rising by 12.5% in the year to February 2022. 

Average prices in London rose by 8.1% over the same period. This was the weakest of the UK’s regions, although the figure was up sharply from the 3.8% registered by the capital in January this year.

Mortgage market

Amanda Aumonier, head of mortgage operations at online mortgage broker Trussle, said: “In the midst of a cost-of-living crisis, the property market seems at odds with the rest of the economic climate. All of the indicators show that house price growth is continuing to go from strength to strength.

“However, the dashboard warning lights are starting to light up. Households are projected to be worse off by around £900 per year from inflation alone, which will without doubt have a knock-on effect on the property market. Lenders are clearly beginning to realise this and are betting on an economic downturn impacting the property market.”

Aumonier added that in recent days, interest rates on five and 10-year mortgage products had begun to fall in line with, and in some cases drop even lower than, the rates on two-year home loans.

Nicky Stevenson, managing director at estate agent Fine & Country, said: “House price growth continues to move at a rate of knots and it remains unclear whether this marks the apex of this unprecedented boom. 

“At the moment, cash-rich buyers appear to be shrugging off the challenges that are mounting in the broader economy, but the picture may change in the summer as lenders reassess affordability tests.”

7 April: Halifax Sees Record Property Prices

• Average property hits record £282,753
• Prices up 11% in year to March
• Growth strongest in SW England

The average UK house price climbed by 11% in the year to March 2022, taking it to a record high of £282,753, according to the latest house price index from Halifax.

The mortgage lender says average prices grew by 1.4%, or £3,860, in March – the largest month-on-month increase since September last year.

UK house prices have risen consecutively for nine months. Halifax says the average UK property has increased in value by £28,113 in the past 12 months. The year-on-year rise is on a par with average annual UK earnings of £28,860 before tax.

The bank says south west England is the UK’s strongest-performing region, with annual house price growth of 14.6%.

Wales, which held the regional top monthly spot since the start of 2021, recorded a figure of 14.1% in the year to March. The average house price in Wales now stands at a record £211,942.

Elsewhere in the UK, property prices over the past year grew by 13% in Northern Ireland and 11.6% in south east England. Halifax says London was the UK’s weakest-performing area last month. But, with a figure of 5.9%, house prices are continuing to recover in the capital.

Russell Galley, Halifax’s managing director, said: “With 2021’s strong momentum continuing into the beginning of this year, the annual rate of house price inflation continues to track around its highest level since mid-2007.

“The story behind such strong house price inflation remains unchanged: limited supply and strong demand, despite the prospect of increasing pressure on household finances.”

Amanda Aumonier at online broker Trussle, Forbes Advisor’s mortgage partner, said: “House price growth continues to march to new heights. However, with an increasingly dire financial climate settling in, we may well see this appetite drop off in the coming months.

“Anyone taking out a mortgage now may want to look at longer term options. While two-year fixed mortgages are traditionally the most requested, five-year fixed mortgages are currently proving to be a popular choice.”

31 March: Nationwide reports 14.3% price growth in year to March

• Annual growth up 14.3% from 12.6% in February
• Average property now worth record £265,312
• Prices up by 21% on pre-pandemic levels

Nationwide building society’s latest House Price Index says the price of a typical UK home is at a record high of £265,312, with prices increasing by over £33,000 in the past year. 

It puts annual price growth at 14.3% in the year to March, notably higher than the 12.6% recorded in February, suggesting the traditional spring increase in demand for properties is well under way.

Prices are now 21% higher than before the pandemic struck in early 2020. Property values have been pushed higher as households seek accommodation suited to changing lifestyles, including more time spent working from home and new commuting routines.

Robert Gardner, Nationwide’s Chief Economist, said the pace of increase is the strongest since November 2004: “The price of a typical UK home increased by over £33,000 in the past year. 

“The market has retained a surprising amount of momentum given the mounting pressure on household budgets and the steady rise in borrowing costs. The number of mortgages approved for house purchase remained high in February at around 71,000, nearly 10% above pre-pandemic levels. A combination of robust demand and limited stock of homes on the market has kept upward pressure on prices.

Mr Gardner added that significant savings accrued during lockdowns is also likely to have helped some prospective homebuyers raise a deposit: “We estimate that households accrued an extra £190bn of deposits over and above the pre-pandemic trend since early 2020, due to the impact of Covid on spending patterns. 

“This is equivalent to around £6,500 per household, although it is important to note that these savings were not evenly spread, with older, wealthier households accruing more of the increase.”

Despite the current upward pressure on prices, Mr Gardner believes the housing market is likely to slow in the quarters ahead: “The squeeze on household incomes is set to intensify, with inflation expected to rise further, perhaps reaching double digits in the quarters ahead if global energy prices remain high. 

“The Bank of England is likely to raise interest rates further, which will also exert a drag on the market if this feeds through to mortgage rates.”

Mortgage impact

Amanda Aumonier at our mortgage partner, Trussle, said: “The fact we are still seeing such a level of activity in the market is likely because the availability and cost of mortgages has remained consistent throughout, ensuring products remain accessible. However, unless more strident measures are taken to tackle inflation, only time will tell whether price growth will continue in the long run.

“It is difficult to see how inflation will not start to impact the house buying pipeline, as buyers are forced to clamp down on their expenditure.

“The recent Spring Statement provided little protection for households against increasing inflation. This was particularly the case for middle income earners, who are typically next time buyers, and consequently this section of the property market could see even greater strain in the coming months.”

29 March: Zoopla Reports Record Average Property Price

• Average UK home worth £245,200
• Average price up 8.1% in year to February 2022
• Wales has highest regional growth 

The average UK house price rose to a record £245,200 in February 2022, according to the latest data from Zoopla.

The property portal’s house price index showed that average house prices grew by 8.1 % in the year to February, up on the 7.8% recorded a month earlier.

Zoopla reported that buyer demand across the UK was unseasonably strong, with demand for family houses more than twice as high as usual for early spring. 

The company said there had also been a rebound in the demand for properties in urban centres since the start of this year, as life in cities began to return to normal following the pandemic. 

Zoopla added that the number of homes listed for sale across the average UK estate agency branch had moved up slightly by 3.5% in the 28 days to 20 March. But the company said the stock of homes available to buy is 42% below the UK’s five-year average.

At a regional level Wales, with a figure of 11.8%, recorded the strongest annual house price growth – the 12^th month running that it had achieved this status. In contrast, price growth over the past 12 months to February was slowest in London, which recorded a figure of 3.2%.

Gráinne Gilmore, Zoopla’s head of research, said: “Buyer demand remains elevated as the trends that emerged during the pandemic among households about where and how they are living, continue to drive the market. Demand is strongest for family houses, indicating a continued appetite for additional internal and external space.”

23 March: Annual House Price Inflation Dips To 9.6% – ONS

• Average house price up 9.6% in year to January
• Average cost of UK home £274,000
• Wales best-performing location 

Average UK house prices rose by 9.6% in the year to January 2022, down from 10% recorded the previous month, according to the latest figures from the Office for National Statistics (ONS).

The ONS puts the price of an average UK home at £274,000 this January, an increase of £24,000 on the same month in 2021.

Wales continues to lead the way in terms of the largest national house price increases, with property prices in the country climbing 13.9% to an average of £206,000 in the year to January 2022.

Scotland saw prices rise by 10.8% to £183,000 over the same period. England registered a 10.4% increase to £292,000, while prices in Northern Ireland climbed by 7.9% to £159,000.

In terms of UK regional performance, the East Midlands recorded the strongest annual growth with prices rising by 11.6% in the year to January. Average prices in London rose by just 2.2% over the same period, the weakest of the UK’s regions.

Nicky Stevenson, managing director at estate agents Fine & Country, said: “A modest tightening in house price growth has been expected for some time with challenges building across the broader economy. Affordability has been stretched by a spike in inflation and the consequential upward pressure on interest rates.”

Nathan Emerson, CEO of housing industry body Propertymark, said: “What these ONS figures suggest is that the cost of living, energy prices and rising interest rates mean buyers are beginning to be more cautious with their cash. 

“Our data shows there are more properties entering the market, bringing signs of an equalisation between supply and demand which will likely have a more stabilising effect on prices in the coming months.”

21 March: Rightmove Sees Average Price Top £350,000

• Average British home worth record-breaking £354,564
• 10.4% annual price growth in March, highest in eight years
• Largest supply/demand mis-match ever 

The price of an average UK home hit a record level this month, according to the latest data from property portal Rightmove.

Rightmove’s house price index shows average asking prices grew by 1.7% month-on-month, or £5,760, to stand at £354,564 in March 2022. Rightmove says prices last rose this steeply in March 2004.

The latest increase contributed to an overall rise in the annual growth rate for average house prices of 10.4% to March 2022, its highest level in nearly eight years.

Rightmove says the growth figures have been stoked by a large imbalance between buyer demand and the number of properties for sale.

It adds that, with more than twice as many buyers as sellers, the property market is entering the spring selling season with the biggest mis-match between supply and demand it had ever measured.

Rightmove says it is too early to know how the property market will be affected by the longer-term economic impact of the war in Ukraine. 

Rightmove director, Tim Bannister, said: “The imbalance between high buyer demand compared to low available property supply is the greatest we have ever seen for the start of a spring market, meaning the chance of being able to pick and choose between several buyers is strong.

“The proportion of properties finding a buyer within the first week is also at an all-time high for this time of year, so sellers with an appropriately priced and well-presented property can expect a shorter marketing period than the norm.”

Kate Eales from estate agent Strutt & Parker said: “The market continues to be competitive, with demand outweighing supply, driving up house prices across the country. But despite historically low stock volumes dominating headlines over the past few weeks, we’re beginning to see incremental increases in the number of homes coming to the market as we enter spring.”

7 March: Average UK Property Price Breaks Record – Halifax

• Average UK property hits record £278,123
• House prices up 10.8% in year to February
• Wales continues to lead regional charge

The average UK house price climbed by 10.8% in the year to February 2022, taking it to a record high of £278,123, according to the latest house price index from Halifax.

The company says average house prices grew by 0.5% in February, the eighth rise in consecutive months making the annual growth rate the strongest in 15 years.

Average property values have risen by 16%, or £38,709, in the two years since February 2020, just before the start of the Covid-19 pandemic.

Halifax says Wales, with annual house price inflation of 13.8%, was the UK’s strongest performing area. It notes that South West of England (13.4%) and Northern Ireland (13.1%) both recorded strong annual gains.

London (5.4%) was the weakest performing area, but Halifax says the annual growth figure was the capital’s highest since the end of 2020.

Russell Galley, Halifax’s managing director, said: “The UK housing market shrugged off a slightly slower start to the year with average property prices rising in February by £1,478 in cash terms. This was the eighth successive month of house price growth, as the resilience which has typified the market throughout the pandemic shows little sign of easing.”

Amanda Aumonier, head of mortgage operations at online mortgage broker Trussle, said: “While today’s news is positive for homeowners, it remains to be seen how long house price growth can continue to climb in the difficult economic climate.

“Interest rate rises, increasing inflation and the spiralling cost of utilities are placing an extreme burden on households. This financial pressure will inevitably impact new and old buyers’ ability to afford property and so we could see a significant decrease in demand in the coming months.”

4 March: Zoopla Hails Record Average Property Price

• Average home worth £244,100
• Average prices up 7.8% in year to January
• Wales again sees highest growth

The average UK house price rose to a record £244,100 in January 2022, according to Zoopla’s latest house price index. Growth hit 7.8% in the 12 months to January this year, down from 8% the previous month.

Zoopla says buyer demand for homes in February 2022 was 70% above the five-year average, while the number of homes for sale was down 43%.

But it adds that, since the start of 2022, new property listings in certain UK regions, including the East Midlands, Yorkshire and the Humber and Scotland have exceeded levels recorded in the three years to 2020, pointing to “a turnaround in supply”.

Wales continues to lead the charge in terms of regional annual house price growth, rising by 11.7% in the year to January 2022, beating all other regions for the eleventh month in a row. Growth was slowest in London, where the figure was 3.1%.

Grainne Gilmore, Zoopla’s head of research, said: “The data indicates that more homes are coming to market, as movers and other owners list their properties for sale. This will create more choice for the many buyers active in the market.

“However, the imbalance between high demand and supply will take much longer to unwind and this will continue to underpin pricing in the coming year.”

Guy Gittins, CEO of estate agents Chestertons, said: “To see new buyer enquiries of this scale at the beginning of the year is truly remarkable and a strong indication for the market to remain buoyant for at least the first half of 2022.”

2 March: Nationwide – Average UK Property Price Hits Record High

• Annual house price growth surges 12.6%
• Typical home worth record £260,230
• Average house price 20% higher than 2020

The price of an average UK house soared to a record level of £260,230 last month, according to the latest data from Nationwide.

The building society said the price of a typical British home surged by 12.6%, a rise in cash terms of £29,162, in the 12 months to February 2022.

The latest house price increase, up 1.7% month-on-month, was the seventh rise in consecutive months. Nationwide said house prices are increasing at their fastest rate since June last year.

It said the continued buoyancy of the housing market was surprising, given the mounting pressure on household budgets caused by rising inflation, currently standing at 5.5%, and in light of increased borrowing costs.  

The Bank of England has raised the bank rate twice since December last year. The figure currently stands at 0.5% with the prospect of another rise in the pipeline, perhaps as soon as this month (the next bank rate decision is due on 17 March).

Robert Gardner, Nationwide’s chief economist, said: “The strength of the housing market is particularly noteworthy since the squeeze on household incomes has led to a significant weakening of consumer confidence.

“The economic outlook is particularly uncertain. It is likely the housing market will slow in the quarters ahead,” he added.

Increasing pressure

Amanda Aumonier at online Trussle – our mortgage broker partner – said: “While it’s good news house price growth remains steady, homeowners are continuing to face increasing pressure on everyday bills. 

“Alongside the overall increase on household bills, the past week has seen petrol and diesel prices rise significantly – something that may hit those saving for potential house deposits.

“As people take stock of their current financial situation and manage the increased cost of living, this could impact the pipeline of homebuyers, decreasing the demand on property and the likelihood of bidding wars which could, together, halt any further growth in house prices.”

Nicky Stevenson, managing director at estate agent Fine & Country, said: “Rocketing energy prices, volatile stock markets and creeping interest rates have yet to make even the smallest dent on turbo-charged house price growth.

“This is a remarkable bull run and the prospect of any house price correction seems rather remote for the time being. Heady gains are likely to continue unless we see a flood of new listings come on to the market.”

21 February: Rightmove Notes Record Prices, Signs Of Busier Market

• Average asking prices in February up a record £7,785 compared to last month
• Increases driven by ‘second steppers’ in search of more space
• Prices nearly £40,000 higher than since the start of the pandemic

The price of property coming to market increased by 2.3% in February, equating to £7,785, according to Rightmove’s latest House Price Index.

The hike marks the biggest monthly jump in pounds the property portal has recorded in its 20 years of data-gathering. It also brings the average asking price of a UK property to a staggering £348,804.

On an annual basis, average asking prices are now 9.5% higher than in February 2021, marking the highest annual rate of growth since September 2014. Prices have risen by nearly £40,000 in the two years since the pandemic started, compared to just over £9,000 in the previous two years.

Market activity is also showing signs of returning, with estate agents reporting a 16% increase in the number of potential buyers making enquiries this month, compared to last year.

London, which has been lagging behind the rest of the UK in terms of price rises, recorded the biggest jump in buyer enquiries at 24% higher than last February.

Tim Bannister, director of property data at Rightmove, said: “As the final legal restrictions look to be ending soon, and more businesses are encouraging a return to the office for at least part of the week, we now have a group of movers who are looking to return closer to major cities, or at least within comfortable commuting distance of their workplaces.”

He added that ‘second steppers’ looking for more space than their first home offers, were also fuelling the market.

Potential sellers are showing more signs of activity, with the number of people requesting a home valuation from an estate agent up 11% compared to this time last year, said Rightmove.

While there is still a mismatch between buyer demand and the supply of home, and added pressures from the rising cost of living, Mr Bannister says that the most recent data shows, “demand rising across the whole of Great Britain, with many people determined to move as we head into the spring home-moving season.”

ONS: House Prices Rise 10.8% In 2021

• UK average house prices rise 10.8% in year to December 2021
• Average UK home in December 2021 costs £275,000 
• London sees weakest annual growth at 5.5%

Average house prices in the UK stood 10.8% higher in December 2021 compared to the previous year. The annual rate of house price inflation was slightly up on the 10.7% recorded in December 2020, according to the latest UK House Price Index (UK HPI) from the Office for National Statistics (ONS).It puts the average cost of a UK home at the end of last year at £275,000 – £27,000 more expensive than the same time in 2020.

Research from Savills shows that this annual increase means that, effectively, ‘houses earned more than people’ last year. According to the 2021 Annual Survey of Hours and Earnings, the average UK worker earned £25,971.

The UK HPI comes on the same day as the latest inflation figures, which show that the cost of living, as measured by the Consumer Prices Index (CPI), rose to 5.5% in January, marking a 30-year high. This is making further rises in the Bank of England base rate more certain which, in turn, is putting upward pressure on the cost of mortgages.

Miles Robinson, head of mortgages at online broker Trussle, said: “While continued house price growth is positive news, many homeowners are concerned about their finances, as soaring inflation and the cost of energy are putting households under extreme pressure.”

Prices by UK country 

In regional terms, Wales led the charge with house prices increasing by an average 13% over the year to December, a whisker under the 12.6% recorded in November. It puts the average cost of a home in Wales at £205,000.

In Scotland, property prices increased by 11.2% over the year to December putting the cost of an average home at £180,000. The rate of growth in Scotland slowed from 12.1% in the year to November 2021.

England was the next-best performing region with annual house price increases of 10.7%, slightly up from 10.5% in the year to November last year. The average cost of a home in England stands at £293,000. However, London continued to see weakest annual growth at 5.5%.

Northern Ireland continues to be the cheapest country in the UK for buying a home, where property values (at the end of the third quarter of 2021 which is most recent data), stand at an average £159,000. It marks a 10.7% increase on the previous year.

However, because the UK House Price Index (HPI) uses data from completed transactions, from HM Land Registry and the respective country equivalents, the ONS said there may be ‘increased volatility’ in the latest estimates, especially where transaction numbers have been low.

7 February: Halifax: House Prices Continue Upward – But Rate Of Growth Slowing

• Annual house price growth steady at 9.7%
• Monthly house price growth slows to 0.3%
• Average UK house prices stand at £276,759

Property prices in January continued to rise, but the rate of growth is slowing according to the latest house price index from Halifax. It reports that, while average values are 9.7% up on this time last year, the monthly growth stands at 0.3% – the slowest recorded since June 2021.

Affordability remains at historically low levels as house price rises continue to outstrip earnings growth, according to Russell Galley, managing director at Halifax: He said: “Despite record levels of first-time buyers stepping onto the ladder last year, younger generations still face significant barriers to home ownership as deposit requirements remain challenging.”

He added that the challenges of getting onto the property ladder are likely to become even more acute in the short-term as household budgets come under mounting pressure. 

Energy costs are set to soar from 1 April, for example, following a 54% rise in the price cap, while the cost of mortgages is also climbing after two interest rate hikes in the last three months by the Bank of England. It has put the current base rate at 0.5% with city economists forecasting at least two more rises by the end of the year.

This is on the back of an already-soaring UK inflation rate which, as measured by the Consumer Prices Index, jumped to 5.5% in the 12 months to January 2022 – its highest level in 30 years. 

The relentless rise of property prices is being exacerbated by the current lack of available stock. According to Nathan Emerson, chief executive of estate agent trade body, Propertymark, the number of homes for sale is between 40% and 50% down on last year.

He said: “Our member agents are reporting that the number of offers they are receiving on properties each month can be well into double figures and that sales are continuing to be agreed at over the asking price.”

More homes will need to become available for sale before prices can slow, he added.

Wales continues to be the strongest-performing UK region. With annual house price inflation of 13.9% in January and an average property value of £205,253.

Northern Ireland and Scotland also continue to record strong price growth, with prices up 10.2% and 8.9%, on this time last year respectively. 

In England, the North West was once again the strongest performing region, up 12% compared to last January, while London remains the weakest performing region with annual price growth of 4.5%.

3 February: Bank Of England Raises Rate To 0.5%

The Bank of England (BoE) today raised its Bank interest rate to 0.5%, the second increase in two months.

The announcement, the first back-to-back interest rate rise since 2004, will see the cost of lending rise, including an automatic increase in tracker mortgage rates. The news also means dearer home loans for customers with standard variable rate mortgages, if their lenders choose to pass on the increase.

Today’s decision will further intensify the squeeze on household finances, following a 54% increase in the energy price cap to £1,971 from this April, announced by the energy regulator Ofgem earlier this morning.

The BoE’s Monetary Policy Committee (MPC) voted 5-4 to double the rate from its previous level of 0.25%. The BoE said that those MPC members in the minority had called for a rate rise of 0.5 percentage points to 0.75%.

The latest inflation figure, reported last month, showed that the cost of living grew by 5.4% in the 12 months to December 2021, its highest level in 30 years. Inflation is almost three times the BoE’s 2% target, as set by the government.

The MPC’s decision to dampen down the UK’s overheating economy by increasing interest rates had been predicted by most City commentators.

The MPC voted unanimously not to reinvest any of the £875 billion of government bonds it has bought under quantitative easing programmes when they mature.

Online mortgage broker, Trussle, calculated that the latest rate rise could add a further £331.56 to the average mortgage annually for customers whose home loans are based on standard variable rates. 

This is based on the average house price of £264,000 and assuming a 15% deposit. The calculation comes on top of the £324.48pa increase customers faced following December’s rate rise last year.

The next Bank rate announcement is due on 17 March. A further two rate increases are thought to be in the pipeline for 2022.

Demand Surges As Home Buyers Flood Back To Cities

Home buyers are flocking to city centre locations in numbers not seen since before the pandemic struck in 2020, according to online mortgage broker Trussle.

The broker says that, after a two-year break, there are clear signs that prospective property buyers are showing a rediscovered desire for city living.

Enthusiasm for cities declined during the pandemic as remote working became the norm and local amenities were closed. 

But Trussle says demand for mortgages in London, Manchester and Birmingham is rising. Mortgage applications in London now account for 14% of all mortgage applications, a level last seen in December 2019.

The broker says mortgage applications in the capital have increased by 30% in recent months and adds that Manchester and Birmingham are proving even more popular as potential home buying destinations. In Manchester, applications are double where they were in 2019.

According to Trussle, buyers with an appetite for a return to city living want more space than previously, to take into account the potential to work from home.

Miles Robinson, the broker’s head of mortgages, said: “With high streets back in business, the allure of city living is returning. This is clearly beginning to resonate with buyers. We are seeing interest in city centre properties up and down the UK either return to pre-pandemic levels, or move higher.”

Nationwide: Average UK Property Price Hits Record High

• Annual house price growth surges to 11.2%
• Typical home worth record £255,556
• Housing market’s strongest start to year since 2005

The price of an average UK house hit a record level of £255,556 last month, according to the latest data from Nationwide building society.

It says the price of a typical British home surged by 11.2% in the 12 months to January 2022, up 0.8% month-on-month.

The latest price rise was the sixth in consecutive months. Nationwide says the increase means the UK’s housing market has made its strongest start to the year since 2005.

The building society adds that the total number of property transactions in 2021 was the highest since 2007 and around 25% higher than in 2019, before the pandemic struck.

Robert Gardner, Nationwide’s chief economist, said: “Housing demand has remained robust. Mortgage approvals for house purchase have continued to slightly run above pre-pandemic levels, despite the surge in activity in 2021 as a result of the stamp duty holiday, which encouraged buyers to bring forward their transactions to avoid additional tax.”

Nicky Stevenson, managing director at estate agents Fine & Country, said: “While monetary policy will tighten in 2022, this is unlikely to have a significant damping effect on the housing market any time soon, with most agents around the country still unable to find enough homes to meet demand.”

Rightmove: Seaside Town Is UK’s Housing Supply Hotspot

• Bexhill-on-Sea has most new properties for sale this year compared with 2021
• UK has 8% more properties for sale overall compared with 12 months ago
• Nuneaton in Warwickshire is fastest town for finding a buyer

A town on the English south coast and an area in the Derbyshire Peak District have topped a list of locations that have more new properties for sale this January, compared with the same time in 2021.

Bexhill-on-Sea led the new year list of ‘supply hotspots’ with an 88% increase in the number of new properties coming to market, according to the property website Rightmove.

The East Sussex town was followed by High Peak in Derbyshire, which recorded an 82% rise in new homes for sale. Chelmsford in Essex was third with a 58% increase.

Rightmove said that, regionally, the East Midlands, South East, South West, Wales and Yorkshire & Humber each recorded a rise of 10% or more in new properties for sale this January compared with the same month last year.

The company added that, as a whole, there were 8% more new properties for sale across the UK in the last week of January 2022, compared with the same time in 2021.

In terms of finding buyers, Rightmove said that Nuneaton in Warwickshire had the quickest turnaround time of 24 days. This was followed by Leigh-on-Sea in Essex and Burton-on-Trent in Staffordshire, with 27 and 29 days respectively.

Tim Bannister, Rightmove’s director of property data, said: “More new listings, coupled with the higher number of requests from prospective sellers to estate agents to value their home, certainly suggests good news and positive signs that we are moving towards a better balanced market in 2022.”

Zoopla: Average UK Property Price Hits Record Level

·      Average British home worth record-breaking £242,000
·      Housing demand up 50% compared with recent New Year periods
·      Highest regional price growth in Wales for tenth month running 

The average UK house price rose to a record £242,000 in December 2021, according to Zoopla’s house price index, out today.

The property portal says house price growth was 7.4% in the 12 months to December, and that the price of an average house has risen by £25,500 over the past two years.

It says UK housing demand in January is up by 50% compared with recent New Year periods. 

Wales recorded the highest regional annual rate of house price growth for the tenth month in a row, up 11.3% to December. Bringing up the rear was London with growth of 2.6% over the same 12-month period.

Zoopla says that, with ‘hybrid’ working from home and the office continuing to be the norm for many white-collar workers, the pandemic continues to shape the property market. 

It added that the trend for increasing space has further to run, notably for three-bedroom houses outside the London area. Demand for this type of property is four times higher than the five-year average.

Geographically, Zoopla says suburbs remain in the highest demand with Thurrock in Essex and areas around Birmingham, Glasgow and East London proving the most popular.

With city workers slowly returning to offices, the property portal added that demand for flats is at its highest level for five years.

Grainne Gilmore, Zoopla’s head of research, said: “The effects of the pandemic on the housing market cannot be underestimated. Even after nearly two years, the pandemic-led ‘search for space’ is one of the factors creating record demand for homes this month.

“The market is also being boosted by office-based workers re-thinking where and how they are living amid more hybrid working models.”

Rents increase at fastest rate on record

Average asking rents have increased at the fastest rate on record, according to Righmove, the property website.

The company said that average rents are now £1,068 per calendar month (pcm) outside of London, 9.9% higher than this time last January.

Rightmove noted that rents in London have risen beyond pre-pandemic levels for the first time and now stand at a record average figure of £2,142pcm.

ONS: Annual House Price Inflation Hits 10% 

• Average UK house prices up 10% in year to November 2021
• Average cost of UK home at £271,000
• Wales best-performing location with annual price growth of 12.1%

Average UK house prices soared by 10% in the year to November 2021, according to the latest figures from the Office for National Statistics (ONS). 

The ONS said that the latest annual growth figure was a slight increase on the 9.8% recorded a month earlier in October. 

The cost of an average home in the UK stood at £271,000 last November, an increase of £25,000 compared with the figure from 12 months earlier.

Wales led the way in terms of the biggest national house price increases around the UK. Average property prices in the country climbed by 12.1% to an average of £200,000 during the 12 months to November last year.

Next came Scotland where prices climbed by 11.4% to an average £183,000. Northern Ireland saw a 10.7% rise to £159,000, while prices in England climbed by 9.8% to £288,000.

In terms of regional performance, the south west of England recorded the strongest annual house price growth with a figure of 12.9%. London recorded the lowest figure with average prices up 5.1% in the year to November 2021.

Miles Robinson, head of mortgages at online broker Trussle, said that it was good news for homeowners that house price growth remained steady, but that there was also the need for caution: “Many homeowners are now facing a real squeeze on their finances. Increased interest rates have already had a big impact on mortgages, with sub 1% mortgage rates all but disappearing from the market overnight.

“In addition to this, rising energy costs look set to affect mortgage affordability. Big lenders have signalled that energy prices could increase by such an extent that they will need to take utility costs into account during mortgage affordability checks.

“Not only could this prohibit first time buyers with smaller deposit sizes, but it could also ring fence more competitive mortgage deals for those who really need them. Time will tell what impact these changes will have on the housing market, but it’s likely that buyers will need to take a more cautious approach during the coming months.”

Rightmove: UK Property Prices Hit Highest Annual Growth Rate For Six Years   

• Average UK property prices grow at fastest rate since May 2016
• Average asking price at £341,019 in January 2022
• First-time buyer prices hit record £214,176

Average UK property prices grew at their fastest annual rate for nearly six years this January, according to the latest data from Rightmove.

The property portal’s house price index showed that average asking prices grew by 0.3% month-on-month, to stand at £341,019 in January 2022. 

This contributed to a 7.6% rise in the overall annual growth rate for average house prices to January. Rightmove said the last time this figure was exceeded was when it reached 8.3% in May 2016.

The company added that first-time buyer asking prices reached a record level of £214,176 in January this year, a month-on-month increase of 1.4%.

According to Rightmove, the number of homes for sale per estate agency branch hit a record low of 12 properties in January, down two from the previous month. 

Available homes continue to be snapped up at speed. The company said the average time to find a buyer in December 2021 was more than two weeks quicker than in the same month the previous year.

Tim Bannister, Rightmove’s director of property data, said: “New Year sellers and buyers have been quick off the mark this year, with Rightmove recording the highest ever number of Boxing Day sellers coming to market. Early-bird sellers who got themselves ready to come to market are now benefiting from the busiest start to the new year we’ve ever recorded.”

7 January: Halifax: Average UK Property Price Breaks Record

• Average cost of UK property hits record high of £276,091
• December 2021 prices 9.8% higher than 12 months ago
• Wales continues to lead with 14.5% annual house price inflation

Average UK house prices climbed by 1.1% in December 2021 compared with the previous month, taking them to a record high of £276,091, according to the latest House Price Index from Halifax.

The company said this was the sixth consecutive month where UK house prices have risen.

Annual house price inflation stood at 9.8% in December, its highest level for 14 years. The rise meant that average property prices were £24,500 higher at the end of 2021 compared with a year earlier. 

Halifax said that Wales, with annual house price inflation of 14.5%, was the UK’s strongest performing nation or region. Other double-digit performers included Northern Ireland (10.6%) and the North West (11.8%), making the latter England’s strongest-performing region. 

Russell Galley, Halifax’s managing director, said: “The housing market defied expectations in 2021. We saw the average house price reach new record highs on eight occasions, despite the UK being subject to lockdown for much of the first six months of the year.

“Looking ahead, the prospect that interest rates may rise further this year to tackle rising inflation and increasing pressures on household budgets suggest house price growth will slow considerably.”

Miles Robinson, head of mortgages at online mortgage broker Trussle, said: “The housing market is continuing to defy the odds. But, while it’s good news for homeowners that house price growth remains steady, there is need for caution. This winter is likely to see a cost-of-living squeeze that will impact savings and which could hamper potential market growth.

He suggested fixing mortgage payments could be advantageous: “For homeowners, locking your monthly payments for a period of time can save money and help households better plan for the future.”

30 December: Nationwide: Average UK Property Price Hits Record

• Typical British home surges to record high £254,822 
• Annual house price growth at 10.4% in December
• 2021 strongest year for property prices since 2006
• Wales top performing region in past 12 months

The price of an average UK home hit a record level of £254,822 this month, according to the latest data from Nationwide building society.

It has reported that the price of a typical British home rose by 10.4% in the 12 months to December 2021, an increase of nearly £24,000 over the past year. 

Nationwide said that this made 2021 the strongest calendar year for UK house price growth since 2006.

With its house prices up 15.8% year-on-year, Wales ended 2021 as the top performing region. Nationwide started producing regional data nearly 50 years ago and said this was the first time Wales had come out on top during this period.

Northern Ireland recorded annual price growth of 12.1%, while Scotland, with 10.1%, was in line with the average UK figure.

The South-West was the strongest performing English region, with annual growth of 11.5%. Nationwide said London, which recorded a figure of 4.1%, was the weakest performing region in the UK.

London was also the only region to experience lower annual price growth this year compared with 2020, when it recorded a figure of 6.2%.

Sustained demand

Robert Gardner, Nationwide’s chief economist, said: “Demand has remained strong in recent months, despite the end of the stamp duty holiday at the end of September. The stock of homes on the market has remained extremely low throughout the year, which has contributed to the robust pace of price growth.”

Mr Gardener predicted that the UK housing market is likely to slow next year. “The stamp duty holiday encouraged many to bring forward their house purchase in order to avoid additional tax. The Omicron variant could reinforce the slowdown if it leads to a weaker labour market.

“Even if wider economic conditions remain resilient, higher interest rates are likely to exert a cooling influence. Indeed, house price growth has outpaced income growth by a significant margin over the past 18 months and, as a result, housing affordability is already less favourable than before the pandemic struck.

“However, the outlook remains extremely uncertain. The strength of the market surprised in 2021 and could do so again in the year ahead.”

Zoopla: Average UK Property Price Hits Record Level

• Average British home worth a record-breaking £240,800
• UK housing stock valued at £9.5 trillion
• Regional buyer demand currently highest in the East and West Midlands

The average UK house price rose to a record level in November 2021, having increased by £16,000 over the past year, according to Zoopla.

The property portal said annual house price growth stood at 7.1% for the 12 months to November, making the average home worth £240,8000. It estimated around a fifth of the UK’s private housing stock increased by more than £35,000 over the past year.

The company said an increase in the buying and selling of homes this year has resulted in the value of UK housing rising by £670 billion to £9.5 trillion. It added that more people moved into a new property in June than in any other month since 2005, when records began for this data.

Zoopla said buyer demand shaped the UK property market in 2021, with levels running on average nearly 16% higher than last year. Levels are currently running highest in the East Midlands, West Midlands and Yorkshire where the figures are up by 42%, 35% and 28% respectively on 2020.

Grainne Gilmore, Zoopla’s head of research, said: “This year has been a record year for the market, with the stamp duty holiday and the pandemic-led ‘search for space’ among homeowners resulting in the highest number of sales since before the financial crisis.

“However, such a busy market eroded the number of homes available to buy, as properties were being snapped up so quickly. This imbalance between demand and supply has put upwards pressure on prices. This uplift in equity may act as a spur for more households to consider a move in 2022.”

• The UK’s property price hotspot is Mountain Ash, in Rhondda Cynon Taf in Wales, where average asking prices in the area jumped by 31% over the year, according to the property website Rightmove.

Rightmove said the average asking price for a home in Mountain Ash is £137,200 this year, compared with £104,431 12 months ago.

Rightmove added that, with an increase of 10.5%, Wales tops the tables as this year’s regional property price hotspot. This was followed by the South West and South East of England at 9.6% and 9.1% respectively.

Bank Of England Raises Interest Rates To 0.25%

The Bank of England (BoE) has raised UK interest rates to 0.25%, following yesterday’s sharp rise in the inflation figure and against a backdrop of a surge in the Covid-19 Omicron variant.

This will see tracker mortgage rates increase. The news will also mean dearer mortgages for customers with standard variable rate home loans if their lenders choose to pass on the increase. 

At its last rate-setting meeting of 2021, the central bank’s Monetary Policy Committee (MPC) voted 8-1 to raise the rate from its historic low of 0.1% by 0.15 percentage points. The rise is the first increase in more than three years.

Speculation had been rife earlier this autumn that the BoE would hike interest rates before the year-end to head off an upward trajectory in the UK’s inflation rate. 

The latest inflation figure, reported on 15 December, showed that the cost of living grew by 5.1% in the 12 months to November, its highest level in over 10 years. Inflation now stands at well over double the BoE’s 2% target level, as set by the government. 

Taken by surprise

The MPC’s decision to dampen down the UK’s overheating economy took many City commentators by surprise.

The BoE said: “The labour market is tight and has continued to tighten, and there are some signs of greater persistence in domestic cost and price pressures.” 

It added that: “Although the Omicron variant is likely to weigh on near-term activity, its impact on medium-term inflationary pressure is unclear at this stage.”

Hinesh Patel, portfolio manager at Quilter Investors, said: “The BoE clearly feels vindicated to raise interest rates just before Christmas. Given high, and rising, inflation, in part a result of the BoE’s communication mis-steps creating a de-facto weaker sterling policy, it clearly felt it could no longer stay on the accelerator pedal despite the risks that are now out there in the economy.”

Nicky Stevenson, managing director at estate agents Fine & Country, said: “After wrong-footing the markets last month, rate-setters have decided that further inaction risked fuelling inflation and jeopardising the economic recovery.

“Such a minor increase isn’t going to impact the property market significantly. Currently, more than three-quarters of homeowners are locked into fixed rate deals, so will be unaffected for the time being,” she added.

The next Bank of England rate announcement is due on 3 February 2022.

ONS: UK House Price Inflation Slows To 10.2%

• Annual rate of house price inflation at 10.2% in October
• Average cost of a UK home at £268,000 
• London shows slowest annual growth at 6.2%

Property values in October were more than 10.2% higher than the same month a year ago,  according to figures from the Office For National Statistics (ONS). 

The annual rate of inflation slowed from 12.3% in the year to September, and reflects the first month there has not been a stamp duty incentive in any part of the UK. However, property values were still £24,000 more expensive on average than in October 2020.

Wales saw the steepest increase with average property values 15.5% up on last year at £203,000. In Scotland, prices rose by 11.3% over the year to reach an average £181,000. 

Property values in Northern Ireland saw the next steepest annual increase at 10.7% putting the average cost of a home at £159,000, while England saw the slowest UK growth at 9.8%. Property in England is still the most expensive however, at an average £285,000. 

London saw the slowest growth at 6.2%.

However, the housing market is looking less certain for 2022, according to Miles Robinson, head of mortgages at online broker Trussle, in the face of ‘a difficult winter for household finances in general’.

He said: “Families are facing a steep rise in energy bills and an increase in the general cost of living. This squeeze in consumer spending will almost certainly impact people’s ability to save for deposits and ultimately move home.  As such, we could well see house price growth begin to stall.”

Separate figures published by the ONS today show that the annual rate of inflation, as measured by the Consumer Prices Index, has also risen to 5.1%. This is more than double the Bank of England’s target of 2% and marks the highest level in the last decade. 

Soaring inflation has been largely driven by the rising cost of fuel, as well as food, clothing and household energy bills. It also increases the likelihood of the Bank of England putting up interest rates when it announces its latest decision tomorrow.

Robinson at Trussle added: “While it may seem small, an interest rate rise of just 0.25%, which is a likely scenario, could add £324.48 onto the average mortgage per year.”

14 Dec: Bank Of England Mulls Removing Mortgage Affordability Test

• UK’s central bank to consult on scrapping mortgage eligibility stress test
• Relaxation of rules would potentially benefits thousands of first-time buyers

The Bank of England (BoE) is to consult next year on the suitability of the UK’s existing mortgage affordability tests.

Stringent lending rules were imposed on borrowers seven years ago, in the wake of the 2008 financial crisis, to prevent a potential property crash from damaging the UK economy.

The rules restricted the number of mortgages that banks could offer at high loan-to-income ratios. In effect, these limited most home loans to no more than 4.5 times a potential customer’s income (or joint income in the case of combined mortgage applications).

At the same time, affordability checks were also introduced designed to stop customers from building up excessive debt. This meant that would-be borrowers had to be able to show that they could still afford their mortgage repayments if interest rates rose by three percentage points.

Latest analysis from the BoE shows that mortgage debt to income has stabilised since the measures were brought in, suggesting that the restrictions protect against an increase in household indebtedness.

As a result, the BoE has revealed that it is now considering removing the affordability stress test element of the mortgage application procedure. It said it will set out a consultation on reforming the existing lending rules early in 2022. 

BoE governor, Andrew Bailey, said that dispensing with the affordability requirement should not be thought of as a relaxation of lending standards because the 4.5x income rule was the main filter against riskier lending. 

According to officials, removing the affordability test would make the overall rules  “simpler and more predictable”.

Miles Robinson, Head of Mortgages at online mortgage broker Trussle, comments: “There have been reports that the BOE may be imminently about to change lending rules, making it easier for borrowers to take out larger loans. Many lenders will currently only allow buyers to borrow approximately 4.5 times their salary. But, this could be extended to 6-7 times their yearly earnings.”

“These changes should be approached with an air of caution. The rules are in place to protect homeowners from any volatility that can come from interest rate rises. However, soaring house prices mean that younger buyers on average have to save for 10 years to secure the large deposits that are typically needed to access the housing market. As such, relaxing the rules just slightly could enable hundreds of thousands of first time buyers to own their own home much more quickly.”

13 Dec: Rightmove Reports Further House Price Falls Amid Near-Record Lending In 2021

• Average UK asking price stood at £340,167 in December, down 0.7% month-on month
• 2021 saw highest number of home sales for 14 years
• Amount of fully available housing stock for sale hit record low in December

Average UK property prices fell by 0.7% in December 2021, the second slight dip in consecutive months according to the latest data from Rightmove.

The property portal’s house price index showed that the average asking price of properties coming to market stood at £340,167 this month. This was £2,234 lower than November’s average, which itself was 0.6% down compared with the figure recorded a month earlier.

Rightmove attributed December’s dip to seasonal factors, adding that average house prices over the past 12 months had risen by 6.3%

With two months of sales data yet to be reported, Rightmove said 2021 had already recorded the highest number of completed home sales since 2007. It predicted that the total figure for this year will be around 1.5 million.

According to Rightmove, the amount of fully available housing stock for sale hit a record low in December. The portal added that valuation requests were up 19% on the same time a year ago, suggesting more people will be making a new year resolution to move.

Around the regions, average property prices in the West Midlands performed best by bucking December’s decline and recording a rise of 1.6% during the month. In contrast, average prices for Scotland fell 3.5% in the same period.

Tim Bannister, Rightmove’s director of property data, said: “While the pandemic is still having an ever-changing impact on society as we head into the new year, we expect a housing market moving closer to normal during the course of 2022. A return to a less frenetic market due to more choice, and forecast slightly higher interest rates, will suit many movers who have held back during the last 18 hectic months.”

Rightmove’s forecast ties in with that from trade association UK Finance, also published today. It suggests that, while an estimated £316bn in mortgage lending has been advanced by banks and building societies in 2021 (up 31% on 2020 and the highest since before the global financial crisis in 2007), lending will ‘moderate’ in 2022 to £281bn due to factors such as the end of the stamp duty holiday. 

However, UK Finance forecasts that gross mortgage lending will increase again to £313bn in 2023 due, in part, to a post-pandemic resurgence in homemover numbers. 

7 December: Halifax: House Prices Continue On Relentless Upward Climb In November

• Average cost of UK property hits a new record high of £272,992
• Prices in November 8.2% higher than 12 months ago
• Wales leads the charge with 14.8% annual house price inflation, and cost of average home breaking £200,000  

UK house prices climbed by 1% in November compared to the previous month, according to the latest House Price Index from Halifax, reaching a new high of £272,992.

It marks the fifth consecutive month that average house prices have risen, with typical values more than £20,000 higher than last year. Prices have risen by £33,816 (or £1,691 a month) since the first lockdown in March 2020, and stand £13,000 higher the summer (June). 

While first-time buyer properties were priced 9.1% higher in November than 12 months ago (compared to 8.8% for homemovers), annual gains (at 6.6%) were slower for detached properties. This could suggest the ‘race for space’ is becoming less prominent than earlier in the pandemic, according to Russell Galley, managing director at Halifax.

He said that, overall, the buoyant market continues to be driven by a shortage of properties, a strong labour market, and competition among mortgage lenders to produce the best deals amid the continued low-interest rate environment.

Regional breakdown

Wales remains the strongest performing region by far for UK house prices, with annual house price inflation of 14.8%. The value of the average Welsh property also broke the £200,000 barrier for the first time in history in November, at £204,148. 

Northern Ireland continued to post double-digit annual growth at 10%, with an average house price of £169,348.

House prices also continued to rise in Scotland, with the average property now costing 8.5% more than last year at a current £191,140. Again, this is the most expensive on record. 

While up on October’s figure, London continues to lag behind the rest of the UK posting annual inflation of just 1.1%. However, at average house prices of £521,129, the capital is still by far the most expensive area of the UK.

Tougher times ahead

However, Halifax does not expect the current level of house price growth to continue into 2022, given that ‘house price to income ratios are already historically high, and household budgets are only likely to come under greater pressure in the coming months’.

Mr Galley said: “Looking ahead, there is now greater uncertainty than has been the case for quite some time, with interest rates expected to rise to guard against further increases in inflation.

“Economic confidence may also be dented by the emergence of the new Omicron virus variant, though it remains far too early to speculate on any long-term impact, given insufficient data at this stage, not to mention the resilience the housing market has already shown in challenging circumstances.”

Miles Robinson, head of mortgages at online broker Trussle agreed that, while it’s positive that house prices and demand remain strong as 2021 comes to a close, caution should be exercised as we enter what looks to be a ‘difficult winter for household finances’.

He said: “Families are facing a steep rise in energy bills and an increase in the general cost of living. People’s thoughts are also beginning to turn towards a possible rise in interest at the end of this year.

“While it may seem small, an interest rate rise of just 0.25%, which is a likely scenario, could add £324.48 onto the average mortgage each year. As such, now is a good time for people to start looking at their outgoings, and mortgages are the perfect place to start.”

1 December: Nationwide Sees House Prices Edge Higher, Cites Uncertain Outlook

• Annual house price growth 10.0%, up from 9.9% in October.
• Seasonally adjusted prices up 0.9% month-on-month
• House prices 15% above March 2020 levels

Nationwide, the world’s largest building society, has recorded double-digit annual house price growth for November in its latest House Price Index, out today.

It logged a 10.0% rise, a wafer higher than the 9.9% it recorded in October. 

Prices rose 0.9% month-on-month once seasonal effects were discounted. It says house prices are now almost 15% above the level prevailing in March last year, when the pandemic struck the UK and the housing market was locked down for two months.

Robert Gardner, the society’s chief economist, says the impact of the Omicron strain of coronavirus is uncertain: “A number of factors suggest the pace of activity may slow. It is unclear what impact the new variant will have on the wider economy. 

“While consumer confidence stabilised in November, sentiment remains well below the levels seen during the summer, partly as a result of a sharp increase in the cost of living. Moreover, inflation is set to rise further, probably towards 5% in the coming quarters.

“Even if economic conditions continue to improve, rising interest rates may exert a cooling influence on the market. House price growth has been outpacing income growth by a significant margin and, as a result, housing affordability is already less favourable than was the case before the pandemic struck.”

The Bank of England will announce on December 16 whether it will increase the Bank rate, which heavily influences mortgage borrowing rates, from its current historic low of 0.1%.

The Bank wrong-footed the market in November by holding the Bank rate steady, which prompted many market watchers to predict that the Monetary Policy Committee would back a rate rise later this month. But with the economic impact of Omicron uncertain, forecasters are now on less solid ground.

On Monday, the Bank said mortgage borrowing in October had fallen to its lowest level since July (see story below).

Mr Gardner said there have already been some signs of cooling in housing market activity in recent months: “The number of housing transactions were down almost 30% year-on-year in October. But this was almost inevitable, given the expiry of the Stamp Duty holiday at the end of September, which gave buyers a strong incentive to bring forward their purchase to avoid additional tax.”

Any negative sentiment plays against the buoyancy the market has exhibited thus far in 2021. Mr Gardner added: “The number of housing transactions so far this year has already exceeded the number recorded in 2020, with two months (of data) still to go. We are tracking close to the number seen at the same stage in 2007, before the global financial crisis struck.”

Nationwide says underlying housing market activity appears to be holding up well, with the number of mortgages approved for house purchases in October running above the 2019 monthly average. 

It says early indications suggest labour market conditions remain robust, despite the furlough scheme finishing at the end of September.

Miles Robinson at our online mortgage partner Trussle, commented on the Index: “While it’s positive that house prices remain strong, we must face up to what looks to be a difficult winter for household finances. Families are facing a steep rise in energy bills, as well as an increase in the general cost of living.

“People’s thoughts are beginning to turn towards a possible rise in interest rates at the end of this year. While it may seem small, an interest rate rise of just 0.25%, which is a likely scenario, could add £324.48 onto the average mortgage per year*. As such, now is a good time for people to start looking at their outgoings, and mortgages are the perfect place to start.

“Most homeowners have one, but many don’t understand just how much they could be overpaying by not having the right product for them. You could potentially save thousands of pounds per year by switching.”

* Trussle quotes a monthly repayment amount of £921.91 for a £224,400 mortgage with an interest rate of 1.73%. If the interest rate rose by 0.25 percentage points to 1.98%, the monthly repayment would be £948.95, an increase of £27.04, or £324.48 a year.

29 November: Mortgage Borrowing Plummets In Wake Of Stamp Duty Change

• Mortgage borrowing stood at £1.6 billion in October, the lowest since July 2021
• Mortgage approvals for house purchase fell to 67,200 in October from 71,900 in September

Figures out today from the Bank of England show a steep decline in mortgage borrowing in October to £1.6bn. This compares to £9.3bn in September and is the lowest since last July, when a net amount of £2.2bn of mortgage debt was repaid.

According to the Bank, October’s decrease was driven by borrowing being brought forward to September to take advantage of stamp duty land tax relief before it completely tapered off in England at the end of the month.

Approvals for house purchases fell to 67,200 in October, from 71,900 in September. This is the lowest since June 2020, and is close to the 12-month average up to February 2020, before the onset of coronavirus lockdowns. of 66,700. 

The Bank sees approvals as an indicator of future borrowing, suggesting that the market is cooling following the end of the stamp duty holidays in the UK, although other economic factors may be at play given rising inflation and the prospect for higher interest rates as early as next month.

Approvals for remortgaging rose slightly to 41,600 in October (the Bank’s data only captures those remortgaging with a new lender). This is the highest since March 2020, when it stood at 42,700, although it is well down on the 12-month average up to February 2020 of 49,100.

Distortive effect

Commenting on the figures, Lucian Cook, head of residential research at estate agent Savills, said: “There is no great surprise to see a fall in the number of mortgage approvals in October given the distortive effect of the end stamp duty stamp duty holiday in September.   

“In the year to the end of September, we saw total spend in the UK housing market exceed £500bn for the first time ever to £513bn. This represents an increase of £170bn on pre-pandemic levels, a reflection of three key factors: the so-called race for space as people looked to trade up the housing ladder, the cheap cost of mortgage finance, and the added impetus provided by the stamp duty holiday. 

“Activity in the more expensive price brackets continues to hold up strongly, so we expect to see a higher than normal spend in 2022. That said, it’s difficult to see how spending next year can match the extraordinary levels of late across the market as a whole without such a mix of strong drivers.  

“This supports our expectation that house price growth will slow to 3.5% next year.”

23 November: HMRC sees October property transactions October halve on September

• Provisional number of UK property sales in October 52% lower than September
• Large drop-off is due to ‘forestalling’ as buyers rush to meet the end of stamp duty holiday deadline
• Property transactions 28.2% under mid-lockdown levels recorded in October 2020

The provisional number of residential property transactions (seasonally adjusted) in October 2021 stood at 76,930, which is a staggering 52% less than September, and 28.2% lower than October last year.

The new figures are according to HMRC’s latest monthly data which estimates property transactions on homes worth over £40,000 (where stamp duty usually becomes payable).

The large drop in transactions is due to the end of the stamp duty holiday (a temporary increase in the nil rate band) which, in England and Northern Ireland, fell at the end of September. In Scotland and Wales, the end of the equivalent property tax breaks ended on 31 March 2021 and 30 June 2021 respectively.

Sarah Coles, personal finance analyst, Hargreaves Lansdown, said: “The monthly drop looks spectacular, as sales almost halved, but this was from an enormous peak, created by the final stamp duty holiday deadline. A major chunk of sales we would otherwise have expected this winter, were rushed through in time for the deadline at the end of September.

Paul Stockwell, chief commercial officer at Gatehouse Bank, added: “Transactions plummeted similarly after June’s stamp duty deadline, so it’s not surprising to see them fall in this way again. With the tax incentive now completely removed, we’ll see the back of these peaks and troughs as transactions settle into a more consistent pattern. House sales will likely return to the historic norms seen before the pandemic as the cost of moving becomes a factor again.” 

17 November: House price inflation edges 12%, average value £270,000

• UK average house prices increased by 11.8% over the year to September 2021, up from 10.2% in August
• Average UK house price was at a record high of £270,000 in September 2021, which is £28,000 higher than this time last year
• Average house prices increased over the year in England to £288,000 (11.5%), in Wales to £196,000 (15.4%), in Scotland to £180,000 (12.3%) and in Northern Ireland to £159,000 (10.7%)
• London continues to be the region with the lowest annual growth (2.8%) for the tenth consecutive month

Figures out today from the Office for National Statistics reveal that average UK house prices soared by 11.8% in the year to September, with demand fuelled by the end of the tapered Stamp Duty holiday in England. Until 30 September, the nil rate band stood at £250,000. It reverted to £125,000 on 1 October.

The UK average house price for September 2021 was a record high of £270,000, up from £263,000 in August 2021 and £242,000 a year previously. September’s figure is £6,000 higher than the previous record seen in June 2021.

Miles Robinson at Trussle, our online mortgage partner, commented on the latest figures, published on the same day the ONS revealed that the cost of living rose by 4.2% in October: “The Stamp Duty holiday incentivised buyers to accelerate their moving plans in order to save up to £15,000 in costs. As such, house price growth leading up to September was incredibly strong. 

“But, while the market remained buoyant because of this, the months ahead will likely be more difficult as buyers may start to view the market with caution. We have already seen the much publicised sub-1% mortgage deals begin to disappear, and a rise in interest rates is certainly on the cards.

“Alongside this, it looks set to be a difficult winter for household finances. Families are facing a steep rise in energy bills and an increase in the general cost of living. This squeeze in consumer spending will almost certainly impact people’s ability to save for deposits and ultimately move home. But, for those staying put, now could be a good time to remortgage, as rates remain competitive.”

According to the ONS, all UK nations experienced strong price growth in the year to September, with the average prices/percentage increases as follows:

• England – £288,000 / 11.5%
• Wales – £196,000 / 15.4%
• Scotland – £180,000 / 12.3%
• Northern Ireland – £159,000 / 10.7%.

London continues to be the region with the lowest annual house price growth in September at 2.8%, down from 6.7% in August 2021. This represents the lowest annual growth in London since July 2020. However, the capital’s average house price remains the most expensive of any region in the UK at £507,000.

The North East of England continued to have the lowest average house price, at £153,000.

15 November: Rightmove – ‘Full house’ as October prices hit record levels across all regions and buyer types in the same month

• Average asking prices in October up 1.8% to £344,445
• ‘Full house’ with record price levels across all regions and buyer types
• Continued supply shortage pushing up prices

Asking prices of property coming to market increased by 1.8% (+£5,983) in October on the previous month, marking the biggest seasonal jump since October 2015.

Last month also saw a ‘full house’ for first time since March 2007, according to Rightmove’s latest house price index. This means that price records were reached across all regions of Great Britain and for all sectors of buyers – namely first-time, second-stepper and top-of-the-ladder.

The number of sales agreed was up 15.2% in September, versus 2019, which was the was the last ‘normal market’ comparison, said Rightmove.

Director of property data, Tim Bannister, said: “Competition for property for sale remains hot this autumn, with average prices jumping by almost £6,000 in the month.

“Although more properties are coming to market, the level is still not enough to replenish the stock that’s being snapped up. Consequently, new price records have been set across the board, with every region of Great Britain and all of the three market sectors.”

He added that the ‘full house’ is an ‘extremely rare’ event, seen for the last time since March 2007.

Property stock shortages – which began after the first lockdown – look set to continue against the backdrop of a strong housing market, said Bannister, while fixing in a mortgage rate before rates rise is proving an additional incentive.

11 November: Parents Mull Buy-To-Let To Help Children At University

Two-thirds of parents would consider investing in a buy-to-let property near their child’s university to help with living costs while they are away from home. And over half (53%) would consider downsizing to help their children financially through their student years.

These are two key findings from a new report from Trussle, our mortgage broker partner.

Rents from properties in university locations can be significantly higher, and rates of occupancy more sustained, than in non-student locations, making investment an attractive proposition for property investors. 

Mortgage requirements

Many would-be buy-to-let landlords, especially those entering the market for the first time, will need to take out a special mortgage to fund the purchase. These usually require the annual rental income to exceed the mortgage due for the period by a significant amount – say, by 25% – to cover the risk of tenants defaulting and the property being vacant for lengthy so-called ‘void’ periods.

Additionally, the interest charged may be higher than for normal residential mortgages because of the risks involved.

The picture for parents seeking accommodation for their student offspring is complicated by the fact that standard buy-to-let mortgages exclude tenancies involving close relatives. This is because of the expectation that the landlord will not charge a realistic amount of rent or will be more forgiving on any non-payments.

However, a limited number of lenders offer ‘family’ buy-to-let deals that allow children to occupy the property. But in such cases, the borrower may need to demonstrate that they have sufficient earnings to cover the mortgage themselves – or their child’s part of it, in cases of multiple tenancy.

It’s also worth noting that buy-to-let mortgages are arranged on an interest-only basis, meaning the capital debt will need to be cleared in one go at the end of the term. That could mean using the proceeds of a property sale or finding the funds elsewhere.

All buy-to-let purchasers also pay higher rates of stamp duty or land tax on the purchase price. And multiple tenancy landlords are required to be licensed so they can be monitored for the standard of accommodation provided.

But Trussle says that rents from student buy-to-lets consistently outstrip the rest of the domestic rental market by 18%, making them an attractive long-term proposition for parents who may continue letting them out after their child has graduated.

Miles Robinson at Trussle said: “It’s true that buy-to-lets aren’t the bargain that they once were. Changes to tax and the Stamp Duty Surcharge have impacted returns, which made rental the king of investments, leading to a peak in popularity during 2007.

“However, this new data shows that property is still seen as a safe and reliable way of generating extra income. This can be both in the short-term, through rent collection, and long-term gains in house prices. In addition, the low interest climate means would-be landlords can lock-in a competitive buy-to-let mortgage.”

For those contemplating a buy-to-let property in a university town, Trussle identified the top towns and cities that offer the best rental yields. It used data from Zoopla and the Times Higher Education guide to calculate the property prices and rental yields in the top 30 universities across the UK.

Top 5 Rental Yields Among Top 30 UK Universities

The research also revealed the UK’s cheapest university towns to purchase a buy-to-let property. Belfast (Queen’s University) topped this list with an average house price of £152,175.

Cheapest University Locations To Purchase Buy-To-Let Property

For its research, Trussle interviewed 2,000 homeowners with children and examined house prices across 30 popular university towns and cities postcodes in the UK, using Zoopla. The top 30 universities used in the release were determined using the Times Higher Education Guide.

5 November: Halifax Sees Annual House Price Inflation Hit 8.1% 

• Average UK property price in October £270,027
• Annual price inflation 8.1%, up from 7.4% in September
• Wales, Northern Ireland and Scotland outperform UK average

The upward trajectory of house prices continued in October, according to Halifax’s latest house price index. The cost of an average UK property increased by 0.9% last month – more than £2,500 – marking the fourth consecutive monthly rise.

Annual inflation for October stood at 8.1%, which is the highest rate the mortgage lender has recorded since June. At just over £270,000, the cost of an average UK home is now £31,516 (13.2%) more expensive than in the first lockdown in April 2020.

Russell Galley, managing director at Halifax, explained: “One of the key drivers of activity in the housing market over the past 18 months has been the ‘race for space’, with buyers seeking larger properties, often further from urban centres. Combined with temporary measures such as the cut to Stamp Duty, this has helped push the average property price up to an all-time high of £270,027.”

Mr Galley added that the performance of the economy continues to provide a “benign backdrop” to housing market activity. He said the labour market was “outperforming expectations through to the end of furlough, with the number of vacancies high and rising relative to the numbers of unemployed.”

While the Bank of England opted to keep interest rates on hold yesterday, it’s still expected to increase base rate by the end of this year to tame risks of rising inflation, while further hikes are likely in 2022. As a result, Halifax expects house buying demand to cool in the months ahead as the cost of mortgages increases. 

That said, borrowing costs will still be low by historical standards and raising a deposit is likely to remain the primary obstacle for many.

Record growth

Miles Robinson at our mortgage partner Trussle commented: “Over the past year, house prices have seen record growth, as government support helped keep the market buoyant during lockdown. While it’s positive that house prices remain strong, we must face up to the fact that activity in the market will likely slow in the coming months, and as a consequence we could see house prices begin to dwindle.

“A rise in inflation is on the cards and any increase will almost certainly trigger a corresponding spike in interest rates. As such, in contrast to previous months, buyers will likely begin to take a more cautious view of the market until they have more clarity on any potential rate rises.

“Alongside this, it looks set to be a difficult winter for household finances. Families are facing a steep rise in energy bills as well as an increase in the general cost of living. This squeeze in consumer spending will almost certainly impact people’s ability to save for deposits and ultimately move home.

“For existing homeowners who are on a standard variable rate or who are nearing the end of their mortgage term, now is the perfect time to lock-in a long-term deal at a good interest rate. While many of the much publicised sub 1% interest rate deals have started to quietly disappear, this is likely the lowest level they will reach.”

Wales remains the strongest performing region in the UK, according to Halifax, with annual house price inflation of 12.9% (average house price of £198,880), while London remained by far the weakest performing area, with prices just 0.8% higher than this time last year.

4 November: Relief for borrowers as Bank rate stays at 0.1% – for now

The Bank of England said today that its Bank base rate will remain at 0.1% at least until 16 December, when the next announcement is due. Its Monetary Policy Committee, which decides the rate, voted 7-2 on Tuesday to keep it at its current record low, where it has been since March 2020.

There has been widespread speculation that the base rate will rise sooner rather than later in a bid to keep a lid on rising prices – inflation is currently running above 3%, with the official target at 2%. But the Bank is conscious that any increase would filter through to the cost of borrowing, heaping pressure on millions of mortgage customers and potentially threatening the post-Covid economic recovery.

That said, many lenders have priced-in a base rate increase to the deals they are currently offering. And the Bank itself has said that base rate might hit 1% by the end of 2022 in response to inflationary pressures such as soaring wholesale energy prices.

You can use our interactive rates calculator to find deals for your exact requirements.

Commenting on today’s announcement, Dan Boardman-Weston at BRI Wealth Management, said: “Many were expecting a hike today in the face of rising inflation, but the decision is quite finely balanced. Economic growth is showing signs of weakening and a lot of the inflationary pressures that the economy is seeing are global in nature and likely to be transitory.

“We’d expect to see some small movements higher over the coming months but the Bank is unlikely to make significant changes given slower growth, the threat of Covid resurgence and the transitory nature of this inflation. We continue to believe that interest rates will stay low in a historic context and that the Bank will be cautious about aggressively responding to this bout of inflation.”

3 November: Nationwide sees average property value top £250,000 for first time

• Average UK house prices in October bust £250,000 mark for first time
• Annual house price growth stands at 9.9%
• Outlook for property market ‘extremely uncertain’

Average house price growth in the year to October pushed ahead at 9.9%, according to figures from Nationwide published today – just marginally lower than the 10% recorded in September.

Monthly growth was recorded at 0.7%, taking seasonality into account, compared to 0.2% in September.

The latest boost pegs the cost of an average home in October at £250,311 compared to £248,742 in September.This marks a £30,728 price rise since the start of the pandemic in March 2020 – as well as the first time average values have passed the £250,000 mark in the history of the lender’s house price index.

Robert Gardner, Nationwide’s chief economist said: “Demand for homes has remained strong, despite the expiry of the stamp duty holiday at the end of September. 

“Indeed, mortgage applications remained robust at 72,645 in September, more than 10% above the monthly average recorded in 2019. Combined with a lack of homes on the market, this helps to explain why price growth has remained robust.”

However, Mr Gardner added that the outlook for the property market remained “extremely uncertain”. Consumer confidence has weakened in recent months, while the growing likelihood of a rise in interest rates could exert a cooling influence on the market, he said.

It also remains to be seen how the wider economy will respond to the withdrawal of government support measures.

Miles Robinson, head of mortgages at our broker partner, Trussle, commented: “While house price growth is continuing to exceed expectation, it may well start to stutter as inflation and potential interest rate rises could mean buyers begin to be more cautious in the months ahead.”

He added that now could be a good time to lock in a competitive interest rate with a fixed term mortgage: “A high interest rate can increase monthly repayments significantly, but many lenders are still offering sub-1% interest rates on mortgage products. This may not last, however, with the Bank of England signalling that a rate increase is imminent, so acting quickly is vital.”

Unsatisfied demand

Guy Gittins, CEO of estate agents Chestertons, said: “Buyer demand remains unsatisfied and properties are going under offer increasingly faster.

“In October we witnessed a 22% uplift in the number of offers being made and a 26% increase in agreed sales compared to September. The sustained demand is reducing the supply of properties for sale, which in turn is driving prices higher. This is providing further motivation for people to move before the house they want to buy becomes more expensive. 

Mr Gittins said buyer enquiries normally tail off in the latter months of the year, but they are in fact increasing: “At the end of last month, we recorded our highest ever number of new buyer enquiries at this time of year, which was 18% higher than this time last year when. We saw demand being driven by buyers who didn’t manage to agree a deal within the Stamp Duty holiday timeframe and those who put their search on hold during the summer break.

“Looking ahead, we expect the anticipated small increase in interest rates (likely to be announced tomorrow), to spur more buyers to finalise their property search sooner rather than later in order to benefit from the currently more favourable rates.” 

21 October 2021 – HMRC property transactions

• Property transactions soared in September 2021, up 67% from August
• September’s figure almost 70% higher compared with the same month in 2020

UK property transactions rose sharply in September 2021, with seasonally adjusted figures up 67.5% month-on-month to 160,950, according to the latest data from HM Revenue & Customs (HMRC).

HMRC said September’s figure was also 68.4% higher than the one recorded for the corresponding month in 2020. It estimated the provisional, non-seasonally adjusted figure for UK residential transactions in September 2021 at 165,720.

In September, the government brought to an end the temporary Stamp Duty Land Tax holiday in England and Northern Ireland that had been in place since July 2020. The measures incentivised buyers as they looked for properties with greater indoor and outdoor space on the back of the coronavirus pandemic.

Lawrence Bowles from the estate agents Savills said: “As if this year hasn’t been enough of a rollercoaster already, transaction figures released this morning show 166,000 homes changed hands in September. That’s 63% higher than the 2017-19 average.

“There’s more to this activity than a stamp duty holiday… record-low mortgage rates, desire for more space and a core of unmet pent-up demand all continue to push up transaction volumes.”

20 October: ONS House Price Index Charts +10% Rise

• Average UK house price up 10.6% in year to August
• Average UK property now worth £264,244
• Annual price growth strongest in Scotland at 16.9%

Average UK house prices increased by 10.6% in the year to August 2021, up from 8.5% recorded a month earlier, according to the UK House Price Index from the Office of National Statistics (ONS).

The ONS said the average price of a UK property stood at £264,244 in August this year. This compares with £256,000 a month earlier.

At country level, the ONS said Scotland, at 16.9%, recorded the largest annual house price growth in the year to August 2021. This compared with 12.5% in Wales and 9.8% in England to the same date.

Regionally, around England, annual house price growth was highest in the North East where prices increased by 13.3% to August. This was followed by 12.4% in the North West and 11% in the West Midlands. 

London registered the lowest regional price growth over the past 12 months to August at 7.5%. 

However, this figure was more than three times greater than the 2.2% it recorded to July this year, prompting Lucy Pendleton, property expert at estate agents James Pendleton, to describe the rise as “quite a jump. The capital has turned a corner and we expect the London market to now mount a charge.”

Nicky Stevenson at estate agent Fine & Country said: “Just when you thought it was safe to predict the end of the housing boom, you get another dramatic spike in prices. 

“This data captures the final surge of the stamp duty holiday as buyers put their foot back on the gas to complete transactions before the end of the Chancellor’s tax breaks.”

18 October: Rightmove House Price Index Sees Records Broken

• Records broken across all GB regions for first time in 14 years
• Average property price hits all-time high of £344,445
• Monthly average price increase of 1.8% is largest in six years

Average property prices rose to record levels across every region in Great Britain this month, the first time this has happened since March 2007, according to the latest data from Rightmove.

The property portal’s house price index shows that the average price of properties coming to market jumped on average by £5,983 in October 2021. Rightmove said the month-on-month rise of 1.8% is the largest since October 2015. 

The company added that the increase was down to “strong housing market fundamentals and a window of opportunity to buy before a potential interest rate rise”.

Rightmove also reported record average price rises for the month across all British regions as well as all market sectors, namely, first-time buyers, second-step property purchasers and so-called ‘top-of-the-ladder’ buyers. The last time this happened was in March 2007.

Tim Bannister at Rightmove said: “This ‘full house’ is an extremely rare event. 2021 has been the year of the power buyer, with those in the most powerful position to proceed quickly and with most certainty ruling the roost over other buyers who have to sell but have yet to come to the market.

“Buyers being able to prove they are mortgage-ready or have cash in the bank helps them get up the pecking order. While available stock for sale is still close to record lows, there are signs that this has stopped falling and is stabilising this month, so fresh new choice is slowly growing.”

14 October: Total value of homes in Britain ‘tops £9 trillion‘

At-a-glance:

• Combined value of Britain’s homes is £9.2 trillion
• Market value has risen by £550 billion in 12 months
• Average British home worth £50,000 more than in 2016

Britain’s homes had a total value of £9.2 trillion on the open market this summer, according to property portal Zoopla. It said the combined value of Britain’s 28.6 million residential homes increased by £550 billion in the past year.

Zoopla said this was due to “soaring buyer demand as a result of the pandemic-led ‘search for space’ as well as the stamp duty holiday”.

It calculated that the total value of Britain’s 23.5 million privately-owned homes was £8.2 trillion in July this year. Zoopla said around £6.6 trillion of this figure was equity, with outstanding debt accounting for around £1.6 trillion.

Britain has a further five million affordable homes worth around another £1 trillion.

According to Zoopla’s figures, the average British property has risen in value by £49,257 over the past five years. More than two-thirds of homes in each of 53 local authorities around Britain have risen by a figure greater than this amount.

Topping the list was Monmouthshire where, according to Zoopla, 88.2% of homes have risen by more than the average. This was followed by Hastings (83.1%) and Trafford (82.2%).

The total value of housing in London stood at £2.4 trillion in 2021 making it the most valuable region. Behind the capital came the South East of England (£1.7 trillion) and the East of England (£1 trillion).

In terms of rising values over a five-year period, Zoopla said that the South East of England had outstripped all other regions.

UPDATE 7 October 2021: Halifax reports record average UK property price 

• Average UK property price £267,587 highest on record
• Annual house price inflation up to 7.4%
• Prices in Wales and Scotland continue to outpace UK average 

Average UK property prices reached another record high last month, according to Halifax.

The bank’s monthly house price index shows the average property was valued at £267,587 in September 2021. This is a 1.7% increase month-on-month compared with August’s figure of nearly £263,000, itself a record. 

Halifax said the latest monthly rate of growth is the largest since February 2007. It added that year-on-year UK house price inflation was 7.4% in September, reversing a three-month downward trend.

Wales continues to outstrip any other area in the UK with average annual house price growth of 11.5%,. Scotland (8.3%) also outperformed the UK national average. The South West (9.7%) remains England’s strongest performing region, while the weakest was the South East (7%). 

Russell Galley, Halifax’s managing director, said: “While the end of the stamp duty holiday in England and a desire among homebuyers to close deals at speed may have played a part in these figures, it’s important to remember that most mortgages agreed in September would not have completed before the tax break expired. 

“This shows that multiple factors, including the ‘race for space’, have played a significant role in house price developments during the pandemic.”

Miles Robinson at online mortgage broker Trussle said: “With so little housing stock across the country, it is likely that momentum will continue, and the market will remain active in the coming months. 

“The race for space, coupled with many companies still allowing employees to work from home, means countryside locations in particular are continuing to be extremely popular.”

UPDATE 30 September 2021: Nationwide House Price Index

At-a-glance

• Average UK house price is £248,742 in September, down 0.1% from August
• Annual house price growth stands at 10%
• Wales is strongest performing region, up 15.3% year-on-year

House price growth in the UK slowed sharply to 0.1% month-on-month in September, down from the 2.1% recorded in August.

According to the Nationwide’s House Price Index (HPI), annual house price growth fell back to 10% this month, down from 11% in August. The lender said the average home is now valued at £248,742, about 13% higher than before the pandemic began in early 2020.

Nationwide reported Wales as the strongest performing region, with house prices up 15.3% year-on-year, the highest rate of growth since 2004. Next best was Northern Ireland (14.3%), followed by Yorkshire & Humberside (12.3%), then Scotland (11.6%).

Robert Gardner, Nationwide’s chief economist, said: “Annual house price growth remained in double digits for the fifth month in a row in September, though there was a modest slowdown to 10% from 11% in August.

“House prices have continued to rise more quickly than earnings in recent quarters, which means affordability is becoming more stretched. Raising a deposit remains the main barrier for most prospective first-time buyers. A 20% deposit on a typical first-time buyer home is now around 113% of gross income, a record high,” Gardner added.

Miles Robinson, head of mortgages at our online broker partner Trussle, said: “The Nationwide index certainly indicates that the market is starting to contract, which is to be expected as the stamp duty holiday finally draws to a close this month. The growth rate for this month was marginal, but house prices have still increased 10% year-on-year, and demand still significantly outweighs supply.

“With such little housing stock across the country, however, it is very likely that momentum will continue, and the market will remain buoyant for several months to come,” he added.

UPDATE 28 September 2021: House Price Inflation Hits Young And Low Paid In Tourist Hotspots – ONS

At-a-glance:

• Rising prices and rents forcing low earners away
• Hospitality sectors struggling to recruit staff
• North Wales, Devon and Yorkshire seeing high inflation

The Office for National Statistics (ONS) is warning that rising house prices and private rents in rural and coastal areas are increasingly pricing low-paid and young workers out of areas where they live.

It says this has implications for hospitality businesses in these areas because it leaves them unable to fill job vacancies.

The ONS reported that house prices in locations such as Conwy in North Wales (25%), North Devon (22%) and Richmondshire in the Yorkshire Dales (21%), each rose at more than three times the national rate in July 2021.

In addition, areas including the Derbyshire Dales, Powys and Eden in Cumbria each recorded house price rises of 10% or more every month between January and July 2021.

By contrast, the seven areas that each recorded house price falls during July were all in London, including City of London, plus the boroughs of Westminster, Lambeth, Camden, Islington, Lewisham and Newham.

According to the ONS, workers in tourist hotspots earn less on average than people who live there. As an example, it referred to residents in the Cotswolds in April 2020 who earned nearly 29% more than people who were employed in the area.

The ONS added that there were similar differences between the earnings of residents and workers in other tourist areas such as the Derbyshire Dales (27%) and Allerdale (24%) in the Lake District. 

For full-time employees, the median hospitality salary in April last year was £22,779, a figure that was 28% lower than the national average of £31.461.

The ONS also said that hospitality workers were the most likely to be furloughed during the pandemic. As a result, tourist hotspots were among the areas with the highest average furlough rates during this period.

The government’s furlough scheme, which protected millions of jobs during this period, is to close on 30 September.

UPDATE 28 September 2021 – Zoopla House Price Index

At-a-glance:

• Average UK house price stands at record high of £235,000
• Prices up 6.1% in year to August 2021
• Wales records highest regional annual price growth at 9.8% 

UK house prices reached a record high last month, with the average property worth £235,000 according to the house price index from Zoopla, the property portal.

Zoopla reported annual house price growth of 6.1% in the year to August 2021. It added that the property market is moving at its fastest pace in five years, with homes consistently going under offer in less than 30 days since May this year.

Having removed a full-blown stamp duty holiday from England and Northern Ireland at the end of June, the UK government withdraws its remaining framework of tapered stamp duty reliefs at the end of this month.

Despite the removal of these reliefs, which have translated into savings for homebuyers of up to £15,000 per property, Zoopla reported that there had been “little evidence of a change to buyer behaviour” in recent months and “no sign of a cliff-edge of demand”.

At a regional level, Wales recorded the highest house price growth at 9.8% over the past year to August, followed by Northern Ireland (8.4%). 

Annual price growth among the UK’s major cities was highest in Liverpool at 9.8% and Manchester (8.1%). In last place came London with growth of 2.2%. According to Zoopla, the average house price in the capital now stands in excess of £500,000.

Gráinne Gilmore, Zoopla’s head of research, said: “The demand coming from buyers searching for space, and making lifestyle changes after consecutive lockdowns, has further to run.

“Balancing this, however, will be the ending of government support for the economy via furlough, and more challenging economic conditions overall, which we believe will have an impact on market sentiment as we move through the fourth quarter of this year.”

UPDATE 21 September 2021 – HMRC property transactions

At-a-glance

• Property transactions rebound in August 2021 following July’s sharp decline
• August’s figure up 20% compared with the same month last year 

UK property transactions bounced back in August 2021, with seasonally adjusted transactions up 32% from the previous month to 98,300, according to the latest data from HM Revenue & Customs (HMRC). 

HMRC said August’s figure was also 20% higher than the one recorded for the corresponding month in 2020. It estimated the provisional, non-seasonally adjusted figure for UK residential transactions in August 2021 at 106,150.

August’s data followed a month that saw transactions plummet by more than 60%. 

This month, the government will bring to an end the temporary Stamp Duty Land Tax holidays in England and Northern Ireland that have been in place since July 2020. The measures have incentivised buyers as they looked for properties with greater indoor and outdoor space on the back of the pandemic.

Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “The property market was just pausing for breath in July, and set off again in August, albeit at a slightly less frenetic pace.”

“The withdrawal of most of the stamp duty breaks at the end of June meant buyers made a dash for the finish line, leaving a gap in July. However, August’s figures show that this was a temporary pause rather than a full stop,” she added.

UPDATE 20 September 2021 – Rightmove House Price Index

• Average price of properties coming to market hits all-time high of £338,462
• Market “stock starved” but supply and demand forecast to balance out this autumn
• The rise of the ‘power buyer’ continues

The national average asking price of newly marketed properties rose this month to an all-time high of £338,462, according to the latest data from property portal Rightmove.

Rightmove said fierce competition among buyers has continued against the backdrop of a record low number of properties for sale, with the high ratio of buyer demand to properties for sale resulting in a continued “stock starved” market.

It added that the rise of the ‘power buyer’, those who have already sold their own homes, have cash in the bank, or are first-time buyers with a mortgage agreed, shows no signs of stopping. 

Tim Bannister, Rightmove’s director of property data, said: “Competition among potential buyers to secure their next home is now more than double what it was this time in 2019.”

“Agents report that buyers who have yet to sell are being out-muscled by buyers who have already sold subject to contract. Proof that you are mortgage-ready, or can splash the cash without needing a mortgage, will also help you to get the pick of the housing crop,” he added.

The property portal said there were signs that supply and demand for properties could start to balance out this autumn. The number of new listings posted on Rightmove in the first two weeks of September was 14% higher compared with the figure for the last two weeks of August.

Five areas of Great Britain: the South West, East Midlands, Wales, East of England, and the South East, each recorded annual house price growth in excess of 8%.

UPDATE 15 September 2021 – ONS House Price Index

• Average UK property now worth £256,000
• Average prices up 8% year-on-year
• Price growth strongest in Scotland over the past 12 months

Average UK house prices went into reverse in July this year after hitting record highs a month earlier, according to the UK House Price Index from the Office of National Statistics (ONS).

The ONS said that the average price of a UK property stood at £256,000 in July 2021. This compared with the £265,000 recorded in June.

Despite the month-on-month decline, the ONS said that average prices in July were up overall by around 8%, or £19,000, compared with a year earlier. The increase in June was 13.1%.

July’s house price fall coincided with the start of a tapering to the UK government’s Stamp Duty holiday incentive. Read more about the Stamp Duty Land Tax changes here. 

In March this year, the Chancellor announced an extension to the Stamp Duty holiday in England and Northern Ireland. This meant that the tax holiday was extended until 30 June 2021 after which the ‘nil rate’ threshold decreased from £500,000 to £250,000 until 30 September 2021. 

From 1 October 2021, the Stamp Duty thresholds will revert to what they were before 8 July 2020. The tax holiday for Scotland ended on 31 March 2021. The tax holiday in Wales ended on 30 June 2021.

According to the ONS, the average house price in Scotland increased by 14.6% in the year to July 2021. In Wales the figure was 11.6%, while England recorded growth of 7%.

Regionally, the North East has enjoyed the strongest house price growth over the past year, with a figure of 10.8% to July.

Miles Robinson, head of mortgages at online mortgage broker Trussle, said: “A combination of the stamp duty holiday, low mortgage interest rates, increased demand for space and a lack of supply has created the perfect environment for sellers – but a very difficult market for buyers.

“The price decrease from June to July could signal a turning point in the market and a shift in the level of activity seen over the last year. If this is the case, it is certainly good news for those buyers who have missed out in the last six months.”

14 September 2021: Mortgage Broker Trussle Unveils Speed Promise Backed By £100 Offer

Forbes Advisor’s UK mortgage broking partner, Trussle, has announced its Mortgage Speed Promise, which will provide customers with mortgage advice within 24 hours and a mortgage decision within five days. Eligible customers who do not receive a decision within 5 days will receive £100 in compensation.

Trussle claims to be the first mortgage broker to offer a service that promises mortgage decisions to customers within five days.

It says it is trying to tackle the problems experienced by many would-be borrowers who find it difficult to get a timely mortgage decision from a lender, arguing that the pandemic has exacerbated the issue, with average mortgage approval times slowing down dramatically.

While some lenders such as Halifax are now back to pre-pandemic processing times of around three days, the broker says its internal data suggests other high street lenders can take 15 days or more.

Because of the lack of consistency in mortgage approval times among lenders, Trussle will only work with the UK’s fastest lenders to deliver on its five-day service commitment. Initially, nine lenders will be part of the promise including Halifax, HSBC, Barclays and Clydesdale.

Alongside this, Trussle is actively working with a wide range of lenders to improve their approval times and include them in its Speed Promise at a later date.

Ian Larkin, Trussle’s CEO, said: Buying a new home should be an exciting time, and so it’s such a shame that it’s considered one of the most stressful processes in life. Trussle was created to make mortgage applications easier and now we want to give our customers the certainty they desperately need at a very early stage in the process. 

“By using technology and automation to cut out needless hassle, we can give our customers decisions in days not weeks, without compromising on service, to hopefully bring some of that excitement back to buying a home.”

Borrowers will not be required to submit further documentation beyond what is currently required for a mortgage application, and a wide range of mortgage products with market-leading rates will be available, including high LTV, buy-to-let and remortgages. Any eligible customer who does not receive a decision within 5 days will receive £100 in compensation. Terms and conditions apply.

Update 7 September 2021: Halifax sees record average UK property price at £263,000

At a glance…

• Average UK property price £262,954, highest on record
• Figure is £23,600 higher than June 2020
• Annual house price inflation eases to 7.1%

Halifax bank’s monthly house price index for August confirms that UK property prices are continuing to rise, although the rate of annual increase, at 7.1%, is down from the 7.6% recorded in July.

The month-on-month increase was 1.2%.

The bank says the average UK property price stands at £262,954, which is a record high. The previous peak was in May (£261,642). Demand has been fuelled in recent months by changes to stamp duty rules, including the ending of the tax holiday in Wales and the tapering of relief in England.

You can find out more about stamp duty rates and rules here.

Russell Galley at Halifax said there are other significant factors driving house price inflation: “Structural factors have driven record levels of buyer activity, such as the demand for more space amid greater home working. 

“These trends look set to persist and the price gains made since the start of the pandemic are unlikely to be reversed once the remaining tax break comes to an end later this month.”

Mr Galley added that economic conditions will continue to to support property prices: “The macro-economic environment is becoming increasingly positive, with job vacancies at a record high and consumer confidence returning to pre-pandemic levels. 

“Coupled with a supply of properties for sale that looks increasingly tight, and barring any reimposition of lockdown measures or a significant increase in unemployment as job support schemes are unwound later this year, these factors should continue to support prices in the near-term.”

In terms of regional variances, Halifax says Wales is the strongest performing area, with annual house price inflation at 11.6% – the only double-digit rise recorded in the UK during August. 

South-west England is also still experiencing strong growth at 9.6%, reflecting demand for rural living within the region. 

Price inflation in Greater London continues to lag the rest of the country, according to the Index, registering a 1.3% annual increase in prices in August. Over the latest rolling three-monthly period, the capital was the only region or nation in the UK to record a fall in prices (-0.3%). 

The year-on-year rise in London was also the weakest seen in 18 months, says Haliax, though it notes that the average price in the capital – at £508,503 – remains far above the average national price.

UPDATE 2 September 2021: Nationwide cuts mortgage rates to ‘lowest-ever’ 0.87%

Nationwide is launching its lowest-ever mortgage rate for new lending after cutting its fixed and tracker range rates by up to 0.40%, to below the psychological 1% barrier

Those with a 40% deposit will be able to take advantage of a two-year fixed rate mortgage at just 0.87% or a two-year tracker at 0.99%. However, the deals come with hefty fees of £1,499 and £999, respectively.

Elsewhere, the building society is offering a 75% LTV deal at 1.00% with a £1,499 fee and a two-year fix for first-time buyers holding a 5% deposit at 2.99% (down from 3.24%) subject to a £1,499 fee. Nationwide’s first-time buyer mortgages come with £500 cashback.

The reductions haven’t just been reserved for new buyers though – remortgagers can also get the 0.87% rate on a two-year fix at 60% LTV – again for a fee of £1,499. 

The biggest price cut in its remortgage range is on the building society’s two-year tracker mortgage at 60% LTV at 0.99% (down from 1.39%).

Henry Jordan at Nationwide said: “These latest reductions will offer those looking for a new deal one of the best rates available. However, reductions have been made at all loan to value levels so whether someone is buying a new home, remortgaging their existing property or getting a further advance to improve their home we have a range of mortgages on offer to suit their needs.”

Rates below 1% – but watch for high fees

Despite being the lowest rates Nationwide has ever offered, a spate of new sub 1% deals have recently come to the market from rival lenders – one of which is lower still.

Halifax has a two-year fixed rate mortgage at 0.83% with a £1,499 fee or a higher rate of 0.87% if you pay a lower fee of £999. Both are for purchases only, though, and require a 40% deposit.

Rates continue to fall as lenders try to get more people on their books amid the post-pandemic property boom – despite the fact that the Stamp Duty Land Tax holiday in England, which incentivised so many buyers since July 2020, will expire at the end of September.

Not everyone will be eligible for a sub 1% mortgage deal, since offers are subject to status. Lenders will want to see that you’re a responsible borrower with a good track record of managing credit in the past.

The relatively high fees of £1,499 attached to some of these sub 1% mortgages might not be cost-effective if you need a relatively small mortgage. In fact, depending on how much you need to borrow, you may be better off choosing a no-fee deal with a slightly higher rate.

Also, if you’re currently tied into a fixed rate mortgage and want to take advantage of a competitive new deal, you may be penalised with early repayment charges that could wipe out any benefits from switching. 

And remember, rates could continue to fall, so if you sign up for one of the new cheap fixed-rate deals now, you won’t be able to jump ship when something cheaper potentially comes along without incurring penalty charges.
To see how much your repayments would be with one of Nationwide’s new deals or any other mortgage product, try our new mortgage calculator tool.

UPDATE 1 September 2021 – Nationwide House Price Index

At-a-glance…

• Average UK house price was £248,857 in August, up 2.1% from July
• Second largest gain month-on-month in 15 years
• Annual house price growth stands at 11%

House prices rose by 2.1% in August, the second largest month-on-month gain in 15 years, despite predictions that the recent scaling back of stamp duty reliefs would subdue demand in the UK’s property market.

According to the Nationwide House Price Index, annual house price growth rose to 11% in August 2021 with the average home valued at £248,857. Nationwide added that house prices are now about 13% higher than when the pandemic began.

Nationwide described the August increase as “surprising” following the tapering of stamp duty reliefs at the end of June. 

Robert Gardner, Nationwide’s chief economist, said: “The strength may reflect strong demand from those buying a property priced between £125,000 and £250,000 who are looking to take advantage of the stamp duty relief in place until the end of September, though the maximum savings are [now] substantially lower.

“Lack of supply is also likely to be a key factor behind August’s price increase, with estate agents reporting low numbers of properties on their books. Activity will almost inevitably soften for a period after the stamp duty holiday expires at the end of September.”

Miles Robinson, head of mortgages at online mortgage broker Trussle, said: “Today’s results will come as a surprise as many expected to see a contraction in the market as the stamp duty holiday (in England) draws to an end. However, while unprecedented demand has meant sellers have very much been in the driving seat this past year, there are now some great opportunities for would-be house hunters. In particular, next-time buyers who have equity or larger housing deposits can take advantage of some incredibly competitive interest rates.”

Nicky Stevenson, managing director of national estate agency chain Fine & Country, said: “While the stamp duty holiday savings on big homes are quickly vanishing, a greater proportion of market activity is now in the mass market sector, buoyed by the resurgence of buy-to-let investing and first-time buyers.”

UPDATE 26 August 2021 – Zoopla notes ‘acute shortage’

At-a-glance

• Properties selling almost twice as quickly as in 2019
• Price growth highest in Wales and Northern Ireland

The UK property market faces an “acute shortage” of homes for sale, after a record number of transactions to beat changes to the temporary stamp duty regime used up available stock, according to the property portal Zoopla.

Latest figures from the firm’s House Price Index showed that the number of properties for sale in June dropped by 26.4% compared with the 2020 average.

Zoopla said buyer demand remains strong, up 20.5% compared with the 2020 average. The figures also showed that competition among buyers intensified through the second half of 2020 and into 2021. 

It said the average time to sell, measured as the time taken between a property being listed and a sale being agreed, now stands at 26 days, down from 49 days in 2019.

At a regional level, property price growth around the UK over the past year was highest in Wales (up 9.4%), Northern Ireland (9%) and the north west of England (7.9%). In terms of city locations, Liverpool led the way with price growth of 9.4%

Zoopla said first-time buyers have been increasingly active in 2021, supported by lenders that have reintroduced products accommodating higher loan-to-value (LTV) mortgages. See below for comment on the impact of LTV deals.

Maximum LTV mortgages ‘failing to secure market share’

• 95% mortgages accounted for just 1% of mortgages in July
• 49 lenders offer 95% mortgage deals

According to research from our mortgage partner, Trussle, the recent crop of 95% loan to value (LTV) mortgages coming to market is not resulting in successful applications from would-be borrowers. 

The online broker has seen interest in 95% LTV deals account for a quarter of all its mortgage enquiries in recent months, but says that just 1% of its mortgage completions were from 95% mortgages in July 2021. It attributes this to the fact that high LTV mortgages are subject to stricter lending criteria and require higher credit scores.

Additionally, many lenders do not accept ‘gifted deposits’ (where the borrower uses funds given to them by their parents, for example) on 95% LTV deals. Also, some property types like flats and new builds are ineligible for the 95% deals on offer.

Trussle says there are currently 49 lenders offering 95% LTV mortgages, with the number of lenders steadily increasing since March. Its data shows that 60% of all leads for 95% mortgages were first time buyers, with ‘next time’ buyers (34%) and remortgages (6%) making up the rest.

While 95% mortgages are struggling to make an impact on the market, Trussle says other high LTV mortgage brackets are seeing significant demand from consumers. For example, 90% mortgages have been a popular choice for those needing higher LTV products, accounting for 10% of Trussle completions in June 2021, the highest since August last year.

UPDATE 24 August 2021 – HMRC property transactions

At-a-glance

• Property transactions plummet by 63% month-on-month
• Reduction in stamp duty relief triggers decline

UK monthly property transactions fell dramatically in July 2021, with seasonally adjusted transactions for July standing at 73,740, a 62.8% drop compared with the figure reported in June, according to the latest data from HMRC.

The fall coincided with the tapering of a temporary, pandemic-enforced reduction in Stamp Duty Land Tax at the end of June in England and Northern Ireland.

Until 1 July, the first £500,000 of a property purchase was exempt from stamp duty. This figure now stands at £250,000 and will be reduced again, to £125,000, from 1 October 2021.

The end of June also marked the end of the temporarily increased nil rate band to £250,000 for residential Land Transaction Tax in Wales. It has reverted to £180,000.

HMRC estimated the provisional non-seasonally adjusted figure for UK residential transactions in July 2021 at 82,110. 

Adam Forshaw at conveyancing firm O’Neill Patient said: “It was to be expected that housing transactions would be lower in July, but 62.8% is quite a drop. Having said that, June was a record month as the conveyancing industry worked hard to get as many house sales over the line before the first phase of the stamp duty holiday ended.

“We are still seeing a good level of instructions in house sales and purchases as people are still eager to beat the final stamp duty holiday exemption on 30 September.”

UPDATE 18 August 2021 – ONS House Price Index

At-a-glance:

• Average UK property now worth £265,668
• Price growth strongest in north west of England
• Transactions in June 219% higher than 2020

The average price of a UK property was £265,668 in June 2021, according to the UK House Price Index from the Office of National Statistics (ONS).

The ONS said that, on average, property prices rose by 13.2% in the year to June 2021. 

It added that the strongest house price growth achieved over that period had been recorded in the north west of England with a return of 18.6% in the year to June.

Elsewhere around the regions, London recorded the most sluggish rise in annual growth returning a figure of 6.3% over the same period.

Figures from UK Property Transaction Statistics estimated that 198,240 transactions took place on residential properties worth £40,000+ in June 2021. This was a 219% increase on the same month a year ago.

Miles Robinson at online broker Trussle, said: “House price growth remains strong with an average increase of 13.2% over the year to June 2021. Much of this can of course be attributed to the buyers and sellers who grappled to complete before the 30 June higher threshold stamp duty deadline.”

“While house prices have increased on average, the industry is starting to see a slow-down in the rate at which property value is appreciating. With the stamp duty deadline coming to a complete close in the nearing weeks, it is likely that house price growth will start to cool off slightly,” Robinson added.

UPDATE 16 August 2021 – Rightmove House Price Index

At-a-glance

• Average asking price of properties coming to market down £1,076, a 0.3% dip
• Prices of larger properties slip by 0.8%
• Demand remains high for ‘mass market’ properties 

House asking prices fell for the first time in 2021, according to the latest data from property portal Rightmove.

The firm said the average price of property coming to market in August dipped by £1,076, a decrease of 0.3%. 

Rightmove explained that the slight cooling was mainly driven by a 0.8% fall in the price of upper-end, four-bedroom-plus properties, a result of the tapered stamp duty holiday which comes to an end next month.

It added, however, that first-time buyer and second-stepper properties – each less affected by the withdrawal of most stamp duty initiatives – continued to rise in price by 0.6% and 0.3% respectively.

The portal said that overall demand from buyers remains strong and suggested this could prompt an Autumn “bounce” in both prices and seller activity.

Tim Bannister, Rightmove’s director of property data, said: “New sellers dropping their asking prices can ring economy alarm bells, especially when it’s the first time so far this year.

“It’s important to dig underneath the headline figures. We are in the holiday season which means that sellers have traditionally tempted distracted buyers with lower prices. Our analysis shows that average prices have only fallen in the upper-end sector, which is usually more affected by seasonal factors such as the summer holidays.”

UPDATE 6 August 2021 – Halifax UK House Price Index

At-a-glance

• Average UK house price stands at £261,221 in July 2021, up 0.4% from June
• Annual house price growth slowed to 7.6%
• Wales records strongest house price growth for 16 years

UK house prices rose by 0.4% in July, with the average property now worth £261,221, according to the Halifax House Price Index.  

Halifax reported a fall in annual house price growth to 7.6% in the 12 months to July 2021. 

The lender said this easing was to be expected for two reasons. First, the price inflation experienced by the property market last summer as it emerged from the first lockdown and, second, the buying activity prompted by the government’s time-limited stamp duty holiday initiative.

According to the Halifax, Wales recorded an annual house price increase of 13.8% to the end of July, its strongest growth figure since 2005. The North West England, Yorkshire and Humberside, and the South West also posted double-digit rises year-on-year.

Russell Galley, the Halifax’s managing director, said: “Recent months have been characterised by historically high volumes of buyer activity, with June the busiest month for mortgage completions since 2008. This has been fuelled both by the ‘race for space’ and the time-limited stamp duty break.

“With the latter now entering its final stages, buyer activity should continue to ease over the coming months, and a steadier period for the market may lie ahead,” Galley added.

Miles Robinson, head of mortgages at Trussle, the online mortgage broker, said: “There are many positives for homeowners to take from the market at the moment. An increasing number of high-profile lenders are now offering sub 1% mortgage products, with some available on a fixed-term rate for up to five years.”

UPDATE 2 August 2021 – Londoners flock to buy homes outside capital

At-a-glance

• Record number of Londoners buy homes outside capital
• Properties located on average 34.6 miles from capital
• Pandemic-fuelled city ‘out-migration’ shows no sign of stopping

Londoners bought a record number of homes outside the capital in the first six months of 2021 according to estate agent Hamptons.

The firm said Londoners have led the way in “city out-migration”, one of the key property market trends of the pandemic. Between January and June 2021, Londoners bought 61,830 homes outside the capital, with properties located an average 34.6 miles away from the capital.

Hamptons said this was the highest half-year figure since its records began in 2006. Putting the figure into context, the estate agency said it was only 10,030 homes fewer than those sold in London during the whole of 2020.

On average, Londoners paid £389,975 for their new properties. 

So far this year, Londoners made up 8.6% of all buyers outside the capital. This was the highest proportion on record and up from the 6.6% reported over the same period last year.

Aneisha Beveridge, head of research at Hamptons, said: “Pandemic-fuelled city out-migration shows no sign of slowing. Despite lockdown easing and offices and restaurants re-opening, Londoners have continued to re-evaluate where they want to live.

“The capital’s loss has been the Home Counties’ gain. The mix buying beyond the capital has changed, with first-time buyers more likely to leave London than ever before.”

UPDATE 28 July 2021 – Nationwide House Price Index

At-a-glance

• Average UK house price stands at £244,229 in July 2021, down 0.5% from June 
• Annual house price growth slowed to 10.5% 

House prices fell by 0.5% in July thanks to the tapering of stamp duty relief in England and the ending of the duty holiday in Wales.

According to the latest Nationwide House Price Index, annual house price growth slowed to 10.5% in July 2021, having peaked at a 17-year high of 13.4% a month earlier. It described July’s reverse as a “modest fallback”, saying this is unsurprising given the significant gains recorded in recent months. 

Robert Gardner, Nationwide’s chief economist, said: “House prices increased by an average of 1.6% a month over the April to June period, more than six times the average monthly gain recorded in the five years before the pandemic.

“The tapering of stamp duty relief in England is likely to have taken some heat out of the market. This provided a strong incentive to complete house purchases before the end of June.”

Nationwide said stamp duty changes drove the number of housing market transactions to a record high of almost 200,000 in June as homebuyers rushed to meet the deadline. This was around twice the number of transactions recorded in a typical month before the pandemic and 8% above the previous peak seen in March 2021.

UPDATE 27 July 2021 – Savills predicts 9% price growth

At-a-glance

• Savills predicts 9% UK house price growth for 2021
• Prices set to rise by 21.5% over five years to 2025
• Property markets in the Midlands and the North-East of England expected to perform best

Estate agency Savills has predicted that UK house prices will rise by 9% in 2021 thanks to a combination of factors including extended stamp duty holidays, plus the impact of repeated lockdowns on what buyers want from their homes.

Savills said it also expects average house prices to rise by a further 3.5% next year and by a total of 21.5% in the five years to the end of 2025.

Since the property market re-opened last year after the first phase of the pandemic, Savills said price growth had been driven in large part by more affluent buyers, less reliant on mortgage debt and able to lock into low, fixed interest rates. Homes featuring plenty of space, both inside and out, have been high on buyers’ wish lists over the past year.

According to Savills, the property markets of both the Midlands and the North of England are anticipated to show the strongest price growth. It said both regions could sustain a rise in house prices before homes in these areas become unaffordable.

Lucian Cook, Savills’ head of residential research, said: “Some of the growth generated by the extraordinary market conditions of 2020 and 2021 could unwind during 2022, but we see nothing on the horizon that would trigger a major house price correction.

“New buyer demand continues to outweigh supply. This imbalance looks set to continue,  underpinning further price growth over the near term, particularly as people look to lock into current low interest rates,” he added.

UPDATE 27 July 2021 – Zoopla House Price Index

At-a-glance

• Average UK house price stands at a record £230,700
• House prices up 5.4% in the year to June 2021
• Northern Ireland records highest house price growth in past year

UK house prices reached a new high last month, with the average property now worth £230,700, according to the house price index from Zoopla, the property portal.

Zoopla reported a 25% fall in the number of homes for sale in the first half of this year compared to the same period in 2020, resulting in what it describes as a “severe shortage” of housing stock. This has helped push up house prices by an average of 5.4% in the year to June 2021, it said.  

At a regional level, Northern Ireland recorded the highest house price growth at 8.6% over the past year, followed by Wales at 8.4%. The North West was responsible for England’s highest growth figure at 7.3%. In London, prices rose by 2.3% in the past 12 months. 

Zoopla said it expected price growth to edge up to 6% in the coming months before easing back by the end of the year once the impact of the extended stamp duty holiday has unwound. 

Grainne Gilmore, Zoopla’s head of research, said: “Demand for houses is still outstripping demand for flats. There is a continued drumbeat of demand for more space, both inside and outside, among buyers funnelling demand towards houses and resulting in stronger price growth for these properties.”

UPDATE 21 July 2021 – HMRC property transactions

At-a-glance

• Property transactions break record as buyers scramble to beat stamp duty deadline

UK monthly property transactions soared to record figures last month as would-be buyers scrambled to complete purchases ahead of changes to the rules on stamp duty. Seasonally adjusted transactions for June stood at 198,240, according to the latest data from HMRC. 

The figure was 219% higher compared with the same month in 2020 when the effects of the pandemic impacted heavily on the property market. Last month’s figure was also 74% higher than the one recorded for May 2021, according to HMRC.

HMRC estimated the provisional non-seasonally adjusted figure for UK residential transactions in June 2021 at 213,120. This was the highest monthly figure since records began in 2005.

Last month’s flurry of activity coincided with an end to the temporary, pandemic-enforced rules on Stamp Duty Land Tax which had been in place until 30 June 2021 in England and Northern Ireland. 

Until the end of June, the first £500,000 of a property purchase was exempt from stamp duty. This figure was subsequently cut to £250,000 from 1 July and will be reduced again, to £125,000, from 1 October 2021.

In Wales, the Land Transaction Tax holiday came to an end on the same day, with the exemption falling from £250,000 to its permanent level of £180,000.More information on stamp duty changes around the devolved nations can be found here.

UPDATE 19 July 2021 – Rightmove House Price Index

At-a-glance:

• Average price of properties coming to market at all-time high of £338,447
• Average price up by more than £21,000 since start of 2021
• Shortfall of 225,000 properties for sale

“Frenzied” UK housing market activity in the first half of 2021 pushed the average price of newly-listed properties to a record-breaking £338,447, according to the latest data from property portal Rightmove.

The firm said a record figure had been achieved in each of the past four months. The average property price is now £21,389 (6.7%) higher than at the start of 2021. 

In May to June 2021 alone, the average property price rose by £2,374. Rightmove said this was the largest increase recorded at this time of year since 2007. 

Rightmove added that the combination of 140,000 sales being agreed in the first half of 2021, plus 85,000 fewer listings compared with the long-term average, had produced a shortfall of 225,000 homes for sale.

Detached homes with four or more bedrooms have experienced the largest imbalance in terms of supply and demand since the start of 2021, with a 39% surge in sales but a 15% fall in numbers. 

Rightmove estimated that the average number of available properties for sale per estate agency branch is now at a record low of 16.

Tim Bannister, Rightmove’s director of property data, said: “New stamp duty deadlines in England and Wales for sales completed by the end of June helped to exhaust the stock of property for sale and concentrate activity.”

UPDATE 15 July 2021 – ONS UK House Price Index 

At-a-glance:

• Average UK property now worth just under £255,000
• Annual house price growth strongest in north west of England, sluggish in London
• Property transactions for May 2021 138% higher than a year earlier

The average price of a UK property was £254, 624 in May 2021, according to the UK House Price Index from the Office for National Statistics (ONS).

The ONS said that, on average, property prices had risen by 10% across the UK in the year to May 2021.

It added that the strongest house price growth over that period had been recorded in the north west of England with a return of 15.2%. London, meanwhile, recorded the most sluggish rise in annual growth returning a figure of just 5.2% in the year to May. 

According to the Bank of England, mortgage approvals stood at 87,500 for May 2021. The figure was up slightly from the previous month, but lower than the recent peak of 103,400 reported in November 2020.

Figures from UK Property Transaction Statistics estimated that 114,940 transactions on residential properties worth £40,000 had taken place in May 2021. This was a 138% increase in the figure recorded for the same month in 2020. 

UPDATE 7 July 2021 – Halifax UK House Price Index

Property prices fell in June for the first time since January, suggesting the UK housing market may be reacting to changes in the UK’s land tax regimes.

The average house price slipped to £260,358 last month, according to the latest data from the Halifax House Price Index. The figure was down 0.5% from the 14-year high of £261,642 recorded in May this year. 

However, the June figure is still £21,000 higher than it was at the same time last year – a year-on-year increase of 8.8%.

Halifax said the strongest regional growth over the past 12 months was recorded in Wales (12%), Northern Ireland (11.5%) and the north-west of England (11.5%).

Russell Galley at Halifax said: “With the Stamp Duty holiday now being phased out (in England and Northern Ireland), it was predicted the market might start to lose some early steam entering the latter half of the year. 

“It’s unlikely that those with mortgages approved in the early months of the summer expected to benefit from the maximum tax break, given the time needed to complete transactions.”

Forbes Advisor UK’s mortgage partner, broker Trussle, says there may still be time for people in certain English postcodes to complete their purchase before the final changes take effect on 30 September.

Between now and then, the Stamp Duty nil rate band stands at £250,000. It will revert to £125,000 from 1 October.

The holidays on the equivalent duties ended in Scotland on 31 March and in Wales on 30 June.

Miles Robinson at Trussle said: “While house prices have stalled month-on-month, it’s important to remember that annual growth remains strong. This is because prices have been driven by an imbalance between demand and supply for the past year.”

Nicky Stevenson at estate agents Fine & Country said: “The housing market has been running on rocket fuel for some time, but this is evidence that things may finally be starting to plateau. But there’s no suggestion we’re now facing a nosedive. Annual price rises across most of the UK remain impressive and make growth in previous years look rather mundane.”

Some investors are viewing depressed prices as an opportunity to ‘buy on the dip’ while others seem to be taking gains and sitting out until stock markets recover.

Emilie Stevens, analyst at Freetrade, commented: “We were pleased to wave goodbye to June. More record price rises, further rate hikes and creeping recession fears, led to the market throwing another wobbly.” 

However, she pointed to investors “being able to think beyond the near-term turbulence and continue to build long-term investment positions.”

So, what shares are investors buying and selling? We’ve compiled a list of the top 10 most bought and sold shares by UK investors in June, based on data from AJ Bell, Hargreaves Lansdown, interactive investor and Freetrade.

Please note that investing in individual stocks and in stock market funds is speculative and places your capital at risk. You might lose all your money.

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UK share trading in June 2022

Difficult month

Overall, June was a difficult month for the UK stock market, with the FTSE 100 falling by 5% over the period. The FTSE 250 was hit even harder, dropping by 8%. 

Laith Khalaf, head of investment analysis at AJ Bell, points out that, while small and mid-cap shares have struggled in 2022, it comes on the “back of a blistering spell of performance in 2021.” 

He adds that, “As investors dial down risk, it’s natural to see them skimp on their exposure to small and midcaps, and this has been exacerbated by inflation taking the shine off the future growth in cash flows that is one of the key attractions of smaller companies.”

Let’s take a closer look at what we can learn from this list.

What were the most bought shares?

The FTSE 100 heavyweights dominated the most bought shares, with only two companies outside this list (easyJet and Tesla). 

Blue-chip companies in the FTSE 100 operate in more defensive sectors such as financial services, energy and mining, which are seen as ‘safer’ options in an economic downturn.

Mr Khalaf comments: “UK equity investors can console themselves that the FTSE 100 as an index is only just in the red, having been buoyed by its exposure to old economy sectors like oil, tobacco and defence.”

Many of these FTSE 100 companies also pay high dividends, appealing to investors looking for income as well as share price growth. 

Aviva, L&G, Lloyds and BP are currently trading on a dividend yield of between 4-7% (last year’s dividend divided by the current share price). Their share prices have also fallen by between 5-8% over the last month, which investors may see as a buying opportunity.

Mining shares, such as Glencore and Rio Tinto, continue to be in high demand as high commodity prices have driven bumper profits. However, both shares have fallen by around 20% in the last month, due to concerns over the possible impact of lower commodity prices and higher operating costs. 

That said, both shares offer attractive dividend yields of 5% and 12% for Glencore and Rio Tinto respectively. 

What were the most sold shares?

The majority of the most sold shares also featured on the most bought list, including Tesla, Lloyds, Rolls Royce and BP. 

Profit-taking was likely to be a key factor in the companies featuring on the most sold list, with investors keen to take their gains with a possible downturn ahead. 

In early June, BP, Glencore, Shell and GSK hit their highest share prices since the pandemic. As a result, shareholders were sitting on one year gains ranging from 15% for BP up to 35% for Shell, thanks to soaring oil and gas prices.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, also highlighted the potential issues facing BP and Shell, including one off expenses from exiting Russian oil operations, the new windfall tax and net zero targets for fossil fuels. 

However, she believes the “big risk for Shell and BP going forward is that slowing economies could pull down the price of oil”.

Shareholders in Lloyds, Rolls Royce and British Airways parent IAG have all suffered significant losses over the last three years, with the price of Rolls Royce shares falling by over 70% in this period. 

Other than IAG, these shares hit their highest level over the last few months in June, which may have provided an exit opportunity for investors that have lost faith in their recovery stories.

The aviation industry also continues to face turbulence in its efforts to rebuild after the pandemic. Ms Streeter comments: “The post-pandemic travel boom has created a welcome tailwind, but many airlines have not been able to fully capitalise on it because they aren’t able to expand capacity fast enough.”

Tesla deserves a separate mention as a long-term occupant of the most bought and sold lists. Having been one of the most highly valued US growth stocks in the last bull market, its fortunes have since reversed, with a 45% fall in share price since 2021. 

Tesla’s share price has also been heavily impacted by Elon Musk’s bid for Twitter, which has been a long-running saga since he first made his offer to buy the social media platform in April. 

Although his latest refinancing removed his Tesla shares as security against loans, doubts remain about his future role at Tesla if the Twitter deal makes it across the finish line.

But that’s not the only issue facing Tesla, who recently reported a serious dent in deliveries due to the lockdowns in Shanghai. Ms Stevens comments: “For all Elon’s superpowers, Tesla is not immune to the supply chain challenges facing the world and we’ll find out how well they are equipped to deal with this later this month.”

While Ms Streeter also warns about the impact of high inflation and the cost of living crisis on electric car sales, stating that: “For now Tesla fans seem prepared to wait for coveted models, but affordability is still part of the equation.”

Looking ahead

The investment outlook continues to look uncertain, thanks to rising inflation, interest rates and an uncertain political climate, domestically and globally. 

Fears of a recession ahead have prompted investors to take steps to protect their portfolio against a stock market crash. 

Ms Streeter says: “Investors sense there is trouble ahead for the global economy, given that the priority of the powerful US Federal Reserve is to stamp out the flames of inflation even if that means extinguishing growth, causing ripple effects around the world.”

If you’re looking to trade in shares, it’s also worth taking the time to choose the best trading platform for your individual circumstances.

Remember that when investing, your capital is at risk. Investments can go down as well as up, and you may not get your money back. If you are unsure as to the best option for your individual circumstances, you should seek financial advice.

The first of the Government’s cost of living payments will begin to be paid today (14 July) into the bank accounts of the UK’s lowest-income households.

Eight million households in receipt of benefits such as Universal Credit, Jobseeker’s Allowance and Child Tax Credit, will be paid the first £326 of the total £650 payment. 

Announced back in May by the then-Chancellor Rishi Sunak, the windfall is designed to alleviate soaring costs such as energy, fuel and food.

With the exception of households claiming tax credits, who will receive their first payment in the autumn, the £326 will hit most accounts between 14 and until 31 July. However, delays may occur in ‘unique or complex’ circumstances, according to a spokesperson for the Government’s Department for Work and Pensions.

The second cost of living payment will be made in the autumn, although the exact date has yet to be confirmed. For those in receipt of tax credits, the second payment will be made in winter.

What is the cost of living crisis?

Struggling to make ends meet when it comes to the everyday cost of living is nothing new for vast swathes of the UK population. But, as the price of powering your home, filling up the car and paying for the food shop continues to soar, record numbers are now sharing in the experience – while those who were already battling are being pushed further into financial hardship, and even poverty.

The Bank of England’s Financial Stability Report for July found that day-to-day living costs have risen sharply in the UK and across the rest of the world, while the economic outlook for growth has worsened.

The Bank warned that households with high levels of debt will find themselves ‘most exposed’ to further price rises of essential goods such as food and energy – especially if costs continue to climb quicker than expected, or it becomes more difficult to borrow.

The latest Office for National Statistics (ONS) report into the rising cost of living found that nearly a quarter (23%) of adults reported that it was already ‘very difficult’ or ‘difficult’ to pay their regular household bills compared to 12 months before. And the situation will have almost certainly deteriorated further since its publication in April.

Indeed, the latest inflation figures which showed the Consumer Prices Index (CPI) hit 9.1% in the year to May – the highest level for 40 years – indicate no end in sight to the cost of living crisis.

What bills have gone up?

It’s difficult to think of any household bill or daily cost that hasn’t gone up in recent months. And households will barely need reminding of those that have. But here’s a more detailed summary, including reasons behind the hikes and – most importantly – if there’s anything you can do about it.

Energy

While the Government has announced a package of financial support measures (more on this later), the biggest worry for millions of UK households is still the cost of their energy bills.

Around 43% of those responsible for paying for energy reported that it was ‘very’ or ‘somewhat difficult’ to afford their energy bills in March 2022, according to the latest ONS cost of living report. Again, as fresh data emerges, this number is almost certain to rise.

Costs soared with the arrival of the new energy price cap level on 1 April. The cap, set by market regulator Ofgem, has meant that a typical UK household* is paying a staggering £1,971 a year for their energy bills. That’s a rise of 54% compared to the previous cap of £1,277 (if you’re on a prepayment meter, the cap rises from £1,309 to £2,017 a year*).

And cost predictions for the next cap level, which takes effect on 1 October, are worsening as the date draws nearer. On 8 July, energy analyst Cornwall Insight amended its prediction of what Ofgem’s energy price cap will rise to this autumn, to £3,244. The number is significantly higher that the £2,980 it suggested only last month.

And the firm says the price cap could rise to £3,363 in January 2023, when the frequency of reviews will shift to every three months to allow greater responsiveness to movements in wholesale energy prices. Cornwall Insight had previously forecast a level of £3,003 at that point.

But why has energy become so expensive? Wholesale gas prices, which had been climbing steadily during 2021 due to factors ranging from a unseasonably cold winter of 202/2021 and lack of gas storage facilities, have been exacerbated by the conflict between Russia and Ukraine – Russia being a key international gas supplier. 

And while, of course, it’s incomparable to the suffering of millions of Ukrainians, it’s made it cripplingly expensive for us in the UK to heat our homes. 

It’s currently not possible to switch to a cheaper fixed rate tariff (although deals may be available for some existing customers at the level of the current cap) but we have outlined the support that is available if you simply can’t keep up with the rising cost of your energy bills.

*Annual cost for a household with average energy consumption on a ‘dual fuel’ gas and electricity standard variable rate tariff (SVT), paying by direct debit. The cap limits the price companies can charge per unit of gas, electricity and a daily standing charge – actual bills will be determined by consumption.

Home entertainment

Netflix customers have been feeling the effects of price hikes first announced back in March.

The cost of a basic Netflix package has risen from £5.99 to £6.99 a month, while a standard package has increased from £9.99 to £10.99 a month and its premium package from £13.99 to £15.99 a month. 

Price hikes are being rolled out gradually with 30 days’ notice and were necessary to ‘sustain its content output’ and compete with rivals including Disney+ and Amazon Prime, according to the streaming giant.

13 July: Regulator Cracks Whip On Operational Standards

Energy market regulator, Ofgem, has released its analysis of how suppliers adjusted customer direct debit payments earlier this year. Many households saw steep increases, with 500,000 payments increasing by more than 100%, writes Candiece Cyrus.

The review found that:

• over 7 million energy consumers (out of an estimated 11 million) on Standard Variable Tariffs (SVT) saw a direct debit increase between February and April 2022
• average increase was 62%, reflecting the increased cost of gas
• around 500,000 households saw an increase of more than 100%. All customers whose direct debit was increased by 100% or more between 1 February and 30 April 2022 will be assessed by their supplier to determine whether the uplift was appropriate
• no evidence was evidence of unjustifiably high direct debits
• some suppliers’ processes are not as robust as they could be, and that this could lead to inconsistent, incorrect or poor treatment for customers
• there is a lack of formally documented policies and processes within some suppliers, which risks inconsistent and poor consumer outcomes.

Of 17 large suppliers in the market, four – Ecotricity, Good Energy, Green Energy UK, Utilita Energy – had moderate to severe weaknesses in their processes and controls.

Ofgem is engaging with these firms to drive “rapid and robust improvements” to processes and a reassessment of customer direct debits where necessary. If these suppliers don’t improve quickly enough, Ofgem says it will consider enforcement action.

Two firms, TruEnergy and UK Energy Incubator Hub (UKEIH), were found to have severe weaknesses. UKEIH has since ceased to trade, with its customers taken on by Octopus on 9 July. Enforcement action against TruEnergy is being considered.

Bulb, E.ON, Octopus Energy, Outfox the Market, Ovo, Shell and Utility Warehouse were found to have some weaknesses or gaps in their processes that could lead to poor consumer outcomes. Ofgem has started compliance engagement with these suppliers

No significant issues were found at British Gas, EDF, ScottishPower and SO Energy, although Ofgem says it will work with these suppliers for continuous improvement. The firms will be asked to review customer direct debits to ensure they are correct, as an additional assurance for consumers.

The companies involved must lay out their plans for rectifying any issues within two weeks, for Ofgem to approve. 

Ofgem can force companies to take action to improve operations, fine companies and ban them from taking on new customers if adequate improvement has not been made.

8 July: Analyst Says Cap Will Smash £3k Barrier In October And Soar Further In January

Households are facing yet more financial pressure following analyst Cornwall Insight’s amended prediction that the Ofgem energy price cap will rise to £3,244 in October, up from its current £1,971 and significantly higher that the £2,980 it mooted last month.

The firm says the cap, which limits how much energy firms can charge for units of energy and standing charges, will rise further to £3,363 in January 2023. It previously forecast the cap to be £3,003 at that point.

The cap is reviewed every six months, and rose to its present level from £1,277 in April. After October’s increase, it will be reviewed every three months to allow greater responsiveness to movements in wholesale energy prices.

The figures used are for the annual cost of energy for a typical household on a standard variable rate tariff paying by direct debit. The cap does not impose a limit on the size of bills, with costs determined by usage.

If Cornwall Insight’s estimates prove accurate, bills will have increased by over 160% in the months between March 2022 and January 2023 as a result of rising wholesale costs (see stories below).

The government has announced a package of measures to help people battle against the cost of living crisis, including cash payments to those on means-tested benefits and £400 off electricity bills for every household in the autumn.

It remains to be seen how recent political turmoil, including the resignation of Boris Johnson as leader of the Conservative Party and the subsequent leadership election, will affect future plans to tackle high levels of inflation across all sectors of the economy.

7 July: Energy Security Bill Extends Price Cap, Pledges Action On Green Initiatives

The government has included measures for tackling rising energy costs, continuing the rollout of energy smart meters and improving protection against cyber threats on smart appliances, in its Energy Security Bill, which was introduced into parliament yesterday.

The ambition is to generate £100 billion of private sector investment  into the energy sector by 2030, with hydrogen, offshore wind and heat pumps being promoted as new sources of energy supply.

Given the government upheaval following mass resignations in the run-up to Boris Johnson’s resignation as leader of the Conservative party, the Bill may be delayed in its passing through Parliament.

The Bill makes provision for the energy price cap to be retained beyond its original end-date of 2023, the aim being to maintain relatively low energy costs for 11 million households on default/standard variable tariffs and four million on prepayment meters.

The cap limits how much energy suppliers can charge households per unit of gas and electricity, along with a standing charge, while reflecting fluctuations in wholesale energy prices.

The last change to the cap was in April, when it soared by 54% to £1,971 a year for households with average energy consumption. For households on prepayment meter tariffs, it rose to £2,017 a year. The increase was the result of higher wholesale prices due to increasing international demand and pressure on supplies because of the war in Ukraine.

Energy analytics firm Cornwall Insight forecasts the cap will hit £3,244 in October and £3,363 in January next year.

Dame Clare Moriarty of consumer advice charity Citizens Advice, supports the price cap extension but said more short term measures are needed to help households with energy costs: “With millions of people already struggling to make ends meet, it’s a relief to see the government extend the price cap beyond 2023.

“Yet much of what we’re paying for our energy is going straight out the window, because so many of our homes are draughty and poorly insulated. 

“We’re glad the government is taking a longer-term view on supporting people with energy bills, but it must bring in energy efficiency measures as a matter of urgency, to help families stay warm this winter.”

The new Bill also contains measures to continue the rollout of smart meters to households and small businesses across Britain by the end of 2025. It aims to review suppliers’ installation targets for the last two years of the rollout in 2023, and review the whole smart metering system after 2025.

Smart meters display how much energy is being used, along with the cost, in real-time, allowing consumers to see where they can reduce their energy usage and save money.

Smart meters would also help customers to see the energy they may be saving on time-of-use tariffs, which may be introduced into the UK in the coming months. These tariffs encourage households to use off-peak energy supplies – for instance, to recharge an electric car battery – to benefit from lower prices, and to spread demand around the clock. 

The Bill will also help prevent ‘cyber hacking’ of smart appliances such as electric vehicle charge points and smart heat pumps by giving the government more powers to introduce minimum technical requirements for security and data privacy.

The government will also have the power to regulate companies who remotely operate these appliances.

Kwasi Kwarteng, business and energy secretary, said: “To ensure we are no longer held hostage by rogue states and volatile markets, we must accelerate plans to build a truly clean, affordable, home-grown energy system in Britain.

“This is the biggest reform of our energy system in a decade. We’re going to slash red tape, get investment into the UK, and grab as much global market share as possible in new technologies to make this plan a reality.”

Dhara Vyas at trade association Energy UK said: “With the cost of energy reaching unprecedented levels it’s right that the government urgently legislates to protect consumers, while also delivering frameworks and regulation to support the decarbonisation of the UK economy so that it reduces bills in the long term.”

23 June: Audit Office Slams Lax Ofgem Regulation For Enabling Weak Companies To Operate

Energy customers will pay an estimated £2.7 billion to cover the cost of moving 2.4 million customers to new suppliers following the closure of 28 energy firms since June 2021, according to the National Audit Office (NAO), the independent Parliamentary body that scrutinises public spending.

NAO was critical of the role played in regulating the energy market by Ofgem, which is responsible for managing the fall-out when a supplier goes to the wall.

The estimated cost of £94 per household, will be spread across all energy customers, not only those whose firms failed.

According to NAO, Ofgem’s approach to licensing and monitoring suppliers over previous years increased the risk of firms failing, although NAO said considerable hikes in wholesale energy prices were the main cause.

Gareth Davies, head of NAO said: “Ofgem and the Department for Business, Energy & Industrial Strategy (BEIS) ensured that the vast majority of consumers faced no disruption to their energy supply when their provider failed. 

“However, by allowing so many suppliers with weak finances to enter the market, and by failing to imagine that there could be a long period of volatility in energy prices, Ofgem allowed a market to develop that was vulnerable to large-scale shocks.

“Consumers have borne the brunt of supplier failures at a time when many households are already under significant financial strain having seen their bills go up to record levels. A supplier market must be developed that truly works for consumers.”

NOA said that, in the years to 2018, Ofgem did not scrutinise the financial position of energy firms when they applied for a licence or after they entered the market. While it began tightening rules in 2018, NOA said Ofgem did not address risks with existing suppliers until 2021. 

NAO said Ofgem should “define a set of objectives for its regulation of the retail market around price, stability, and innovation, against which it should review and report its performance at least annually”.

An Ofgem spokesperson said: “Ofgem accepts the findings of the NAO report, which aligns with our own conclusions and the recommendations from the independent Oxera report we commissioned, and we are already working hard to address all of the issues raised.

“While the once-in-a-generation global energy price shock would have resulted in market exits under any regulatory framework, we’ve already been clear that suppliers and Ofgem’s financial resilience regime were not robust enough. This contributed to a significant number of failures since August 2021.

“We welcome the NAO’s recognition that Ofgem began tightening the rules in 2018 and has continued to do so through to 2022. Our announcement this week continues this process with protection of customer credit balances and tough new measures to improve the financial health of energy suppliers (see story below).

“While no regulator can, or should, guarantee companies will not fail in the future, we will continue to take a whole-market approach to further strengthen the regulatory regime, ensuring a fair and robust market for consumers which keeps costs fair as we move away from fossils fuels and towards affordable, green, home-grown energy.”

NOA says the estimated £94 cost per household to cover the administration of the customer reallocation process could rise or fall as the cost of firms exiting the market is uncertain.

An additional cost to run energy firm Bulb Energy may also be added. As a larger supplier with 1.6 million customers, Bulb Energy was put into special administration last year. The government has spent £0.9 billion on an administrator to run the company in 2021-2022 and budgeted another £1 billion to run it during 2022-23.

20 June: Regulator Stops Firms Using Customer Funds As ‘Interest-Free Credit Card’

Ofgem, the energy market regulator, is introducing financial controls to reduce the likelihood of suppliers going bust. And if there are corporate failures in the future, it wants to protect consumers from the cost of handling the administrative fall-out.

Since September 2021, 28 energy suppliers collapsed, leaving all households to share the tab for reallocating their customers to new suppliers and protecting any credit balances they had with the defunct supplier.

This added £94 to every households’ annual energy costs.

Ofgem is proposing:

• improvements to the financial health to reduce the risk of failures
• action to prevent the costs of protecting credit balances and mandatory green levies falling to consumers if a company fails
• tighter rules on the level of direct debits suppliers can charge customers, to ensure credit balances do not become excessive. 

Jonathan Brearley, CEO of Ofgem, said: “The energy market remains incredibly volatile and there are a number of huge geopolitical issues continuing to apply massive pressure. Ofgem is working to ensure suppliers shore up their positions so they can weather the ongoing storm.

“By ensuring that suppliers are operating well-financed, sustainable and more resilient business models, we can avoid the supplier failures we saw last year which caused huge stress and worry and added costs to everyone’s bills.

“But if some do still fail, consumer credit balances and green levy/renewables payments will be protected.”

Consumer groups have long criticised the system that allows companies to dip into their customers’ account credits to bankroll their operations – Mr Brearley conceded that such balances “are used by some suppliers like an interest free company credit card.”

The idea of the reform is that suppliers will be obliged to have enough working capital to operate without putting their customers’ credit balances at risk. Ofgem has been criticised in the past for allowing dozens of companies to enter the market in the last 10 years without adequate scrutiny of their financial strength.

Ofgem says it wants to build longer-term resilience by encouraging sustainable business models and stopping risky behaviour. It has developed stricter entry requirements for new suppliers and introduced new tests to ensure people who start and run energy companies are fit and proper to do so.

15 June: £326 Payment In Accounts Next Month, £324 In Autumn

The government has announced that the first of two cost-of-living cash support payments totalling £650 will be made from 14 July onwards to eight million UK households in receipt of means-tested benefits.

The first payment of £326 will be made direct to recipients’ bank accounts by the end of July.

To be eligible for the first instalment, claimants needed to be in receipt of one of the following benefits, or have begun a claim which is later successful, as of 25 May 2022:

• Universal Credit
• Income-based Jobseekers Allowance
• Income-related Employment and Support Allowance
• Income Support
• Working Tax Credit
• Child Tax Credit
• Pension Credit.

This payment will be tax-free, will not count towards the benefit cap, and will not have any impact on existing benefit awards. The second instalment of £324 will follow in the autumn at a date to be decided, with details of eligibility provided in due course.

The £650 payment to low-income households was announced in May by the Chancellor, Rishi Sunak MP, alongside a package of other financial support measure. See story below.

26 May: Chancellor Unveils £15bn Package To Counter Energy Bill Hike

UPDATE 27 MAY: Ofgem, the energy regulator, is warning people not to fall for scams where criminals say it is necessary to register for the payments or the bill discount listed below, before inviting recipients to provide bank details or click through to fake websites. Ofgem has issued no such notices or requests, so any such email, text or other communication should be ignored and reported to Action Fraud in England, Wales and Northern Ireland or to Police Scotland.

Rishi Sunak MP, Chancellor of the Exchequer, has presented a £15 billion package of measures designed to help households afford the expected steep increase in energy bills later this year.

All households will see £400 automatically cut from their bills in the autumn, with no need to repay, while those on means-tested benefits, pensioners and those on disability benefits will receive lump sum cash payments direct to their bank accounts. There will be no need to apply.

The energy bills price cap, managed by the market regulator, Ofgem, is expected to rise to around £2,800 a year for typical households on 1 October, up from £1,971. The current figure for households with a prepayment meter is £2,017 a year.

Ofgem’s chief, Jonathan Brearley, confirmed the £2,800 figure earlier this week (see story below).

The Chancellor also announced an energy profits levy on oil and gas production companies, which have enjoyed soaring profits due to high wholesale prices – this is expected to raise £5 billion.

The government is also exploring whether such a ‘windfall’ tax could be extended to the electricity generation sector.

The measures announced today include:

• £650 cash payment (in two instalments in July and the autumn) to eight million households on means-tested benefits
• £300 cash payment to pensioner households via an increase in the Winter Fuel Payment
• £150 cash payment to those in receipt of disability benefits, some of whom may also qualify for the £650 payment.

Additionally, Mr Sunak said that the £200 energy bill grant revealed in February and due to be deducted from all household electricity bills in October will be doubled to £400.

Crucially, he said it will not need to be repaid. Originally, the plan was for £40 a year to be deducted from bills for five years to recoup the original £200 grant.

Benefits calculation

As part of his cost-of-living address to Parliament, the Chancellor announced that benefits payable in the UK from April 2023, including the state pension, will rise in line with consumer prices as measured in September.

This reinstates the ‘triple lock’, which sees increases each tax year by the highest of three measures: consumer price inflation, average wage growth, or 2.5%.

The government opted to suspend the triple lock for the 2022/23 tax year in response to the pandemic, but the Chancellor has announced it will be reinstated this September for 2023 increases.

The most recent CPI figure from April this year, as calculated by the Office for National Statistics, is 9%.

The Bank of England and other financial commentators have warned that inflation could continue to remain stubbornly high for the remainder of 2022 and potentially beyond. 

If that’s the case, then the new benefit calculation will provide a significant boost to the state pension worth several hundred pounds a year for the 2023/24 tax year. The full UK state pension currently stands at £185.15.

Energy Profits Levy

In today’s speech, the Chancellor announced a Temporary Energy Profits Levy as part of the government’s cost of living support package. 

Oil and gas companies will face an additional 25% tax on profits, taking their effective rate from 40% to 65%. This is a temporary measure that will be phased out when oil and gas prices “return to historically more normal levels”. 

Mr Sunak mentioned that a ‘sunset clause’ will be written into the legislation, with the expectation that the temporary uplift in tax rates will cease at the end of 2025.

He also announced a new Investment Allowance to soften the blow for oil and gas companies. Companies will now receive 90% in tax relief for every £1 invested, almost double the previous level. Mr Sunak stated that “companies will have a new and significant incentive to reinvest their profits.”

Mr Sunak made reference to the “extraordinary” profits also being made in the electricity generation sector and pointed out that France, Italy, Spain and Greece have already taken measures to correct this.

The government is exploring whether generator companies should also face a profits levy.

Mr Sunak estimated that the Energy Profits Levy on oil and gas producers will raise £5 billion over the next year to help fund the £15 billion of support measures announced today.

24 May: October Energy Price Cap Could Rise To £2,800, Says Ofgem Boss

Average household energy bills could jump by more than £800 a year this autumn when the new energy price cap takes effect.

Jonathan Brearley, chief executive of energy regulator Ofgem, told MPs on the cross-party Business, Energy and Industrial Strategy Parliamentary committee that he expected the energy price cap to rise to “around £2,800” when it is recalculated later this summer.

The current cap, implemented in April, stands at £1,971.

Such a move would worsen the UK’s current cost-of-living crisis already being felt by millions of households.

Brearley attributed the rise to continued volatility in the gas market. This has been exacerbated by the Russian invasion of Ukraine, its impact on supplies and the subsequent knock-on for the price of fuel.

Volatile energy prices have already caused 30 UK energy companies to go bust since the beginning of 2021. Collapses such as these can also drive consumer prices higher because of the cost of reallocating customers of failed firms to other suppliers.

The price cap, which limits how much energy firms can charge for each unit of gas and electricity supplied to domestic customers, along with any standing charge, rose by 54% on 1 April this year.

The increase this spring meant that the bill for a household with average consumption, on a dual-fuel standard variable rate tariff and paying by direct debit, rose from the previous price cap level of £1,277 to just under £1,971.

Pre-payment meter customers also experienced a hike in prices – from £1,309 to £2,017 – also based on typical usage.

The cap, which is calculated twice-yearly at the moment, although Ofgem is pushing for it to be reviewed quarterly from the autumn (see stories below), applies to around 22 million households in England, Scotland and Wales. Northern Ireland does not have a price cap.

Brearley told MPs that energy price rises were a “once in a generation event not seen since the oil crisis in the 1970s”.

He also warned that the number of people in fuel poverty – defined as being when a household needs to spend more than 10% of its disposable income on heating its home – could double.

Using the current system of calculation, the price cap will be recalculated this August before being implemented on 1 October. Brearley estimated that, by the autumn, 12 million households could be placed in fuel poverty.

Brearley told MPs: “We are really managing between two versions of events. One where the price falls back down to where it was before, for example if there’s peace in Ukraine, but one where prices could go even further if we were to see, for example, a disruptive interruption of gas from Russia.”

The Ofgem boss also apologised for regulatory shortcomings and admitted that had financial controls been in place sooner for suppliers, fewer firms would have gone bust in the past year due to being unprepared for the sharp rise in wholesale energy prices.

The estimated jump in the price cap is likely to renew calls on the government to take further action to head off the impact on households facing soaring energy costs. One solution being suggested by opposition parties and campaigners is a windfall tax on energy companies which have enjoyed bumper profits in the first part of this year.

18 May: Analyst Predicts 5% Bills Reduction Under Quarterly Cap

Energy research specialist Cornwall Insight today provided analysis of the likely effect on energy bills of moving to a quarterly price cap review, compared to the current price cap review every six months (see story below). 

Dr Craig Lowrey, principal consultant at Cornwall Insight, said: “The devil will be in the detail. With greater complexity comes greater risk of unintended consequences. It would have been useful to see more detailed evaluation of price cap levels for the new world against the old from a consumer perspective.”

Cornwall Insight is forecasting that typical annual energy bills would rise to £2,750 this winter under the current price cap system. Under a quarterly review of the price cap, it predicts that bills would rise to £2,600.

While this remains a significant increase from the current price cap level of £1,971 a year for a household with average consumption, it would mean a 5% reduction compared to the six-monthly review period.

Ofgem, the energy market regulator, is undertaking a formal consultation of its proposed move to a three-monthly review of the price cap. It favours the move because, it says, it would protect energy suppliers who would be able to move their energy prices in line with changes in wholesale rates. 

Any changes would come into effect from October 2022 when the current price cap is due to change (the new level will be announced in August).

16 May: Ofgem Seeks Quarterly Cap Review Cycle

The UK’s energy regulator, Ofgem, is seeking reforms that would see its energy price cap adjusted every quarter rather than twice a year.

The cap was introduced in 2019 to protect consumers from unfair pricing, by limiting what energy suppliers can charge. It is currently updated in line with wholesale energy costs every April and October.

Under the proposed reforms, the cap would be updated every three months in January, April, July and October. 

The cap, which limits the amount consumers can be charged for each unit of energy used and for associated standing charges for gas and electricity, does not put a ceiling on bills. The more energy used, the higher the bill will be.

At present, the cap is £1,971 for an average household with a dual fuel (gas and electricity) variable rate tariff, paying annually by direct debit. There are fears this could rise to £2,600 or even £3,000 in October.

Last week, the government announced in the Queen’s Speech that the cap, introduced as a temporary measure in 2019, will be extended beyond 2023 in recognition of market conditions (see story below).

Fair price

Jonathan Brearley, Ofgem CEO, said changing to quarterly cap reviews could cut bills: “Our reforms will ensure consumers are paying a fair price for their energy while ensuring resilience across the sector.

“Today’s proposed change would mean the price cap is more reflective of current market prices, and any price falls would be delivered more quickly to consumers.”

Ofgem believes adjusting the price cap every quarter will help energy suppliers remain profitable as wholesale prices rapidly rise and fall, reducing the likelihood of corporate failures.

Volatile prices have caused around 30 UK energy companies to go bust since the beginning of 2021. Collapses such as these can drive consumer prices higher because of the cost of reallocating customers of failed firms to other suppliers.

Mr Brearley added: “The last year has shown that we need to make changes to the price cap so that suppliers are better able to manage risks in these unprecedented market conditions.”

In the midst of a cost-of-living crisis, falling energy bills could ease the strain on UK household budgets. However, if the cost of wholesale energy continued to soar, the bill would be passed onto consumers much more quickly if there were a quarterly cap change in place. 

Ofgem will initiate a consultation on the price cap plans today, which will remain open until Tuesday 14 June 2022. If these reforms come into effect, they will be put in place from October 2022.

10 May: Energy Security Bill Extends Ofgem Price Cap Beyond 2023

The Queen’s Speech, delivered by Prince Charles today to outline the government’s legislative programme for the next session of Parliament, included details of an Energy Securities Bill. This is aimed at protecting consumers from steep price hikes via an extension to the official energy price cap regime beyond 2023.

The Bill will also renew national emphasis on the switch to renewable energy sources and encourage households to install heat pumps as an alternative to traditional heating methods that are dependent on fossil fuels.

However, critics have suggested that the government should be taking more urgent action to alleviate the cost of living crisis in general and soaring energy bills in particular. The government has countered by stating that there are no short-term fixes available.

There are fears that the next iteration of the price cap, which will be announced by the regulator Ofgem in August and implemented in October, could reach £3,000 a year from its current level of £1,971 for typical households (see stories below).

The price cap was a temporary measure introduced in 2019 to prevent energy suppliers from making huge profits. The turmoil in the market since wholesale prices escalated at the beginning of 2021 has necessitated its being extended to protect customers from suffering the full extent of costs, hence the announcement today.

Currently, the cap changes twice a year in April and October, but Ofgem is proposing to adjust it more frequently if market conditions dictate.

9 May: Govt Plans To Extend Warm Home Discount In Scotland As Power Chief Demands Drastic Action

The UK government is proposing to expand its Warm Home Discount scheme in Scotland, with around 50,000 extra families being added to the 230,000 that already receive payments.

The £140 payment towards winter electricity bills would also increase to £150, with more suppliers encouraged to participate. The scheme would also be extended to 2025 to 2026.

The aim is to bring the Scottish scheme into line with the comparable schemes in England and Wales.

The government said: “The Warm Home Discount in Scotland will continue to focus support on those in receipt of means-tested benefits such as Universal Credit and Pension Credits, which ensures that rebates go to those on the lowest incomes.

“Energy suppliers can use additional eligibility criteria, as long as the criteria identify households at risk of fuel poverty, subject to approval from (energy regulator) Ofgem.”

You can find out more here about the Warm Home Discount scheme, including eligibility criteria.

Shock proposal

In an interview with the BBC, Keith Anderson, head of Scottish Power, has repeated his calls for vulnerable households to receive a reduction of £1,000 in their energy bills in the autumn, with the cost being met by a £40 increase in the annual bills of other energy customers for five years, starting in 2023.

Mr Anderson first made the proposal when questioned in Parliament last month (see story below). He believes up to 10 million households are at risk of fuel poverty when the next adjustment to the Ofgem price cap is made in October.

He is concerned that the cap will be set too low because Ofgem will use current low gas prices in its calculations, whereas many suppliers have already paid recent high prices for future supplies.

If the cap prevents suppliers from recouping what they have already spent, Mr Anderson said we could see further corporate failures on top of the 30 we have seen in the past 18 months.

This would feed significant additional costs into the system which would ultimately have to be added to customer bills.

Pundits are suggesting that the October price cap figure could land somewhere between £2,500-£3,000 for typical users, up significantly from its current level of £1,971.

3 May: Govt Backs Regulator Over Excessive Direct Debit Increases

Kwasi Kwarteng MP, business and energy secretary, has today confirmed that the energy market regulator, Ofgem, is scrutinising the behaviour of suppliers with regard to excessive increases in customer direct debits, with substantial fines likely if firms continue to transgress.

In a tweet this afternoon, Mr Kwarteng put his voice behind what many customers have been saying in recent weeks – that suppliers have demanded regular payments at a level far in excess of what might be justified by the increase in Ofgem’s price cap on 1 April.

The cap increased by 54%, adding almost £700 to typical annual energy bills for those paying by direct debit for a dual fuel variable rate tariff. The current average price of £1,971 is expected to rise even further in October, when the next cap review is implemented, due to high wholesale prices.

Mr Kwarteng tweeted: “Some energy suppliers have been increasing Direct Debits beyond what is required.

“I can confirm Ofgem has today issued Compliance Reviews. Suppliers have three weeks to respond.

“The regulator will not hesitate to swiftly enforce compliance, including issuing substantial fines.”

Ofgem first raised the issue of supplier bad practice in April when its boss, Jonathan Brearley, said: “We are seeing troubling signs that some companies are reacting to these (market pricing) changes by allowing levels of customer service to deteriorate.

“Concerns have been raised that some suppliers may have been increasing direct debit payments by more than is necessary, or directing customers to tariffs that may not be in their best interest. 

“When households are facing massive increases in their energy bills, it is particularly important that suppliers are held to account and bad practices are addressed quickly.”

The compliance reviews will include stricter supervision of how direct debits are handled and how much firms are holding in customer credit balances. 

Mr Brearley said: “This work will allow Ofgem to determine if companies are fulfilling their licence conditions and to work with them to rectify deficiencies. Where they fail to do so, we will not hesitate to take swift action to enforce compliance, including issuing substantial fines.”

Ofgem is also cracking down on the practice whereby companies use customer money to prop up their business rather than buy energy. It says this is one of the root causes of the failures of many of those suppliers who exited the market.

Mr Brearley said: “Customer credit balances should only be used to reconcile bills, not as a source of risk-free capital. That is why we are considering options to ring-fence credit balances and renewables payments in such a way that they would be protected if a supplier fails.”

Around 30 companies have gone bust since the start of 2021.

Energy Chiefs Demand ‘Massive Shift’ In Govt Policy

CEOs of some of the UK’s largest energy companies are calling on the government to provide urgent and concrete financial support to struggling customers facing huge increases in their bills.

Speaking at a meeting of the Business, Energy & Industry Strategy Parliamentary Select Committee today, Keith Anderson, head of Scottish Power, told MPs that the current affordability crisis “is of a size and scale beyond what the industry can deal with.”

Energy prices leapt by 54% on 1 April when the market price cap, set by the regulator, Ofgem, was increased to take account of higher wholesale costs in recent months. Average annual bills now stand at around £2,000.

The cap is expected to increase further on 1 October due to the impact of the war in Ukraine on energy supplies. Mr Anderson said the effect of the October cap change will be “horrific”.

One proposal for government intervention is the creation of a ‘deficit fund’, which would see £1,000 removed from the annual bills of customers deemed to be in fuel poverty or on a prepayment meter. This fund would then be repaid over 10 years by the entire energy customer base.

Mr Anderson said this short-term measure should lead to the creation of a discounted social tariff, again aimed at those in fuel poverty and those on a prepayment deal.

Michael Lewis, head of Eon, said the government could also remove VAT from energy bills (it is charged at 5%) and transfer environmental levies from bills into the general taxation burden. Taken together, these measures could reduce annual average bills by £250 – £300.

Further measures could include extending the Warm Home Discount, worth £150 a year next winter, to a larger number of people, and increasing the £200 energy rebate that will be paid by the government to all UK domestic electricity accounts in the autumn.

Mr Lewis also called for the roll-out of energy smart meters to be made mandatory to help improve efficiency across the market.

Chris O’Shea, head of British Gas owner Centrica, said the regulation of the industry should be overhauled to prevent future corporate failures. Around 30 energy firms have collapsed in the past 12 months, with the resultant administration costs adding £68 to the standing charges paid by every energy customer.

Mr O’Shea told the cross-party committee of MPs that he fears more business failures next winter, with the grim possibility that they could dwarf what has gone before.

The assembled energy bosses expressed support for the announcement last week by the regulator, Ofgem, that it will pursue tighter controls to prevent companies from using customer funds to prop up their businesses. 

They also backed moves to stop energy companies increasing customer direct debits by disproportionate amounts, and to bar them from moving customers to fixed rate tariffs costing more than standard variable rate tariffs.

Ofgem has threatened to levy substantial fines on companies that do not comply with its rules.

19 April: MPs To Grill Energy Chiefs Today

The cross-party Business, Energy & Industrial Strategy Committee will today quiz representatives of four major energy firms on the support they are providing customers in the wake of a 54% hike in average bills on 1 April.

CEOs from Centrica (owner of British Gas), E.ON, EDF and ScottishPower will face MPs at 10:30 this morning. 

MPs are expected to focus on the issue of suppliers reportedly increasing direct debits beyond a level consistent with the new energy price cap of £1,971 a year for typical consumption. 

There have also been reports of customers being forced onto expensive fixed rate deals instead of variable tariffs, which are cap-controlled.

MPs will also question the bosses on how they will help implement the government’s Energy Security Strategy (see story below). Other topics on the agenda include the delivery of the £200 energy bill rebate scheme in the autumn, the future of the price cap, and whether the market will remain competitive.  

Also scheduled to appear before the committee are the bosses of collapsed suppliers Bulb and Avro, who will be scrutinised over the management of their firms before they went out of business last year.

A significant part of the increase in the price cap this month is attributed to the cost of reallocating customers from the 29 firms that have ceased trading since the energy crisis started to bite last summer with a sharp increase in wholesale prices.

The Committee says the failure of Avro, which folded owing £90m to customers, is expected to cost consumers £700 million. 

Bulb was effectively nationalised – put into a Special Regime overseen by the regulator, Ofgem, and the government – after being deemed too big to fail. The government is trying to find a buyer to take it over amid reports that its life support arrangement could hit £3 billion. 

7 April: Govt Energy Strategy Adopts Long Term Focus, Ignores Immediate Price Crisis

The government has published its British Energy Security Strategy, with the emphasis on moving to low-carbon generation and boosting UK energy self-sufficiency in the next 10-15 years. But the initiative does little to address pressing concerns about the affordability of energy during the current cost of living crisis.

The government says: “Consumer bills will be lower this decade than they otherwise would be as a result of the measures this government has taken.”

There have been calls from opposition MPs and consumer advocates for the government to call an emergency Budget to address the squeeze on household finances. Critics of the overall strategic approach have also argued that more emphasis should be given to improving energy efficiency, for example, by greater subsidies for insulation of UK housing stock.

The new energy strategy says the government will support the production of domestic oil and gas in the nearer term, but this activity is unlikely to reduce the likelihood of another hike in the domestic energy price cap in October.

The cap – adjusted twice yearly – reflects movements in wholesale energy prices. October’s cap will take into account prices in the six months to the end of July, which are being inflated by fears of supply, in part due to the conflict in Ukraine.

The government’s ambition to de-carbonise energy production will see the acceleration of the deployment of wind, new nuclear, solar and hydrogen. It says this could see 95% of electricity by 2030 being low carbon – there is a legal requirement for the UK to achieve net zero carbon emissions by 2050.

Some critics have suggested that energy bills – many of which increased by 54% on 1 April when the price cap was increased – could be reduced by £100 in the short-term by the removal of so-called ‘green levies’, which help fund environmentally-friendly energy initiatives.

Nuclear initiative

The government strategy says nuclear generation – which it calls a safe, clean, and reliable source of power – will represent up to around 25% of the UK’s projected electricity demand. 

A new government body, Great British Nuclear, is being set up to bring forward new projects “as soon as possible this decade”, including Wylfa site in Anglesey. The strategy document says up to eight new reactors could be built.

Other plans include:

• Offshore wind: There are plans to generate up to 50GW by 2030 – sufficient to power all UK homes. Planning reforms are intended to cut approval times for new offshore wind farms from four years to one year.
• Onshore wind: The government will explore the potential to reward communities who host new onshore wind infrastructure with guaranteed lower energy bills. This would potentially counter objections from those opposed to onshore wind farms on aesthetic grounds.
• Oil and gas: Licences for new North Sea oil and gas projects will be issued later this year. This is a controversial move that will draw fire from the environmental lobby, but the government says domestic production of fossil fuels will boost UK fuel security and that producing gas in the UK has a lower carbon footprint than importing it from abroad.
• Heat pumps: There will be Heat Pump Investment Accelerator Competition in 2022 worth up to £30 million to make British heat pumps, which reduce demand for gas.Grants of £5,000 are currently available to households looking to install heat pumps.
• Solar: The government wants to increase the UK’s solar electricity generation capacity by a factor of five by 2035. It says it will consult on the planning rules for solar projects, particularly on domestic and commercial rooftops.
• Hydrogen: The strategy wants to double hydrogen production capacity by 2030, with at least half coming from green hydrogen, with excess offshore wind power being used to bring down costs.

31 March: Ofgem Wades Into Energy Meter Reading Furore

Energy market regulator Ofgem is ‘engaging with suppliers’ following multiple reports of customers being unable to submit meter readings ahead of the 54% increase in its price cap, effective tomorrow (1 April).

Customers are trying to submit up-to-the-minute readings ahead of the price increase, which affects those on variable rate tariffs, so that they can ensure they pay today’s lower rate for the energy they use in March.

The fear is that, if they rely on their supplier’s estimate of how much energy they have used, some of their March usage might be billed at the higher, April rate.

The cap on prepayment meters bills is also increasing tomorrow, but as customers here are on pay-as-you-go terms, there is no need to log a meter reading.

In a series of tweets this afternoon, Ofgem said: “We are aware some energy suppliers are having trouble with their websites today, affecting people being able to submit meter readings or access their online account. We are engaging with suppliers on the issue.

“Consumers who experience issues should contact their supplier straight away, and take a picture of their meter reading if high contact volumes mean they are unable to get through.

“Suppliers must take all reasonable steps to provide ways for consumers to access their account information, including submitting meter readings.”

A number of replies to the tweets pointed out that consumers are not able to contact their suppliers precisely because websites and phonelines have been overwhelmed by the number of people trying to get in touch.

Anyone worried about reaching their supplier today is advised to take a photograph of their meters (gas and electricity) and email them to their own account so they have a record of usage up to today’s date.

This can then be submitted at a later date or kept to hand in case of a dispute in the future.

Those with smart meters will have their readings sent automatically to their supplier, but they are of course at liberty to take and retain a photograph if they wish.

Those on fixed rate energy tariffs will see no change to their bills from tomorrow as their deals are outside the scope of the price cap.

“People are worried”

In another tweet thread, Emma Pinchbeck of supplier trade body Energy UK, said websites are down because of the scale of the customer inquiries: “People are very worried, and of course they’ve seen consumer groups say today is the deadline for submitting readings.

“We’re just checking in with members but note: a) some suppliers won’t implement new prices tomorrow b) most will take meter readings after today and have put other measures in place for submission. Don’t panic, check meter, keep reading: many suppliers have info on their twitter.

“Meanwhile, website & call centre failures for industry & consumer groups reflect scale of concern. It highlights how scary these price rises are, and what industry has been saying to Gov: the high gas price isn’t just an issue for vulnerable customers, and more needs to be done.”

Yü Energy Takes On Whoop, Xcel Power Customers

Yü Energy Retail Limited, a firm supplying 20,000 UK premises, is taking on customers from Whoop Energy and Xcel Power Limited, which ceased trading last week (see story below).

As it the case when suppliers go out of business, the market regulator, Ofgem, ran a competitive tendering process and identified Yü Energy as the best candidate for customers of the failed firms. 

Yü Energy is primarily known as a business energy supplier, but it posted a reassuring message on its website to the the 50 domestic customers moving across from Whoop: “Ofgem decided that we were the best people for the job. We proved we were able to take over your supply and are committed to bringing you on board. Yü Energy is a strong business with a long-term strategy and the ability to ride out the current challenges in the energy industry.”

Domestic customers will be transferred to a tariff protected by the Ofgem price cap (see stories below). Business energy tariffs are not governed by the price cap. Commercial customers will be moved to a fixed rate tariff, with prices announced in the coming days.

Anyone wishing to switch supplier can shop around but are advised to wait until the transfer has been completed. Customers will not be charged exit fees if they decide to switch to another supplier. For more information customers can visit www.yuenergy.co.uk.

At present, there are no domestic tariffs available for less than the current price cap, which is in place until 31 March. On 1 April it will increase by 54% to take account of rising wholesale prices.

The cap for a household with average consumption on a dual-fuel standard variable rate tariff, paying by direct debit, will rise by £693 from £1,277 to just under £1,971. Prepayment meter customers will see an increase of £708 from £1,309 to £2,017, again for typical usage.

Actual bills will always be determined by consumption, so the cap is not a limit on how much will be charged to any given consumer.

Customers’ supplies will continue as normal following the switch over to Yü Energy on 19 February 2022. They will be contacted over the coming days about the changes. They should take a meter reading as soon as possible.

18 February: Further Two Firms Cease Trading

Two of the energy markets smaller players, Whoop Energy and Xcel Power, have announced they are ceasing to trade.

This brings to 28 the number of firms that have closed their doors since the current energy market crisis deepened last August with a spike in wholesale prices.

Whoop Energy suppliers gas and electricity to 262 customer accounts – 50 domestic and 212 non-domestic. Xcel Power has 274 non-domestic gas customers.

Under the safety net protocol operated by Ofgem’s, the energy market regulator, customers’ supply will continue and funds that domestic customers have paid into their accounts will be protected, where they are in credit.

Domestic customers will also be protected by the energy price cap when being switched to a new supplier. The price cap, currently £1,277 a year for dual fuel users with average consumption, will rise to £1,971 on 1 April (from £1,309 to £2,017 for those with pre-pay meters).

The existence of the cap has sheltered consumers from the worst impact of rising energy prices, although the forthcoming 54% increase is unprecedented and is forecast to tip millions into financial hardship.

For suppliers, the cap has meant they have been effectively selling energy at a loss, hence the catalogue of corporate failures in recently months.

Customers of Whoop Energy and Xcel Power Ltd will be contacted by their new supplier, which will be chosen by Ofgem, in due course. Ofgem’s advice to affected customers in the meantime is to:

•    wait until a new supplier has been appointed and you have been contacted by them in the following weeks before looking to switch to another energy supplier.
•    take a meter reading ready for when your new supplier contacts you to make the process of transferring customers over to the chosen supplier and honouring any funds that domestic customers have paid into their accounts, where they are in credit, as smooth as possible.

16 February: Ofgem Battles Market Turmoil With ‘Stabilisation’ Measures

With the startling 54% increase in its domestic price cap just six weeks away on 1 April, energy regulator Ofgem has announced two measures designed to improve the stability of the market and shield consumers from further steep increases.

It hopes to reduce the number of companies that might go bust as a result of the continuing high price of gas and electricity on wholesale markets. 

The cost of reallocating customers of the 26 companies that have failed since the crisis deepened last summer is estimated to be £4 billion, which will feed through to customers’ bills.

The first measure will be to require suppliers to offer all their tariffs to existing as well as new customers, rather than offer unrealistically cheap deals to new customers to get their business on the books.

According to Ofgem, this will “help to stabilise the market in the short term by acting as a break on unsustainable price competition when cheaper tariffs return and customer switching picks up again. 

“It will also limit price discrimination by suppliers and help to improve consumer trust and confidence in the retail market after the challenges of this winter, improving access to cheaper tariffs for consumers who may be less willing or able to switch supplier, particularly those in vulnerable situations.”

The second measure is the potential to levy a market stabilisation charge if wholesale prices fall significantly after the new price cap level takes effect. 

This would see companies that are acquiring new customers pay a charge to those losing the business, to smooth out the extreme effects of wholesale price volatility.

Ofgem concedes that, if the charge is triggered, it will reduce “to some degree” the cheapest tariffs available in the market. It adds: “However, there will still be significant savings available to active consumers looking to switch.”

Additionally, the expected reduction in the number of companies going out of business will reduce upward pressure on bills.

Both measures are expected to be removed in the autumn when Ofgem hopes to bring in further reforms to its price cap mechanism.

These include introducing quarterly reviews (at present the cap is reviewed each February and August with any change taking effect in April and August) and a reduction in the notice period suppliers are required to give their customers from two months to one.

9 February: Households ‘Paid’ To Cut Winter Energy Usage

Households will get credit on their energy bills by limiting their energy consumption during peak hours this winter, as part of a new National Grid plan.

The National Grid Electricity System Operator (ESO) is partnering with Octopus Energy to see if, between 11 February and 31 March, it can better match energy demand with supply – and it will offer one-off ‘financial incentives’ to those taking part.

Around 1.4 million Octopus Energy customers with smart meters will be eligible for rewards if they reduce their power consumption below what they’d normally use between one of a range of two-hour time slots each day throughout the two-month trial.

Each day’s two-hour window – 12-2am, 9-11am or 4.30-6.30pm – will be announced by 4pm the previous day, giving those involved the chance to opt in or out. Those who opt in will be able to earn up to 35p of free energy for every kilowatt hour (kWh) they don’t use.

The trial could reduce power demand by as much as 150 Megawatts (MW) during each two-hour event, or 75 megawatt hours (MWh). For context, the average UK household uses around 15,000 kilowatt hours (kWh) of gas and electricity per year – equivalent to 15 MW.

ESO will use data gathered during the pilot to inform its plans to run a zero-carbon grid for certain periods by 2025, and a fully decarbonised grid by 2035. It hopes the data will allow it to balance supply and demand more efficiently, with savings passed on to households.

Isabelle Haigh of ESO said: “Encouraging households to engage in exciting climate-friendly energy opportunities like this trial will be crucial in our transition to net zero.

“System flexibility is vital to help manage and reduce peak electricity demand and keep Britain’s electricity flowing securely.

“This trial will provide valuable insight into how suppliers may be able to utilise domestic flexibility to help reduce stress on the system during high demand, lower balancing costs and deliver consumer benefits.”

Energy prices

The trial comes less than a week after the energy regulator Ofgem announced a 54% increase to its energy price cap for 22 million households in England, Scotland and Wales – up from £1,277 to just under £1,971 for those with average consumption levels.

It means a household with average consumption on a dual-fuel standard variable rate tariff, paying by direct debit, will pay an extra £693 for energy from April 1.

The government responded to the unprecedented increase by announcing £350 worth of support for around 30 million households – comprising a £150 Council Tax rebate and a £200 loan to be repaid over five years from 2023.

4 February: Govt Comes Out Swinging On Energy ‘Myths’

With consumers reeling from the 54% hike in the energy price cap from 1 April announced yesterday (see stories below), the government has published an article – Busted: the 9 big myths on energy in the UK – intended to dispel “some of the popular myths around energy price rises in the UK.”

The effect of the price cap increase will be to push up average annual bills from £1,277 to £1,971 (from £1,309 to £2,017 for those with pre-pay meters). 

The scale of the rise, while widely expected, has still proved to be a huge shock for the near-30 million households that will be affected.

Government proposals to soften the blow – a £200 reduction in bills in October (to be repaid over five years) and a £150 Council Tax rebate (that doesn’t need to be repaid) for those in bands A to D to coincide with the cap hike in April – have been branded as inadequate and poorly targeted by consumer groups and opposition parties.

There have been calls for more money to be diverted towards eradicating fuel poverty, which is when required spending on energy pushes a household below the official poverty line.

Commentators are pointing to Shell’s huge increase in operating profits – up to £12 billion for 2021, also announced yesterday – and urging the government to impose a windfall tax on energy production companies that have benefited from a spike in prices on wholesale markets.

There is no indication the government is considering such a move.

We’ve published the government’s article below to give an insight into official thinking on the energy market, and added our own comments under each ‘myth’.

Myth 1. Isn’t the Energy Price Cap causing these problems?

“No, rising energy prices are the result of a global spike in gas prices, which has a number of causes including rebounding global demand as COVID-19 lockdowns ease and a greater liquified natural gas demand in Asia.

“In fact the Energy Price Cap continues to protect millions of customers and ensures they pay a fair price for their energy, despite the sudden rise of wholesale energy costs.

“But in light of continued cost of living pressures, the government has announced a package of support to help households with rising energy bills, worth £9.1 billion in 2022 to 2023.

“This includes:

• a £200 discount on their energy bill this Autumn for domestic electricity customers in Great Britain. This will be paid back automatically over the next 5 years
• a £150 non-repayable rebate in Council Tax bills for all households in Bands A-D in England
• £144 million of discretionary funding for local authorities to support households who need support but are not eligible for the Council Tax rebate

“The devolved administrations are also receiving around £715 million funding through the Barnett formula as usual where UK government support doesn’t cover Scotland, Wales or Northern Ireland.”

We say: Critics argue that, even if a household receives the full £350, this will only be roughly half of the typical increase in bills from 1 April – with £200 of it in the form of a loan in October that will need to be repaid at £40 a year via higher bills for five years, starting 2023.

There are also concerns about the administration of the scheme, with suggestions that some people who do not receive the loan may still have to pay higher bills if they become energy customers in subsequent years.

2. Will the new schemes not just encourage higher prices, rather than more supply?

“No, because the Energy Price Cap remains in place to protect consumers.”

We say: Energy firms will not be able to charge more than the cap for standard variable rate tariffs. But the cap is widely expected to increase again when it is reviewed in August for implementation in October. So while the release of government money will not inflate prices, consumers are still facing a further hike in their bills.

3. Isn’t this all just a chance for oil and gas companies to make massive profits at our expense?

“Neither oil or gas companies or energy supply companies will benefit financially from the new schemes announced today and all the money will be passed through to domestic energy consumers.”

We say: The energy price cap is structured in such a way to prevent energy suppliers making excessive profits – that was the thinking behind its introduction in 2019. But the perception remains that consumers are bearing an unfair burden in an era of high wholesale prices.

4. Why are we still exporting gas to other countries rather than boosting our own supply?

“As an internationally traded commodity, gas is exported and imported in line with price signals. Broadly, the UK imports more than it exports.

“The UK continues to benefit from strong security of gas supply, benefitting from highly diverse sources, including through one of the largest liquified natural gas import infrastructures in Europe.”

We say: Critics point out that the UK’s gas storage capacity has been severely reduced in recent years, leaving the country exposed to short-term price fluctuations because there is no alternative to paying market rates to maintain supply.

5. Why do we keep closing down coal power stations? Wouldn’t this help with keeping energy prices down?

“Closing coal plants is not increasing energy prices. In line with our net zero target, the government has committed to phasing out unabated coal-fired power generation by 2024. Closure of coal units ahead of this date is a commercial decision for the companies involved.”

We say: The government has to balance its commitment to moving to a net zero carbon economy by 2050 with the need to ‘keep the lights on’ in the meantime. It will be forced to make more difficult decisions with regard to the use of carbon fuels, including natural gas, as that date approaches.

If credible, reliable alternatives to fossil fuels are not brought on stream in the near term, gas is likely to remain high in the mix, with all that implies for domestic bills.

6. Why haven’t we upped our domestic gas production in the North Sea or granted new drilling licences?

“Roughly around half the UK’s gas supply comes from domestic sources, and the UK’s gas sector has been maximising production where possible through this winter.

“Most imports come from reliable suppliers such as Norway. We also have one of the largest liquefied natural gas (LNG) infrastructures in Europe.

“We have also been working with oil and gas operators in the UK to develop additional fields. Three new gas streams came online at the end of last year, with more upcoming. However, the biggest factors influencing gas prices are attributable to international activity extending beyond Great Britain’s domestic production.

“Less than 3% of our gas was sourced from Russia in 2020.”

We say: Private companies extracting gas from the North Sea and other fields around the UK sell their products on the open market where they can get the best price. They are under no compulsion to sell into the UK market at a subsidised or controlled cost, and it is hard to see a Conservative government changing this system.

7. Aren’t other countries doing more than the UK?

“It is important to note that higher wholesale gas prices are being faced internationally due to multiple factors in supply and demand – with some countries in Europe in particular facing much more severe security of energy supply challenges than the UK.

“The package of measures announced by the Chancellor will mean millions of households receiving up to £350 to help with the cost of living. That is broadly in line with the support offered by most of our European neighbours, and in many cases is more generous.”

We say: Different countries are adopting different solutions to the general problem of high wholesale prices. For example, the French government has said that energy consumers should only see an increase in bills of 4%, with the national energy operator, EDF, responsible for costs above that level.

However, as EDF is state-owned by the French government, these costs are likely to become part of the country’s general taxation burden, so this in one sense can be seen as financial sleight of hand.

8. Have oil companies been doing share buybacks, rather than investing?

“Decisions on the scale of capital investment in production and the way returns are made to investors are commercial decisions for companies. The UK remains an attractive destination for companies to invest in oil and gas production.”

We say: The Conservative party is rooted in free-market economics. It is hard to see that changing, although conflict in Ukraine, with associated disruption to gas supplies, might mean all bets are off, at least temporarily.

9. Has the UK not gone fast enough on green energy?

“The government is doubling its efforts to generate more clean, affordable power in this country to meet the target of decarbonising Britain’s electricity system by 2035. 

“Since 2010 we have increased the percentage of power from renewables from 7% to 43% as of 2020, and our latest allocation round of the successful Contracts for Difference scheme is seeking up to 12 GW of additional renewable capacity. This would be more than the previous 3 rounds combined.”

We say: The government has given itself highly ambitious green energy targets that will require sustained investment. Its progress on these measures will be closely monitored, both by the green lobby and by those concerned with security of supply.

Sustained PR campaign

The government is already grappling with a cost of crisis that includes likely higher mortgage costs following yesterday’s increase in the Bank rate to 0.5%, higher national insurance contributions from April, and inflation above 5% and predicted to hit 7% in the coming months.

The surge in the energy price cap is adding to its woes, and there will be a fresh round of negative reporting when the price cap rise takes effect on 1 April. We can probably expect to see further messaging of this nature in the coming weeks.

Govt Responds To Price Cap Hike With £200 Bills Discount Loan

Close on 30 million households will benefit to the tune of up to £350 in reduced bills and rebates following the 54% rise in the energy price cap announced earlier today (see story below).

The Chancellor Rishi Sunak told the House of Commons this morning that all domestic electricity customers will get £200 off their energy bills from October. Additionally, 80% of households will receive a £150 Council Tax rebate from April.

Energy suppliers will apply the discount to 28 million domestic electricity customers from October, with the Government meeting the costs. The discount will then be recovered from people’s bills in equal £40 instalments over the next five years.

This will begin from 2023, when the government says global wholesale gas prices – the prime reason for the 54% increase in the price cap – are expected to come down.

Households in England in council tax bands A-D will receive a £150 rebate, made directly by local authorities from April. This will not need to be repaid. The government is also making available discretionary funding of £144 million to support vulnerable people and individuals on low incomes that do not pay council tax, or that pay for properties in bands E-H.

Devolved governments in Scotland, Wales and Northern Ireland are expected to receive around £565 million of funding as a result of the Council Tax Energy Rebate in England. Northern Ireland will receive £150 million of additional funds to provide support for energy bill-payers.

The Chancellor also today confirmed plans to go ahead with existing proposals to expand eligibility for the Warm Home Discount by almost a third to three million vulnerable households will now benefit. The planned £10 uplift to £150 from October has also been confirmed.

3 February: Ofgem Confirms Huge Rise In Price Cap

The energy price cap, which limits how much firms can charge for each unit of gas and electricity supplied to domestic customers, as well any standing charge, is to rise by 54% on 1 April 2022.

This means the level of the cap for a household with average consumption on a dual-fuel standard variable rate tariff, paying by direct debit, will rise by £693 from £1,277 to just under £1,971. Actual bills will always be determined by the amount of energy used.

Prepayment meter customers will see an increase of £708 from £1,309 to £2,017, again for typical usage.

The cap applies to around 22 million households in England, Scotland and Wales. Northern Ireland does not have a price cap.

The increase is due to sustained high wholesale gas prices in the six months to the end of January – the period used by Ofgem, the market regulator which sets the cap, to determine what the new level should be. Once in effect from April, the cap is due to remain at the same point until the end of September, when it will be adjusted again.

However, Ofgem is to unveil measures later this week that may allow it to make adjustments more often than six-monthly. It said: “Further measures include enabling Ofgem to update the price cap more frequently than once every six months in exceptional circumstances to ensure that it still reflects the true cost of supplying energy.”

Such has been the cost of wholesale gas that around 30 energy suppliers have gone out of business in recent months, with their customers transferred to larger rivals. The effect of the cap has been to prevent suppliers from charging enough to cover the cost of buying gas in bulk, leading to them operating at a loss.

Gas prices have risen on international markets because of high demand post Covid lockdown. Alternative sources of energy, such as wind, solar and nuclear, have not been able to meet requirements.

The government is to announce measures later today to help beleaguered households cope with the massive escalation of costs. Rishi Sunak MP, Chancellor of the Exchequer, is to hold a press conference this evening, with expectations high that he will provide details of a fund from which energy companies can borrow money in order to reduce the amount by which bills will increase.

But as this would be a loan, the belief is that bills would need to remain artificially high, even after the gas supply crunch comes to an end, to fund repayments.

Ofgem Cap Update Expected Tomorrow As Govt Mulls Support Measures

Ofgem, the energy market regulator, is expected to announce the next level of its price cap tomorrow (Thursday 3 February). The cap, which dictates how much energy firms can charge per unit of gas and electricity they supply to domestic customers, will be adjusted on 1 April and will remain at the new level until 30 September.

The announcement was scheduled for next Monday but has reportedly been brought forward because the government is keen to unveil a package of measures to help hard-pressed energy consumers.

The cap is widely expected to increase from its current level of £1,277 a year (for typical households on a dual fuel gas and electricity tariff paying in arrears) to around £2,000 a year.

The cap for households with pre-payment meters – currently standing at £1,309 a year for average consumption users – is also expected to rise steeply.

At present, there are no cheaper alternatives to the cap, meaning customers who are not on fixed rate deals already have no option but to pay it. If the cap rises as expected, there may be scope for suppliers to undercut it, but such as been the increase in wholesale energy costs in the past year that this may prove a struggle.

The increase in the cap will stretch many household budgets to breaking point and beyond. In response, the government is expected to announce a package of measures to support consumers, possibly as soon as Thursday afternoon.

We will provide details as they arrive.

24 January: British Gas Takes On Together Customers

British Gas is taking on the customers of Together Energy Retail after the Bristol-based supplier closed its doors last week (see story below).

The move was announced by Ofgem, the energy market retailer, which runs a safety net operation in the case of corporate failures. Together Energy, which also uses the brand Bristol Energy, has 176,000 domestic customers and 1 non-domestic customer.

Under the provision of the safety net, money that current and former domestic customers of the suppliers have paid into their accounts will be protected, where they are in credit. Domestic customers will also be moved to a British Gas tariff that is governed by Ofgem’s energy price cap. 

The will be no interruption to energy supplies. Customers of Together Energy will be contacted over the coming days about the changes. If customers wish to switch supplier, they can shop around but are advised to wait until the transfer has been completed.

Customers will not be charged exit fees if they decide to switch to another supplier, although they are extremely unlikely to find a tariff priced below the level of the price cap, which stands at £1,277 a year for a typical household on a dual fuel deal.

Customers seeking more information can contact British Gas.

18 January: Together Energy Retail Is First Company Failure of 2022 

The UK’s beleaguered energy sector was delivered another blow today with the announcement that Together Energy Retail has gone out of business.

The firm – which also runs Bristol Energy – supplies around 176,000 domestic customers, and one non-domestic customer.

Under the safety net operated by Ofgem, the market regulator, customers’ energy supply will continue and funds that domestic customers have paid into their accounts will be protected, where they are in credit. 

Domestic customers will be switched to a new supplier, with their new tariff protected by the energy price cap.

Customers will be contacted by their new supplier over the coming weeks. This firm will be chosen by Ofgem after a tendering process.

Ofgem’s advice to customers is to:

• wait until a new supplier has been appointed and you have been contacted by them in the following weeks before looking to switch to another energy supplier (at the moment there are no tariffs priced below those operating at the level of the energy price cap)
• take a meter reading ready for when your new supplier contacts you to make the process of transferring over to the new supplier as smooth as possible.

Together is one of almost 30 suppliers that have gone bust in the past 12 months due to an unprecedented increase in global gas prices.

The price cap means that suppliers are unable to pass on the full cost of paying wholesale suppliers for energy, meaning they are effectively selling to UK customers at a loss. This is the reason for such a volume of corporate failures – and with no sign of any meaningful reduction in wholesale prices in the near future, there may be more to come.

The price cap currently stands at £1,277 per annum for an average consumption household paying for a dual fuel tariff by direct debit. The new level of the cap will be announced on 7 February, to take effect on 1 April.

Many analysts fear it could reach £1,900 or even £2,000, pushing many household budgets to breaking point.

Ofgem, the government and energy firms are exploring ways in which to reduce the impact of any price hike on customers.

15 December: Energy Price Cap Under Review As Ofgem Gets Tough

The energy price cap that has shielded many UK households from the full impact of huge rises in natural gas prices this year could be about to change as part of a shake up by the industry regulator, Ofgem

Rules are being brought in to make sure the energy market doesn’t collapse, following a year in which 28 energy suppliers went bust. Part of the changes involve a review of the price cap.

It’s been an unprecedented year for energy company failures. Record natural gas prices – up by more than 250% since January – have put pressure on smaller suppliers with limited reserves, forcing many to fold.

Suppliers said they were hampered by the Ofgem energy price cap, which protected customers from spiralling prices but prevented firms from passing on their increased costs to bill payers.

Ofgem is seeking views on whether the price cap should be changed to better handle volatility in the market.

The price cap limits the rates a supplier can charge for their default variable rate tariffs. These include the standing charge and price for each kilowatt hour (kWh) of electricity and gas. Ofgem sets a new cap for each summer and winter, reflecting global wholesale prices.

The new level of the cap is announced in August and February, and the change takes effect in April and October. The last change was a 12% increase on 1 October, taking it to £1,277 a year for a household with average consumption levels.

The next update in April will be based on an agreed formula that takes account of wholesale energy prices between August 2021 and January 2022 – which means it’s likely to go up. Some commentators have said that a price rise of £300-£400 is on the cards.

The cap is due to end by the end of 2023, but may be changed or withdrawn sooner in light of 2021’s energy market troubles. 

Ofgem’s announcement that it will review the energy price cap coincides with a sharp increase in inflation. 

Consumer Price Index inflation rose from 4.2% to 5.1% in November, according to Office for National Statistics (ONS) data. Independent think-tank Resolution Foundation said the figures were likely to put a squeeze on living standards and predicted inflationary pressures would continue into early 2022.

New Rules For Suppliers

From January 2022, suppliers will have to undergo financial stress testing to make sure they can withstand market pressures that could sink them if their finances aren’t robust enough. 

Ofgem, which is bringing in the new rules, will step in where weaknesses are identified and work with suppliers to improve their situations.

As well as the financial stress testing, supplier management boards will have to carry out self-assessments of their control frameworks and report back to Ofgem. The watchdog will also strengthen its existing ‘fit and proper’ energy licence criteria.

Other measures confirmed by the regulator include exploring how best to tighten rules around protecting credit balances, consulting on new financial licence requirements, and considering making suppliers pause their expansion plans beyond certain milestones (such as 50,000 and 200,000 customers) until Ofgem is satisfied they’re stable enough.

Many of this year’s corporate failures had fewer than 200,000 customers.

Ofgem’s Jonathan Brearly said: “Today, I’m setting out clear action so that we have robust stress testing for suppliers so they can’t pass inappropriate risk to consumers. I want to see more checks on staff in significant roles, and better use of data to help us regulate.

He added: “Our priority has been, and will always be, to act in the best interests of energy consumers. The months ahead will be difficult for many, and we are working with the government and energy companies to mitigate the impact as much as we can, particularly for the most vulnerable households.”

3 December: Zog Customers Move To EDF, Scottish Power Takes On Entice, Orbit Customers

Zog Energy, which has 11,700 domestic customers, has ceased trading. Under regulator Ofgem’s safety net, which comes into play when a business fails, Zog’s customers’ energy supply will continue and funds that domestic customers have paid into their accounts will be protected, where they are in credit.

Domestic customers will also be protected by the energy price cap when they are switched to a new supplier by Ofgem, as part of its Supplier of Last Resort protocol. Customers will be contacted by their new supplier, which will be chosen by Ofgem following a competitive tender process among other supplier

Update: Ofgem announced on 3 December that Zog’s customers will be taken on by EDF.

Ofgem’s advice to affected customers is to wait to be contacted by EDF with details of your the tariff and take a meter reading as soon as possible to smooth the transfer process. Switching to a new supplier is not recommended during the appointment of a new supplier.

Additionally, the current market conditions mean there are no deals available at less than the Ofgem price cap, meaning switching would bring no financial benefit.

Separately, Ofgem has appointed Scottish Power to take on the customers of Entice Energy and Orbit Energy, which closed for business last week (see story below). The 70,000 customers involved will be contacted by Scottish Power over the coming days and weeks. There will be no interruption to supply and the tariff they are moved to will be controlled by Ofgem’s price cap.

In a statement on its website, Zog blamed its decision on the failure of its wholesale gas supplier, Contract Natural Gas (see story below from 3 November). The notice says: “Zog Energy was founded to provide its customers with the best possible value energy.

“Throughout our time we have invested in the best value technology to keep costs down and purchased our gas in advance from Contract Natural Gas Ltd to keep the promise we made to customers to supply simple cheap domestic gas.

“However, Contract Natural Gas Ltd has withdrawn from the wholesale market and ceased to trade. Unfortunately, the administrators of Contract Natural Gas Ltd are unwilling to transfer the gas hedges we had previously agreed. This has put us in an untenable position of having to purchase gas at the current market rate and we have no choice but to cease to trade. 

“Your energy supply will now be transferred to a new supplier. You need not worry; your supply is secure and funds that you’ve paid into your accounts will be protected if you are in credit.”

25 November: Taxpayer On Hook For £1.7bn To Keep Bulb Operational, Entice And Orbit Cease To Trade

Failed energy firm Bulb will be funded by the taxpayer up to a reported £1.7 billion after it was placed into the Special Administration Regime (SAR) by the government and the market regulator, Ofgem.

The SAR process is designed to ensure there is no change to Bulb’s customers’ supply and to protect any credit balances they may have – customers have been told they need to take no action at this time. Anyone considering switching away from Bulb is likely to find that there are no competitive tariffs available and that their best option is to stay put.

The administrator, Teneo, will run the firm using funds provided by the taxpayer until its future is settled, which could mean selling it whole or in part, or closing it down and moving its customers to other firms.

The government says it will work to recoup its outlay, “ensuring that we get the best outcome for Bulb’s customers and the British taxpayer.”

Bulb is the first firm to go into the SA regime, which was created in 2011 in anticipation of a large supplier going to the wall. With around 1.7 million customers, it is over three times the size of Avro, the largest firm to cease trading in recent months.

The 20-plus other energy firms that have gone bust since the summer have been through Ofgem’s Supplier of Last Resort (SoLR) process, whereby a competitive bidding process is held to find another supplier that is willing to take on the failed company’s customers.

But wholesale prices are so high relative to Ofgem’s price cap, it is thought no supplier would be willing to take on Bulb’s business – it would effectively mean their operating at a loss.

Update: Entice Energy, which comprises both Entice Energy Supply Limited and Simply Your Energy Limited, and Orbit Energy have announced today (25 November) that they are ceasing to trade. As with other supplier failures (see stories below), customers’ supplies will be guaranteed by Ofgem, as will in-credit balances they have built up. Customers are advised not to switch, but to take a meter reading and wait to hear from their new supplier, as appointed by Ofgem.

Business as usual

In a statement to customers on its website, Bulb said: “We’ll continue to operate as usual so you don’t need to take any action. Your tariffs are not changing, and the price cap applies to all consumer energy tariffs. If you pay for your energy by top-up, your top-ups will continue to work as normal. If you’re in the process of switching to or from Bulb, your switch will continue.

“We’ll continue to supply 100% renewable electricity and 100% carbon neutral gas, and to protect credit balances for our domestic and business members throughout this process.”

Fuel prices on international wholesale markets have peaked recently, with fears of a cold winter ahead causing a surge in demand. This will heap further pressure on energy suppliers who cannot charge more for standard variable rate tariffs than the Ofgem price cap, which stands at £1,277 a year for a typical household.

Fixed rate tariffs, which are not subject to the cap, are on sale for several hundred pounds more than the variable tariff cap.

The cap is reviewed and adjusted twice-yearly. It is likely the next review, in February, will see a sharp increase to reflect higher wholesale prices. Some commentators suggest it could rise to £1,600 or more when the change is implemented in April.

Ofgem has announced a wide-ranging consultation on the way the cap operates (see story below).

22 November: Bulb In Special Admin As Market Woes Intensify

Green energy supplier Bulb has announced it has taken “the difficult decision to support Bulb being placed into special administration”. The is the first time the arrangement – designed by the government and the regulator, Ofgem, to come into force following the failure of a large energy supplier – has been used.

The move means Bulb is the largest company to hit the rocks since the energy market was plunged into crisis by soaring wholesale prices earlier this year. Bulb has around 1.7 million customers in the UK, making it the seventh largest supplier. Some 24 smaller suppliers have already ceased trading in 2021.

Bulb says special administration “is designed to protect Bulb members, ensuring there’s no change to your supply and your credit balance is protected.”

The process means Bulb will continue to operate as normal, and there is no need for customers to take any action. The special administrator will be announced shortly. The arrangement will remain in force – paid for by taxpayers – until Bulb is able to restore it own financial health, the company is sold, or it is wound up and its customers are moved to another supplier.

Bulb offers variable rate deals that are controlled by the energy price cap, which is currently at £1,277 a year for households with typical usage. At present, there are no tariffs available under the price cap elsewhere on the market, meaning it is almost certainly not worth switching away from Bulb given the protections afforded by the special administration regime.

Bulb’s size means it is unrealistic for another company to take on its customer base, as has been the case with the 20-plus companies that have gone bust in recent months under Ofgem’s ‘supplier of last resort’ regime. Companies taking on customers in such scenarios are not allowed to charge more than the Ofgem price cap (£1,277 a year for average households), and many say the level of wholesale prices would force them to operate at a loss as a result.

A notice on Bulb’s website says: “Special administration is designed to allow Bulb to continue to operate as usual so you don’t need to take any action. Your tariffs are not changing, and the price cap applies to all consumer energy tariffs. 

“If you pay for your energy by top-up, your top-ups will continue to work as normal. If you’re in the process of switching to or from Bulb, your switch will continue. Smart meter installations and other metering work will continue.”

An Ofgem spokesperson said: “Customers of Bulb do not need to worry – Bulb will continue to operate as normal. Ofgem is working very closely with Government. This includes plans for Ofgem to apply to Court to appoint an administrator who will run the company. Customers will see no disruption to their supply and their account and tariff will continue as normal. Bulb staff will still be available to answer calls and queries.”

Bulb is also notable for offering 100% renewable electricity and 100% carbon neutral gas.

19 November: Ofgem Consults On Price Cap

Energy market regulator, Ofgem, has today published a series of consultations on the future of its price cap. The aim is “to ensure that the price cap reflects the costs, risks and uncertainties facing energy suppliers.”

This could mean the cap being adjusted more frequently than every six months (in April and October), which is the cycle at present.

Many suppliers claim the level of the cap – £1,277 per annum for standard variable rate tariff customers with average consumption and £1,309 per annum for prepayment tariff customers with average consumption – is set too low relative to wholesale market prices for electricity and, particularly, gas.

Companies argue they are unable to pass on the true cost of buying energy, resulting in them operating at a loss. Over 20 suppliers have ceased trading in recent months.

However, the cap has already risen substantially this year – by 9% in April and by 12% in October – placing huge pressure on household budgets. The Office for National Statistics and the Bank of England have stated that energy prices are a key contributing factor to inflation hitting its highest level for 10 years last month, at 4.2%.

The cap will be adjusted again in April 2022, with the change announced in February. There are fears that the rise could add a further £300-£400 to annual bills.

One of the consultations issued today will look at whether recent market volatility “has caused the level of the price cap to materially depart from the efficient cost level allowed for in the price cap”. 

In other words, Ofgem wants feedback on whether the current level of the cap is sufficient to allow suppliers to cover their expenses and make an agreed level of profits.

A second consultation will analyse the process for updating the methodology that determines the level of the cap. Ofgem is proposing to modify its licence to allow it to amend the cap outside the current April-October six-month cycle in exceptional circumstances.

Further details of these and other consultations on technical aspects of the price cap can be found here.

Stakeholder views are invited on any aspect of these documents by 17 December 2021, with findings and decisions to be published in the New Year.

16 November: Neon Reef, Social Energy Cease Trading

Update 22 November: British Gas has been appointed the ‘supplier of last resort’ for customers of Neon Reef and Social Supply, which ceased trading earlier this month (see following story).

Two more energy companies have ceased trading, bringing the total of failed suppliers in 2021 alone to 24. The unprecedented market upheaval is attributed to sustained high prices on wholesale markets, which suppliers are largely unable to pass on the their customers because of the regulatory price cap (see stories below).

The two latest casualties are Neon Reef and Social Energy Supply. Last week Ofgem listed Social Energy Supply among the companies that were in default on their required payments to the energy market Feed-in-Tariff (see below).

Neon Reef supplies around 30,000 domestic electricity customers, and Social Energy Supply Ltd supplies around 5,500 domestic customers.

Under the safety net arrangements maintained by the regulator, Ofgem, both firms’ customers will see no interruption to their supply, and funds paid into their accounts will be protected, where they are in credit. As is always the case when a company goes out of business, Ofgem will appoint a new supplier for each firm’s domestic customers, who will be protected by the energy price cap when switched to the new firm.

This means their new tariff will cost no more than £1,277 per annum if they are a typical household with average consumption (£1,309 for prepayment customers). The cap regulates the amount suppliers can charge per unit of gas and electricity and for any standing charge, so actual bills are always determined by the amount of energy used.

As some customers of the failed firms may have been on cheaper deals, they may see their bills rise when they move to their new supplier.

Ofgem will appoint new suppliers in the coming days after a competitive bidding process. The newly-appointed firms will then contact customers with details of the new arrangements. Customers are advised not to switch until the process is complete, but they are recommended to take a meter reading as soon as possible to smooth the transfer process from the old firm to the new one.

12 November: Ofgem Calls In £575,000 Of Supplier Debts, Threatens To Revoke Licences

Ofgem, the energy market regulator, has ordered five suppliers to pay more than half a million pounds they owe or face losing their licences.

The suppliers owe Ofgem a collective £575,000 worth of payments into a government scheme that compensates owners of small-scale renewable energy generators. 

All energy suppliers are obliged to pay into the Feed-in-Tariff scheme as part of their licence conditions, but five suppliers missed the November 10 deadline for payments this week.

The lion’s share of the missing payments are owed by Orbit Energy (£451,296), while the rest of the debt is owed by Delta Gas and Power (£46,701), Social Energy Supply (£28,735), Simply Your Energy/Entice (£28,353) and Whoop Energy (£19,013).

Ofgem has told the suppliers to pay what they owe immediately or face enforcement action that could include financial penalties or stripping them of their licences.

The demand comes at a challenging time for smaller energy firms struggling to keep up with rising wholesale prices – particularly for natural gas, which has risen in price by 250% since the beginning of the year.

Twenty suppliers have folded since the summer, including six this month, affecting more than two million domestic energy customers. 

Affected customers are protected by Ofgem’s safety net that guarantees their supply, moves them onto another supplier’s books and preserves money they have paid into their accounts, where they are in credit.

Customers of firms that cease trading are advised not to switch before the transfer to the new Ofgem-appointed supplier is completed.

8 November: Ofgem Appoints Suppliers For Clutch Of Recently Bust Firms

In line with its market ‘safety net’ protocols, energy regulator Ofgem has appointed suppliers to take over the energy supply of customers of companies which have recently ceased trading due to adverse market conditions, primarily soaring wholesale price for natural gas.

Ofgem – which regulates both domestic and commercial suppliers – says the changes will affect 70,600 domestic and non-domestic customers.

The changes announced today include:

• British Gas will take on customers of Bluegreen Energy, which supplies 5,900 domestic customers, along with a small number of non-domestic customers (more information here), and Zebra Power, which supplies 14,800 domestic customers. More information here
• Utilita is taking on customers of Omni Energy, which supplies 6,000 domestic pre-payment customers. Click here for more information
• Yü Energy will take on customers of Ampower, which supplies 600 domestic and 2,000 non-domestic customers. Customers can visit here or more information
• Pozitive Energy is taking on customers of CNG Energy and CNG Electricity, which supply 41,000 non-domestic customers. Customers can go here for more information
• SmartestEnergy Business Limited is taking on customers of MA Energy, which supplies 300 non-domestic customers. Customers can visit this site for more information.

Ofgem runs a competitive process to get the best deal for consumers. The process ensures that there is no interruption to supply and that energy supplies will continue as normal after customers are switched over to their new suppliers. 

Funds paid by current and former domestic customers into their accounts will be protected by Ofgem, where customers are in credit. Domestic customers will also be protected by the energy price cap with their new supplier, which means they will pay no more than the current cap (£1,277 for average use households) on their new tariff.  

Customers whose suppliers have ceased trading will be contacted over the coming days about the changes. If customers wish to switch supplier, they can shop around but Ofgem is advising them to wait until the transfer has been completed.

They are recommended to take meter readings as soon as possible, as this will smooth the switch to the new supplier.

If, in due course, customers decide to switch to another supplier, they will not be charged exit fees.

Neil Lawrence, Ofgem’s director of retail, said: “We understand this news may be unsettling for customers, but they don’t need to worry. Their energy supply will continue as normal, and domestic customer credit balances, as well as some non-domestic credit balances, will be honoured. 

“Your energy supply will not be interrupted, and your newly appointed supplier will be in contact over the coming days with further information. If customers wish to switch suppliers they can shop around if they wish, but they are advised to wait until the transfer has been completed.”

Key points:

• Customers are being supplied by their new suppliers as of 7 November
• Non-domestic credit balances for customers of Bluegreen, MA Energy, and CNG Energy and CNG electricity will be honoured by British Gas, SmartestEnergy and Pozitive Energy
• Part of the credit balances of non-domestic customers of Ampower will be honoured by Yü Energy
• Accounts for all affected customers will be fully set up in due course and the newly appointed suppliers will be in touch with customers in the coming days
• Any questions customers have should be directed to their newly appointed suppliers. Contact details are available via their respective websites
• Funds that current and former domestic customers have paid into their accounts will be protected, where they are in credit.
• Current and former customers who owe money, or are in debit to their failed supplier, should wait to hear from their new supplier or their outgoing suppliers’ administrators.
• Appointed suppliers will be in touch with customers with direct debits to explain how to set up their account. 
• Customers can find support and advice on the Ofgem website, Facebook, and twitter feed, @ofgem. Alternatively, if they need extra help, in England and Wales they can contact Citizens Advice on 0808 223 1133 or email them via webform, in Scotland they can contact Advice Direct Scotland on 0808 196 8660 or use their online webchat.  

3 November: Business Energy Supplier CNG Stops Trading

CNG Energy Limited, a business energy supplier with around 41,000 non-domestic customers, has gone out of business. A message on its website reads: “After 27 years we are saddened to say CNG Energy Limited is ceasing to trade.”

The news comes after the demise earlier this week of five energy firms with domestic customers (see story below).

As is always the case when energy firms go bust, the regulator, Ofgem, will guarantee continuation of supply to CNG’s customers. However, the part of Ofgem’s safety net that guarantees that any funds which domestic customers have paid into their accounts will be protected, where they are in credit, does not apply in the case of CNG’s commercial clients.

Similarly, whereas domestic customers of a failed supplier are protected by Ofgem’s energy price cap when switched to a new supplier, business customers do not have this certainty.

The status of CNG customers in terms of credit balances and tariff rates will be determined by their new supplier, which will be appointed by Ofgem in the coming days.

CNG customers are being urged not to switch before being moved to their new supplier. But they should take meter readings to ease the transfer process when it happens.

2 November: Further Four Energy Companies Go Bust

In a dark day for the UK energy market, four more energy providers have ceased trading, joining Bluegreen Energy, whose demise was announced yesterday.

The latest victims of the crisis, caused by a steep rise in wholesale energy prices of the past 12 months, are:

• Zebra Power Limited, which supplies around 14,800 domestic customers
• Omni Energy, which supplies around 6,000 domestic pre-payment customers
• Ampoweruk Ltd, which supplies around 600 domestic customers, and around 2,000 non-domestic customers
• MA Energy, which supplies around 300 non-domestic customers.

Under Ofgem’s safety net, customers’ energy supply will continue and funds that domestic customers have paid into their accounts will be protected, where they are in credit. Domestic customers will also be protected by the energy price cap when being switched to a new supplier.

Customers of these suppliers will be contacted by their new supplier, which will be chosen by Ofgem. See story below for further information on the process of moving to a new supplier.

1 November: Bluegreen Energy Becomes Latest Market Casualty

Ofgem, the energy market regulator, has announced that Bluegreen Energy Services Limited is ceasing to trade.

Bluegreen Energy supplies around 5,900 domestic customers and a small number of non-domestic customers. In a statement it said: “Due to the energy crisis in the UK, we find ourselves in an unsustainable situation and regrettably, Bluegreen Energy Services Limited is forced to make the difficult decision to cease trading.”

Ofgem’s safety net means customers’ energy supply will continue, and funds that domestic customers have paid into their accounts will be protected, where they are in credit.

Domestic customers will transferred en bloc to a new supplier, chosen by Ofgem, in the next few days. The new tariff they are moved to will be priced no higher than the regulator’s price cap, which limits how much suppliers can charge for each unit of gas and electricity used.

The current cap works out at £1,277 a year for a typical household with average consumption. The way the cap is set is under close scrutiny at present, with energy suppliers saying it obliges them to operate at a loss because wholesale energy prices are so high. But any increase in the cap when it is next reviewed early in 2022 will heap pressure on already-stretched household budgets.

Last week Ofgem announced a consultation process on the structure and operation of the cap.

Ofgem’s advice to Bluegreen Energy customers is not to switch supplier for the moment. It says they should:

• wait until a new supplier has been appointed and you have been contacted by them in the following weeks before looking to switch to another energy supplier
• take a meter reading ready for when your new supplier contacts you as this will make the process of transferring customers over to the chosen supplier, and honouring any funds that domestic customers have paid into their accounts, where they are in credit, as smooth as possible.

21 October: Shell Energy Takes On GOTO, Pure Planet, Daligas and Colorado Customers

Ofgem, the energy market regulator, has appointed Shell Energy Retail to take on the customers of failed energy firms GOTO, Pure Planet, Daligas and Colorado Energy.

The move affects a combined total of approximately 275,000 domestic customers and 600 non-domestic customers.

As with other customer transfers (see stories below), any credit balances that domestic customers have paid into their accounts will be protected, and there will be no interruption to supply.

Domestic customers will be moved onto a Shell Energy tariff that is limited by Ofgem’s energy price cap, which currently stands at £1,277 a year for households using an average amount of energy. Once the transfer is completed, customers are free to switch without penalty. However, because of current market conditions arising from the high price of wholesale natural gas, it is unlikely that deals will be available below the level of the cap until early 2022.

Customers of all three suppliers will be contacted over the coming days about the changes. Ofgem says they should wait for Shell Energy to get in touch and should not switch in the meantime.

18 October: GOTO Energy Latest Casualty In Energy Price Crisis

GOTO Energy Limited is ceasing to trade with immediate effect. The firm supplies gas and electricity to 22,000 domestic customers. It is the thirteenth supplier to go bust since September as the UK market reels from the effects of rocketing wholesale energy prices.

Under the safety net provisions overseen by the energy regulator, Ofgem, customers’ energy supply will continue without interruption. Funds that domestic customers have paid into their accounts will be protected, where they are in credit.

Domestic customers will be switched as a block to a new supplier by Ofgem. The new tariff they are given will be protected by Ofgem’s energy price cap, which stands at £1,277 a year for households with typical consumption. The size of bills will always be determined by the amount of energy consumed.

Tariffs operating within the cap are currently the cheapest on the market thanks to the unprecedented price of wholesale energy on international markets. However, customers are free to switch away from the new supplier, without penalty, if they choose to do so.

Ofgem’s advice to affected customers in the meantime is to:

• wait until a new supplier has been appointed and you have been contacted by them in the following weeks before looking to switch to another energy supplier
• take a meter reading ready for when your new supplier contacts you. This will make the process of transferring customers over to the chosen supplier, and honouring any funds that domestic customers have paid into their accounts, where they are in credit, as smooth as possible.

14 October: Daligas Closure Brings Number Of Recent Failed Firms To 12

Daligas Limited has announced it is ceasing to trade. The announcement comes the day after Pure Planet and Colorado Energy closed their doors, leaving 250,000 domestic customers to rely on the regulator Ofgem’s safety net (see story below).

The failure of Daligas means 12 energy suppliers have collapsed since the beginning of September. They have all been hit by the high cost of energy – particularly natural gas – on wholesale markets.

With 9,000 domestic and commercial customers, Daligas Limited, a gas-only supply firm, is one of the smaller businesses in the sector, but the announcement today will be seen as further evidence of the turbulence affecting the UK energy market as a whole.

In order to run cheap tariffs when wholesale prices are rising rapidly, companies need to have bought substantial stocks at affordable prices – a process known as hedging. Many smaller firms with modest capital resources have not been able to secure long-term supplies, and have found current spot prices out of their reach.

Additionally, the Ofgem price cap on how much firms can charge those on their variable rate ‘default’ tariffs means firms cannot pass on the full cost of wholesale energy bought today to their customers.

As with previous corporate failures, Daligas’ domestic customers’ supply will be guaranteed by Ofgem, along with any credit balances, until a new supplier is found to take on their business. An announcement regarding the new supplier may be made in the coming days, although reports suggest the remaining viable suppliers are growing increasingly wary of taking on new customers en bloc given that they would have to service them at a loss.

If Ofgem is unable to secure a ‘supplier of last resort’ to absorb the customers of a failed company, it has the power to appoint a special administrator to run the failed business until such time as a permanent replacement can be found.

The costs associated with transferring customers to a new supplier are said to run into hundreds of pounds per account – a cost that would eventually filter through to all energy bills via charges levied on the surviving suppliers.

The regulator says customers of all failed firms, including Daligas, should sit tight and not switch but instead wait until they hear from their new supplier. They should, however, take a meter reading as soon as possible to provide to the new supplier in due course.

13 Oct: Pure Planet, Colorado Energy Latest Firms To Cease Trading

Pure Planet Limited and Colorado Energy Limited have announced they are ceasing to trade. Pure Planet supplies gas and electricity to around 235,000 domestic customers and Colorado Energy supplies gas and electricity to around 15,000 domestic customers.

They bring to 11 the total of energy firms that have gone bust since the beginning of September as a result of the pressures arising from soaring wholesale prices (see stories below).

The market regulator, Ofgem, operates a safety net to ensure customers’ energy supply will continue and any credit in customers’ accounts will be protected. Domestic customers with the firms will be moved en masse to new suppliers by Ofgem, where they will be protected by the energy price cap, which currently stands at £1,277 a year for typical consumption dual fuel households on standard variable rate default tariffs.

Customers will be contacted by their new supplier, which will be chosen by Ofgem over the coming days.

Ofgem’s advice to those affected is to:

• take meter readings as soon as possible ready for when your new supplier contacts you (this will make the process of transferring customers over to the chosen supplier, and honouring any funds that domestic customers have paid into their accounts, where they are in credit, as smooth as possible)
• wait until a new supplier has been appointed and you have been contacted by them in the following weeks before looking to switch to another energy supplier.

Ofgem says it is working closely with government and industry to make sure customers continue to be protected this winter. Neil Lawrence, Director of Retail at Ofgem, said: “Our number one priority is to protect customers. We know this is a worrying time for many people and news of a supplier going out of business can be unsettling.

“I want to reassure affected customers that they do not need to worry. Under our safety net we’ll make sure your energy supplies continue. If you have credit on your account the funds you have paid in are protected and you will not lose the money that is owed to you.

“Ofgem will choose a new supplier for you and while we are doing this our advice is to wait until we appoint a new supplier and do not switch in the meantime. You can rely on your energy supply as normal. We will update you when we have chosen a new supplier, who will then get in touch about your tariff.”

Customers who have questions should visit the FAQs on the Ofgem website.

4 Oct: E.ON Next Takes On Enstroga, Igloo, Symbio Customers

Ofgem, the energy market regulator, has appointed major supplier E.ON Next to take on the customers of Enstroga, Igloo Energy and Symbio Energy, which announced last week that they were ceasing to trade (see below). The move swells E.ON Next’s customer roll by 233,000 households.

The switch, announced today, is effective from yesterday. Ofgem guarantees that there will be no interruption to supply, as is always the case when customers are transferred to a new supplier. Any account credit balances are also protected. The regulator urges customers not to switch until the transfer process is complete.

Transferring customers will be protected by the energy price cap, which rose to £1,277 per annum on Friday for standard variable rate ‘default’ tariff customers using a typical amount of energy. Many ENSTROGA, Igloo Energy and Symbio Energy customers will therefore see an increase in their bills if they have previously have been on a cheaper fixed rate deal.

However, the current energy market crisis (see below) means these cheaper deals have been withdrawn from sale, leaving default tariffs governed by the cap as the lowest-priced available in most cases.

That said, transferred customers are free to shop around and switch once their move to E.ON Next is finalised. Customers will not be charged exit fees if they decide to switch to another supplier at that time.

Anyone whose switch was already in progress when their original supplier went out of business will have their switch honoured.

Further information can be found on E.ON Next’s website:

• ENSTROGA customers: eonnext.com/enstroga
• Igloo Energy customers: eonnext.com/igloo-energy
• Symbio Energy customers: eonnext.com/symbio-energy

29 Sept: Three More Energy Firms Cease To Trade

Ofgem, the energy regulator, has announced that three more energy suppliers are ceasing to trade. This means nine firms have closed their doors in recent weeks in response to soaring wholesale energy prices, which meant they were effectively operating at a loss (see stories below).

Today’s announcement lists Igloo Energy (179,000 domestic customers) Symbio Energy (48,000) and ENSTROGA (6,000) as the latest failures. Ofgem says that together they represent less than 1% of domestic customers in the market. In total, approaching two million households have been affected by recent collapses.

Under Ofgem’s safety net, customers of the failed firms will continue to receive gas and electricity without interruption and any credit balance in customer accounts will be protected and honoured when a new supplier is appointed for each company.

Domestic customers of each firm will be moved en bloc to their respective new supplier’s deemed tariff. This will be subject to Ofgem’s price cap, which stands at £1,277 (as of 1 October) for households with typical usage.

The new suppliers will contact customers with more information in due course. Ofgem normally appoints ‘suppliers of last resort’ within a matter of days. No action is required by customers in the meantime beyond taking a meter reading as soon as possible. There is no need to switch suppliers. This will become an option once the transfer to the new supplier is finalised.

Neil Lawrence at Ofgem said: “Our number one priority is to protect customers. We know this is a worrying time for many people and news of a supplier going out of business can be unsettling.  

“I want to reassure customers of ENSTROGA, Igloo Energy and Symbio Energy that they do not need to worry. Under our safety net we’ll make sure your energy supplies continue. If you have credit on your ENSTROGA, Igloo Energy or Symbio Energy account the funds you have paid in are protected and you will not lose the money that is owed to you. 

“Ofgem will choose a new supplier for you and while we are doing this our advice is to wait until we appoint a new supplier and do not switch in the meantime. You can rely on your energy supply as normal. We will update you when we have chosen a new supplier, who will then get in touch about your tariff.

“In recent weeks there has been an unprecedented increase in global gas prices which is putting financial pressure on suppliers. Ofgem is working closely with government and industry to make sure customers continue to be protected this winter.”

UPDATE 27 September: Shell Energy Takes On Green Supplier Customers

Customers of failed energy company Green Supplier will now be serviced by Shell Energy, the energy regulator Ofgem has announced. The transfer of 255,000 domestic customers and a small number of non-domestic customers becomes effective immediately, and Shell Energy will contact those concerned over the coming days and weeks.

Ofgem said yesterday that Octopus has taken on customers of Avro Energy, which announced last week that it was ceasing to trade. Other companies to announce their closures in recent weeks include PfP Energy, MoneyPlus Energy, People’s Energy and Utility Point (see stories below).

As also detailed below, Ofgem’s safety net procedures guarantee continuity of supply and safeguard credit balances while the transfer of accounts takes place.

Customers of failed companies will be moved to ‘deemed’ contracts with their new supplier, with prices controlled by the Ofgem price cap.

Green Supplier customers can contact Shell Energy for more information: 0330 094 5804 or at Green@shellenergy.co.uk.

Further company closures are expected as suppliers struggle to meet the rising cost of energy on wholesale markets, with the energy cap limiting how much of this additional cost they can pass on to their customers.

The government and Ofgem have issued statements reassuring consumers that there is no threat to supply in the UK over the winter months.

26 September: Ofgem Appoints Octopus To Take On Avro Customers

Energy market regulator Ofgem has appointed Octopus Energy to take on the 580,000 domestic customers of Avro Energy, which announced that it is ceasing to trade last week. The move takes effect from today (26 September).

Green Supplier Limited also announced last week that it is ceasing to trade. An announcement is expected in the next few days about which company will take on its 255,000 customers under Ofgem’s ‘safety net’ process.

This guarantees that customers of any failed energy company will not see any interruption to supply while their account is transferred to the new company, known as the ‘supplier of last resort’. Any credit balance is also safe-guarded.

Octopus will contact Avro customers over the coming days to provide information on the change-over. Customers will be moved to a ‘deemed’ contract which will have a maximum price per unit of energy in line with the Ofgem price cap.

On 1 October, this moves to £1,277 a year for a household with typical consumption levels, an increase of 12%. With many cheaper fixed deals having been withdrawn from the market, this is likely to represent good value at present, although many Avro customers will inevitably find themselves paying more than previously.

Once the move to Octopus is complete, Avro customers are free to switch to another deal.

Ofgem says there is no need for Avro customers to cancel any direct debits they have with the firm. It says: “You don’t need to cancel your direct debit, but can if you wish to. Octopus Energy will be in touch with you about whether your existing direct debit will remain in place, or whether they will set up a new direct debit.”

More information can be found at www.octopus.energy/avro and on the Ofgem website.

24 September 2021: Govt Issues FAQs To Calm Fears Over Energy Market

The government has taken the unusual step of publishing a Q&A to enable consumers “to find out more about energy prices and energy suppliers.”

At Forbes Advisor, we have addressed these issues on this page and elsewhere, covering important issues such as the default tariff price cap and the safety net which ensures continuity of supply to customers of failed energy suppliers.

But we thought it would be interesting for you to read the government’s own views on such topics, as published today…

I’m worried there’s not enough gas?

You don’t need to be. While global wholesale gas prices are currently high we are confident that the UK’s security of energy supply is secure now and over the winter.

Am I going to be left without power if my supplier goes bust, or do I have to find a new supplier myself?

No you don’t. Even if your supplier stops operating, Ofgem – the independent energy regulator – will automatically switch you onto a new supplier so there will be no interruption to your supply of energy.

It isn’t unusual for energy suppliers to exit the market so there’s a well-rehearsed system in place to protect households and ensure your gas and electricity keeps running.

If I join a new supplier, aren’t my energy bills going to increase?

Customers of failed suppliers who are switched to a new supplier are protected by the Energy Price Cap.

This is a government scheme which protects millions of people from sudden increases in global gas prices and limits the amount an energy supplier can charge those on default or standard variable rates.

Suppliers cannot charge customers of failed suppliers more than the level of the price cap.

Major energy suppliers also purchase much of their wholesale supplies many months in advance, giving protection to them and their customers from short-term price spikes.

We also have numerous other schemes available to support vulnerable and low-income households including the Warm Home Discount, Winter Fuel Payments and Cold Weather Payments.

Is the Energy Price Cap going to massively increase this winter?

The Energy Price Cap is reviewed twice a year based on the latest estimated costs of supplying energy and it was announced in the summer that from 1 October, the cap would rise due to higher wholesale gas prices.

However, the next time the price cap is due to be updated is April 2022 which means customers who it protects needn’t worry about it increasing before then.

Why don’t we store more gas in the UK?

Gas storage capacity has little bearing on the price of gas. Some other countries do store gas to ensure their own security of supply, but the UK benefits from having access to a highly diverse and secure sources of gas from the North Sea and reliable import partners like Norway.

22 September 2021: Ofgem Chases Suppliers For Renewables Payments

The energy market watchdog, Ofgem, has ordered five small suppliers to pay around £765,000 they owe a government renewables scheme. Many energy suppliers’ finances are stretched almost to breaking point by rocketing wholesale energy prices.

Colorado Energy, Igloo, Neon Reef, Whoop Energy and Symbio Energy have failed to pay into the Feed In Tariff (FIT) scheme which provides payments to owners of small-scale renewable energy generators.

FIT is designed to promote the uptake of smaller scale renewable and low-carbon electricity generation. Suppliers are obliged to pay into the scheme as a condition of their supply licences, and so the regulator, which administers the FIT scheme, is demanding they each pay their dues.

The deadline for payments was September 17. Colorado Energy still owes £261,406.12, Igloo owes £316,582.44, Neon Reef £37,350.76, Whoop Energy £3,780.22 and Symbio Energy £146,238.66.

Ofgem says the missed payments will delay onward payments to renewable energy generators. It has warned the five suppliers that if payments aren’t made, it could take enforcement action that could include stripping them of their licences or imposing financial penalties.

Extra pressure

The Ofgem demands will heap extra pressure on the finances of the companies concerned at a time when the fragility of some energy suppliers’ capital resources has been exposed by rising wholesale prices. Six smaller suppliers have collapsed in recent weeks, with Avro Energy and Green Supplier Limited today becoming the fifth and sixth suppliers to fold of late, affecting over 800,000 customers (see story below).

The other four suppliers to stop trading recently (PfP Energy, MoneyPlus Energy, People’s Energy and Utility Point), had around 600,000 customers on their books. 

Affected customers’ accounts are being transplanted into one of the UK’s major energy suppliers as part of Ofgem’s ‘safety net’ process that ensures supplies to people’s homes aren’t cut off and credit balances are protected.

Ofgem appointed EDF Energy to take on 220,000 Utility Point customers and British Gas to do the same for People’s Energy customers.

Amid rising fears of further supplier collapses, business secretary Kwasi Kwarteng MP told Parliament last week that it would not subsidise ailing energy firms. 

He said: “The government will not be bailing out failed companies. There will be no rewards for failure or mismanagement. The taxpayer should not be expected to prop-up companies who have poor business models and are not resilient to fluctuations in price.”

Kwarteng also said suggestions of a return to 1970s-style blackouts and three-day working weeks were alarmist and unhelpful.

Avro Energy, Green Supplier Ltd Latest Energy Suppliers To Cease Trading

Avro Energy and Green Supplier Limited have ceased to trade, the fifth and sixth energy suppliers to close their doors in little over a week.

Avro Energy supplies gas and electricity to around 580,000 domestic customers while Green Supplier Limited supplies gas and electricity to around 255,000 domestic customers and a small number of non-domestic customers.

Together they account for just under 3% of domestic customers in the market.

Ofgem’s safety net will ensure there is no interruption to the energy supply of customers of the firms, and outstanding credit balances (of domestic customers) will be protected.

Domestic customers will also be protected by the energy price cap when switched to a new supplier as part of the regulator’s process in such situations.

Ofgem’s advice to Avro Energy and Green Supplier Limited customers is to:

• Wait until a new supplier has been appointed and you have been contacted by them in the following weeks before looking to switch to another energy supplier.
• Take a meter reading ready for when your new supplier contacts you (if you can, take a photograph of your meter, or at least jot down the numbers along with today’s date).

This will make the process of transferring customers over to the chosen supplier, and paying back any outstanding credit balances, as smooth as possible.

Govt Acts On CO2 Shortage As Energy Crisis Intensifies

The taxpayer is to fund the operations of a US-owned fertiliser producer that has mothballed two UK plants because of soaring energy prices. 

The move comes as the government grapples with the deepening energy crisis which has pushed a number of suppliers into bankruptcy and threatened millions of consumers and businesses with higher energy bills. But it has ruled out state backing for energy suppliers facing insolvency and closure.

Four energy companies have ceased trading in recent days, with more expected to follow. Customers of the failed suppliers are automatically transferred to a new supplier, without loss of supply and with credit balances protected, thanks to a ‘safety net’ operated by energy market regulator, Ofgem.

The government’s three-week deal with CF Fertilisers, announced by Kwasi Kwarteng MP, business secretary, will secure supplies of CO2, which is a by-product of its manufacturing process. 

CF Fertilisers produces around 60% of the UK’s CO2, which is used in the slaughter of animals such as poultry and pigs, in food packaging and in the production of carbonated drinks, and has many applications across industry, including in the health and nuclear sectors.

Under the terms of the deal, the government will provide “limited financial support” for CF Fertilisers’ operating costs at its Teesside plant for three weeks “while the CO2 market adapts to global gas prices”.

“Sufficient capacity”

Mr Kwarteng had earlier made an address to Parliament in which he said: “We have sufficient capacity and more than sufficient capacity to meet demand, and we do not expect supply emergencies to occur this winter.

“There is absolutely no question of the lights going out, or people being unable to heat their homes. There’ll be no three-day working weeks, or a throw-back to the 1970s. Such thinking is alarmist, unhelpful and completely misguided.”

He stressed, however, that the government will not pump money into energy suppliers to keep them afloat: “The government will not be bailing out failed companies. There will be no rewards for failure or mismanagement. The taxpayer should not be expected to prop-up companies who have poor business models and are not resilient to fluctuations in price.”

As well as stressing the merits of the Ofgem safety net, Mr Kwarteng said the regulator’s energy price cap “isn’t going anywhere” and would remain in place to protect customers from “price spikes”.

The cap applies to default standard variable rate and prepayment tariffs and benefits around 15 million households. Such tariffs have historically been among the most expensive on the market but increasing wholesale prices mean hitherto cheaper fixed rate deals have been withdrawn from the market in many instances.

The latest iteration of the Ofgem price cap comes into effect on 1 October and will remain in place until 31 March 2022. The net effect of the cap is to isolate the tariffs concerned from further increases in the wholesale cost of energy.

This means many suppliers will be selling gas and electricity to consumers at less than cost price, which is why more supplier failures are expected.

The cap is expected to rise steeply when the next adjustment is made in April next year. The new level will be announced in February and will reflect wholesale prices in the second half of 2021.

Mr Kwarteng insists that the reduction in the number of suppliers should not result in a reduction in competition: “We must not see a return to the ‘cosy oligopoly’ of years past, where a few large suppliers simply dictated to customers conditions and pricing.”

For more information on how to respond to the energy crisis, see our stories below.

Energy Crisis – What Should You Do?

As the government holds emergency meetings with the energy sector and commentators predict further failures of small and medium suppliers, these are worrying times for customers. So what, if anything, should you be doing?

Your course of action will largely depend on your current energy arrangements. Here’s the answers to some common questions to help you ensure you’re getting the best value possible in a turbulent and troubled market.

First, find out what tariff you are on

If you’re not sure what tariff you have, or even who your supplier is, dig out a recent bill (or bills, if you have separate suppliers for electricity and gas). Here you will find all the information you need about your energy firm or firms, along with details of your tariff(s).

Are you on a default standard variable rate tariff (SVT)?

If you’ve never switched supplier or haven’t done so for more than a couple of years, you are likely to be on a default (SVT) deal – around 11 million households in the UK have one of these tariffs, where the price you pay can be adjusted by your supplier at any point, provided it gives you 30 days’ notice of any increase.

Prior to the current pricing crunch, these open-ended default deals were among the most expensive on the market, and the advice was always to switch to a cheaper fixed-rate, fixed-term contract – there were usually dozens available.

But that has changed. At present, default deals are among the most competitive. You can still run an energy quote to see if there’s anything cheaper available, but it is likely that your best bet will be to sit tight and wait for prices to reduce.

Default deal? Your prices will rise in October, but you could still be on the best option

Maximum default tariff prices are governed by a cap managed by Ofgem, the energy market regulator. This is adjusted each April and October, and next month it will increase by 12% to £1,277 for typical consumption households, and suppliers are increasing their prices to take full advantage.

That increase is a scary amount – but such is the crisis in the wholesale energy market, default deals are still likely to be among the best value of those available.

Are you on a prepayment meter?

Prepay tariffs – around four million UK homes have one – are also subject to an Ofgem cap. This will rise by £153 to £1,309 on 1 October (again for those with average consumption levels).

Checking to see if there’s a cheaper deal is always a good idea, but as with default tariffs, you may find you’re on a competitive plan, even after the upcoming price rise.

Are you on a fixed-rate tariff?

Some 13 million UK homes are on fixed rate tariffs, where the price per unit of energy used is locked in for a specific period, usually 12 or 24 months.

Traditionally, these have offered the best value, with prices often hundreds of pounds below the Ofgem price cap – and guaranteed not to change, regardless of what happens in the wider market. But over the past week or so, fixed tariff rates have rocketed, and many companies have stopped offering them to new customers.

If you’re on a fix already, it’s almost certain that your best bet is to stay put until it ends. At this point, if you do nothing, you’ll move to your supplier’s default variable rate tariff. But as your tariff end date approaches, you can run a quote to see if there’s another, cheaper fix to which you can move (if you switch within six weeks of your tariff ending date, you won’t pay any exit fees if your current deal levies them).

It may work out that the default deal represents good value at the time – or you can ask your current supplier if they have another tariff that would cost you less. 

Remember, you can switch from a variable rate deal at any point without penalty, so if you move to one, you can switch away should a cheaper deal become available elsewhere.

Are you on a non-default variable rate tariff?

A relatively small number of households are on ‘elected’ variable rate deals that, until recently, were priced below the level of expensive default variable rate options. In fact, they were on a par or even cheaper than fixed-rate offers.

However, prices for these competitive variable rate tariffs have increased and many have been withdrawn from the market for new customers. So if you are on one of these plans, you should talk to your supplier to check it doesn’t have a cheaper option.

If that doesn’t work, you should run an energy quote to see if there is a better deal out there – including among standard variable rate deals.

Are you worried your energy supplier might go bust?

We’re hearing a lot of speculation in the press that a clutch of smaller to medium-sized energy suppliers could go bust in the coming days and weeks if the government does not step in with a radical support package.

The important thing to remember is that Ofgem, the regulator, has continuity of supply as its priority, so it will work to ensure that customers of any company that goes to the wall are transferred to another supplier – this is the so-called ‘safety net’ that ensures customers are not left without power.

Again, the government says it is exploring ways to make the safety net as robust as possible. This could involve advancing state-backed loans to encourage firms to take on customers from failed suppliers.

If you are concerned about your energy supplier’s viability, switching to another firm may not be the best course of action at present. First, you may not be able to find a reasonable tariff to move to, and second, your interests will always be guarded by the safety net.

That’s not to minimise the anxiety that such situations can bring about – hearing that your supplier has gone bust will always be a shock. But it should be of comfort to know that a system is in place to make sure any negative impact is kept to an absolute minimum.

Ofgem Appoints EDF Re Utility Point, British Gas Re People’s Energy

Energy market regulator Ofgem has appointed large energy supplier EDF to take on the 220,000 domestic customers of Utility Point and arranged for British Gas to do the same for People’s Energy after the two smaller firms ceased trading last week (see story below).

Whenever an energy company ceases trading, Ofgem’s safety net protocols take effect to ensure customers’ energy supply is not interrupted and any credit balances held with the company are protected. Part of the process includes appointing a ‘supplier of last resort’, in these instances EDF and British Gas, following a competitive bidding round among interested suppliers.

The move comes as the wider energy market experiences unprecedented turmoil due to soaring natural gas and electricity prices on wholesale markets (see story below). Many suppliers are ceasing to market products to new customers because prices are so high. In many cases, the cheapest deals on offer are default standard variable rate tariffs, which historically have been among the most expensive on the market.

The amount suppliers can charge customers on default tariffs is limited by Ofgem’s price cap. This is rising by 12% to £1,277 per annum for a household with medium consumption on 1 October 2021. The increase was calculated in the summer before the current pricing crisis took full hold of international energy bourses, and is now reckoned to be far below what energy companies are paying for wholesale supplies (see story below).

There are fears that this will squeeze smaller suppliers with lower capital resources, leading to more corporate failures, a consolidation of the market into the hands of larger suppliers, and ultimately a reduction in competition.

Ofgem is also likely to increase its cap by a significant amount at the next opportunity in April 2022, possibly sending it above £1,550 a year for typical users.

The government is reported to be holding crisis talks with energy market representatives this weekend to ensure continuity of supply to homes and businesses.

Customer advice

Ofgem’s advice to Utility Point and People’s Energy customers is to wait for EDF or British Gas to contact them over the coming days with personalised information about their new ‘deemed’ tariff. Traditionally, ‘deemed’ tariffs were more expensive than others available from the same company or from the wider market, but unless wholesale market prices decline sharply, this may no longer be the case.

However, once their new account with their new supplier is set up, customers of the two failed firms are free to search for a cheaper energy deal if they so choose.

Ofgem said: “If customers wish to change their tariff or switch supplier, they should ask to be switched to another tariff, or shop around. You won’t be charged any exit fees. Waiting for them (EDF or British Gas) to contact you will be the smoothest way for any credit balances domestic customers had with Utility Point/People’s Energy to be honoured by EDF/British Gas.”

With regard to customers who pay by direct debit, Ofgem said: “You don’t need to cancel your direct debit, but can if you wish to. EDF/British Gas will be in touch with you about whether your existing direct debit will remain in place, or whether they will set up a new direct debit.”

Utility Point customers with smart meters were told: “Some customers with newer models of smart meter should see no loss in smart functionality. Unfortunately, customers with older smart meter models will see a loss of smart functionality, but their supplies will continue uninterrupted. EDF will upgrade these older meters for any customers who request it.  Once the transfer to EDF is complete, they will take steps to restore smart functionality.”

Utility Point customers with further queries are asked to visit the EDF website or phone: 0333 009 7120.

People’s Energy customers should visit the British Gas website or call: 0333 202 1052 (if they have a credit meter, where they pay monthly or quarterly in arrears) or: 0333 202 9742 (if they have a pay-as-you-go meter.

16 September 2021: What’s Happening To UK Energy Prices?

These are turbulent times for the UK energy market – and the turmoil will inevitably be reflected in higher domestic energy bills. Here’s a rundown of what’s happening, how it might affect you, and what action you can take…

Wholesale prices are rising…

And they’re rising to record levels. Energy companies naturally seek to pass their higher costs onto their customers, so what happens on the wholesale markets sooner or later affects domestic and business customers.

Why ‘sooner or later’?

How and when you’ll see the impact will depend on what sort of energy tariff you have, and how your supplier buys its wholesale supplies…

• Variable rate tariff customers The cost of a variable rate tariff can fluctuate at any time, although your supplier must give you 30 days’ notice of a price increase. So price rises here are likely to be on the ‘sooner’ end of the spectrum
• What about the price cap? The energy price cap, administered by the market regulator, Ofgem, only applies to standard variable rate default tariffs (more on this below). If you are on a supplier’s non-default variable rate deal, prices could rise beyond the cap level.
• Fixed rate, fixed term tariff customers Fixed deals really come into their own when prices are rising because, as it says on the tin, the prices are locked in for a stated period of time. No matter what happens on the wholesale markets, the price you pay for each unit of energy you use will remain the same, until the contract ends.
• But when the fix ends – what then? That’s the ‘later’ end of the spectrum – but even here, some will be affected sooner than others. Recent weeks have seen the typical cost of fixes soaring ever higher, so anyone coming to the end of a tariff’s lifespan could find themselves paying a lot more for their next fixed contract. They could even find that variable rate deals are cheaper. Further down the line, fixed tariffs will remain expensive relative to prices in the first half of 2021.

What about the price cap?

Ofgem’s cap limits the amount companies can charge their default tariff customers – about 11 million households in the UK. This cap is rising by roughly 12% on 1 October to allow suppliers to charge more because of rising wholesale prices.

If the cap is rising, won’t that sort things out?

Sadly, no. Ofgem did its sums based on what was happening to wholesale prices over the summer, and what it thought might happen over the autumn and winter. It turns out it underestimated the speed and scale of increases.

The new cap was calculated using a gas price of £63 per therm – it’s been as high as £177 per therm in recent days, with a 12-month ‘forward price’ (what you pay if you commit to buying a year in advance) of up to £135 per therm.

With electricity, the price-per-therm used by Ofgem was £70, but it has hit £181 and has been trading at £140 for 12 months.

What seems certain is that the next review of the cap in February (to take effect in April) will see another leap upwards, with Ofgem possibly erring on the side of caution at that point and feeding in a meaty increase.

How will suppliers cope?

Some won’t. As you can read in the stories below, four energy suppliers have gone bust in the past few days, and more are likely to go to the wall in the coming weeks and months.

But as we also explain, no-one will be left without supply. Ofgem’s safety net means customers are transferred to another supplier automatically.

But why are wholesale prices increasing so much?

• Rising demand Last winter was particularly cold across Europe, and more businesses are re-opening in the wake of the coronavirus economic slowdown.
• Lack of wind We are increasingly using renewable sources of energy such as wind, solar and wave to generate electricity, but recent weeks have seen unseasonably calm weather, meaning wind farms have not produced as much energy as expected. This is pushing up the price of traditional fuels such as natural gas, as well as electricity itself.
• Anti-coal sentiment As the popularity of renewables has risen, the UK has mothballed or decommissioned coal-powered generating plants. In some cases these can be brought back online, but it can be a lengthy process, and there may be issues in obtaining the supply of coal (which will itself increase in price).
• Supply interruption This week saw an electricity supply cable between France and England damaged by fire, reducing the amount we can import from the Continent (the UK is a net importer of electricity).

What can consumers do?

Such is the crisis in the domestic market at the moment that most suppliers have withdrawn most or all of their deals – they simply cannot afford to take on new customers. But we can expect more deals to come onto the market once wholesale prices settle – as they are likely to do once supply issues are resolved.

If you’re on a fixed rate tariff with a good few months left to run, it’s probably best to sit tight and see what the market conditions are as you approach the end of your term.

If your fix is nearing its end, keep checking the market to see if you can spot a reasonable deal. And talk to your current provider to see what they can offer, either as far as a replacement fix is concerned, or regarding their default tariff. As noted earlier, the default may even prove the better bet at present.

If you’re on a variable tariff, it’s once again a case of watching for competitive deals, either from the market selection or from your existing supplier.

14 September 2021: People’s Energy and Utility Point Cease Trading, Customers Urged To Sit Tight

Two more smaller energy companies – People’s Energy and Utility Point – have ceased trading as of today, confirming the crippling effect of soaring wholesale prices on the UK energy market. Last week, PFP Energy and MoneyPlus Energy also closed their doors (see below).

Market commentators say rising costs will result in more casualties among energy firms this winter. You can find out here what happens if your energy supplier goes bust.

The market regulator, Ofgem, is advising the estimated 500,000 customers of People’s Energy and Utility Point not to take any action until it has appointed a new supplier. The affected households will not suffer any interruption to supply and any credit balances will remain in place.

Once the new supplier is appointed, customers will be free to switch to another provider if they so choose.

On its website, People’s Energy said: “We are saddened to inform you that People’s Energy is ceasing to trade. Please rest assured that your energy supply is secure and all domestic members’ account credit balances are protected. This includes any recent top-ups that were made as part of the seasonal weighting initiative.

“Ofgem, the energy regulator, will be appointing a new supplier for all our members. Their advice is not to switch, but to wait until they appoint a new supplier. This will reduce any risk of disruption in supply and facilitate the transfer of, and access to, domestic customers’ credit balances.”

Utility Point said: “It is with regret that we must announce that Utility Point is ceasing to trade. Customers need not worry, their supplies are secure and domestic credit balances are protected.

“Ofgem’s advice is not to switch, but to wait until they appoint a new supplier for you and also a to take a meter reading ready for when your new supplier contacts you. This will help make sure that the process of handing customers over to a new supplier, and honouring domestic customers’ credit balances, is as hassle free as possible for customers.”

8 September 2021: Energy Firms Close As Market Reels From Rising Costs

Two of the UK’s smaller energy suppliers – PfP Energy and MoneyPlus Energy – have ceased trading. The estimated 90,000 to 100,000 affected households will have their interests protected by the safety net operated by the market regulator, Ofgem.

Escalating wholesale gas and electricity prices are reported to be the root cause of these collapses. There are fears other suppliers could close over the winter if shortage of fuel supplies in the face of rising demand forces prices ever higher.

Green Network Energy, Simplicity Energy and Tonik Energy are among the suppliers who have gone bust in the past 12 months.

Whenever a firm is in financial difficulty, its situation is closely monitored by Ofgem. If closure becomes inevitable, the regulator finds an alternative supplier to take over the ailing firm’s customers, maintaining supply without interruption.

Customers are not required to take any action as Ofgem works with the firms concerned to honour credit balances and manage debt repayments.

However, customers who are moved to a new supplier will find themselves on a ‘deemed’ contract that is likely to be relatively expensive. It is at this point they should run an energy tariff comparison to see if they can switch to a cheaper alternative – which they are at liberty to do.

You can find out more about what happens when an energy supplier goes bust in Rachel’s article.

Evidence of the impact of rising wholesale prices came in August when Ofgem announced a steep increase in its price cap to allow companies to charge their standard variable rate ‘default’ tariff (SVT) customers more because of rising costs. 

The £139 hike will take the cap to £1,277 for a household with typical consumption when it comes into effect on 1 October – its highest ever level since it was introduced in 2019. All the major suppliers have announced increases in their prices to match the higher cap (see below).

The cap is changed twice a year, in April and October. The expectation is that Ofgem will increase it further in April 2022 if there is no cooling in wholesale price inflation.

You can find out more about Ofgem’s price cap here.

Around 11 million households are on SVTs. The main alternatives are non-standard variable rate deals and fixed-term, fixed-rate deals, where the price per unit of energy used is fixed for a stated period, usually 12 or 24 months.

The price of these deals is also increasing, and some firms are offering fixed-rate contracts at a higher price than their SVTs. An effective way to find out whether you can save money by switching tariff and/or provider is to run a quotation on our site.

Switching takes 21 days and there is no interruption of supply. Work will only be required at your property if you change meters as part of the process.

31 August 2021: British Gas Offers To Shield Customers From Price Hike Until 2022

Following its announcement of a 12% increase in the price of its default standard variable rate tariff (SVT) from 1 October, British Gas has offered to freeze SVT customers’ direct debit payments until February 2022.

The October hike is in line with the latest rise in the Ofgem price cap (see below) to £1,277 for households with average energy consumption levels.

British Gas says it will assess the market in February 2022 before making a final decision on changing direct debit payments to reflect the price increase. It says it will smooth out any increase over subsequent months.

Any SVT customers who would rather start paying the increased price immediately (to avoid a higher leap in their bills next year) can amend their direct debit via the British Gas app or by contacting the company.

Ofgem will also announce the next level of the price cap in February, to take effect in April. This will no doubt play into British Gas’s calculations.

The firm says its offer to freeze payments could be worth £50 to customers who take it up: “Freezing direct debit payments until after winter will keep an extra £50 in customers pockets. We want to give our direct debit customers the option to create a bit of extra financial breathing space if they need it.”

Energy Firms Flock To Match Rising Price Cap

26 August 2021

Bulb is the latest major energy provider to announce a price rise for its standard variable rate (SVT) default tariff-holders.

The move follows the announcement on 6 August by the market regulator, Ofgem, that its energy price cap on default tariff prices will rise by over 12% on 1 October.

Typical Bulb customers will pay an extra £2.90 a week when the new, higher cap comes into effect.

Earlier this week OVO Energy announced a 12.25% increase in the price of its Simpler Energy default tariff, effective 1 October 2021. Customers of SSE Energy Services, which is owned by OVO, will see a similar increase.

Rival large firms Eon and Scottish Power will also be raising their prices by similar amounts in October. Ebico, Igloo, So Energy, Zebra and Orbit have also announced increases.

The new Ofgem cap, which applies to customers on SVT default tariffs, will stand at £1,277 for households with average consumption levels – up by £139 on the current level. It is now at its highest since it was introduced in January 2019.

The raft of price increases announced in recent days take firms’ SVT tariffs up to or close to the cap. More increases are thought to be in the pipeline.

Details of the Ofgem price cap, including the figure for households with prepayment tariffs, can be found below.

EDF was the first company to respond to the price cap announcement last week, revealing its own 12% increase, again effective on 1 October.

British Gas, the UK’s largest supplier, is expected to announce a price increase for SVT-holders in the coming days.

Ofgem has raised the level of the cap to enable companies to charge more because they are facing significant increases in the price of wholesale energy, particularly natural gas.

Ofgem has urged customers on SVT default tariffs to shop around to potentially save ‘hundreds of pounds’ by moving to a cheaper tariff.

EDF Price Rise To Match New Cap In October

At-a-glance

• First company to respond to Ofgem price hike
• 12% increase effective for default customers from 1 October
• ‘Hundred of pounds’ savings for those who shop around

Energy giant EDF has become the first supplier to announce a price hike in line with the recent increase in the official energy price cap administered by regulator Ofgem (see story below).

EDF’s move, which is expected to be matched by other leading providers, will take the typical cost of its standard variable rate ‘default’ dual fuel tariff to £1,277 – a 12% increase – from 1 October. This is the date on which the new Ofgem cap comes into effect.

Philippe Commaret at EDF said: “We know a price rise is never welcome, especially in tough times. In 2020, prices for our standard variable customers fell by an average of £100 a year, and we’ll cut prices again as soon as we’re able. 
 
“As Ofgem has explained, it is global gas prices that have caused the unprecedented increase in wholesale energy costs and as a sustainable, long-term business we must reflect the costs we face.

“Customers on tariffs that are due to change in October will be written to, reminding them to check that they are on the best tariff for them.”

Rising wholesale costs

The regulator has raised the cap to £1,277 – it’s highest level since it was introduced in 2019 – so that suppliers can charge their default tariff customers more to take account of increases in the wholesale cost of energy, particularly natural gas.

Bulk prices have risen by 50% in the past six months due to cold weather and increasing demand triggered by industry emerging from Covid-19 lockdowns.

An estimated 11 million households are on various suppliers’ default tariffs, largely because they have never switched tariff or because they haven’t switched for two or more years and have moved to their supplier’s default deal as a result.

A further four million households are on expensive prepayment tariffs, where the Ofgem cap will also rise on 1 October, up £153 to £1,309.

£100s of savings

Ofgem says this combined total of 15 million households could save “hundreds of pounds” on their annual energy bills by shopping around and moving to a cheaper deal.

Anyone switching now would be comfortably on their new tariff before 1 October – the process of finding a cheaper deal takes a matter of minutes, and the switch itself will be complete in 21 days.

There is no interruption to supply and no need for work inside or outside your property.

Update 6 August 2021: Ofgem Price Cap Leaps £139 To Record £1,277 In October 2021

At-a-glance…

• Rise to hit 11 million default tariff holders
• Prepay tariffs cap also rises
• Regulator blames soaring wholesale gas costs

Energy market regulator Ofgem is raising its cap on standard variable rate default tariffs by £139 on 1 October 2021, it announced today. The 12% increase will take the cap, which applies to 11 million UK households, to £1,277 – its highest ever level.

The cap on prepayment tariffs will increase by £153 on the same day, taking it to £1,309. Around four million households will feel the effect of this rise.

Both caps will be reviewed over the winter and new levels will take effect in April 2022.

Ofgem imposes the cap to limit how much energy companies can charge customers on default and prepay tariffs, but it has increased the level because of soaring wholesale energy market prices, citing a 50% increase in the price of wholesale gas.

The quoted cap figures apply to households with average annual consumption. When households are on default tariffs, it’s usually because they have never switched provider or tariff, or because they have not switched for two years or more.

Many people in rented accommodation and on lower incomes have prepayment meter tariffs.

The Ofgem cap does not limit the size of bills but the amount the energy company can charge for each unit of gas and electricity used, plus any standing charges. Bills therefore differ according to consumption levels in each household.

Substantial savings

Substantial savings can usually be obtained by those who switch from a variable rate default tariff to a fixed-rate or competitive variable rate deal (£477 is the minimum saving of the top 10% of savers who switched gas and electricity through Comparison Technologies, Forbes Advisor’s energy comparison partner, in the period between 1st Jan 2020 and 31st Dec 2020).

There are also competitive prepayment tariffs available to those willing to switch.

Ofgem commented: “Customers can avoid the increase by shopping around or asking their supplier to put them on a better deal.”

Those on default and prepay tariffs now have just under two months to switch energy provider or move to a cheaper tariff with their existing provider. The good news is that switching takes 21 days – and there is no interruption to supply or any need for work at your property, inside or out. Running a quotation takes a matter of minutes using our comparison service.

Update 29 July 2021: Ofgem Chief Hints At £150 Price Cap Hike

Jonathan Brearley, head of the energy market regulator, Ofgem, says its energy price cap could rocket by £150 from 1 October 2021. The actual increase will be announced on Friday 6 August 2021.

The price cap applies to standard variable rate ‘default’ tariffs, and limits how much energy providers can charge for units of gas and electricity and any standing charge associated with the tariff. At the moment it stands at £1,138 a year for a typical household with average consumption.

An estimated 11 million households are on default tariffs, either because they have never switched provider or because they have been moved to a default arrangement by their provider following a previous deal coming to an end.

There is a similar cap in place for the estimated four million households with prepayment meters – it stands at £1,156 a year.

Most providers set their tariff prices at the maximum allowed by the cap. As the annual figure is a cap on unit rates rather than on the size of bills, the amount payable will always depend on the amount of energy used.

Mr Brearley says the cap will rise because global prices for fossil fuels, especially gas, are increasing at an unprecedented rate. Ofgem will enable suppliers to charge higher prices because they are paying more on wholesale markets.

“Regrettably, the increase in wholesale costs will feed through to the price cap and, although final analysis is not complete and other costs will also determine the overall level, it could add around £150 per household to the next level of the price cap,” he said.

Ofgem announces the change to the price cap in advance to allow those affected an opportunity to switch to a cheaper deal. The regulator actively promotes switching, pointing out that there are many cheaper tariffs available to those on default deals – often fixed-term, fixed-rate tariffs that lock in the unit price for 12 or 24 months.

Mr Brearley added: “While the price of these fixed contract deals is also increasing on the back of higher wholesale energy prices, if you shop around you may well still be able to save hundreds of pounds on your energy bill.”

Switching now would mean locking in today’s rates ahead of a further expected surge in wholesale prices in the autumn.

Auto-switching on horizon

As we reported last week, the government is considering introducing automatic switching for those on default tariffs unless they opt out of the process.

However, this would not be introduced until 2024, leaving default customers vulnerable to relatively high energy costs for the next three years unless they choose to switch.

*At least 50% of savers who switched via our partner of choice energyhelpline in the period between 1st Jan 2021 and 30th June 2021 saved £101.

Please be aware that the UK financial regulator, the Financial Conduct Authority, has issued repeated warnings about the risks faced by those who invest in cryptocurrency, stating that all funds are at risk and investors could lose everything.

Cryptocurrency trading is not regulated in the UK and no compensation arrangements are in place.

Got a crypto story to share? Email: mhooson@forbesadvisor.com

13 July: Strong Regulation Will Foster Innovation To Avoid Future Crypto Winters

Sir John Cunliffe, deputy governor of the Bank of England with responsibility for financial stability, has warned of the need for greater regulation of the crypto market as a result of the current ‘crypto winter’, which has seen dramatic falls in the value of assets.

In a speech at the British High Commissioner’s Residence in Singapore, Sir John said: “In recent months we have seen a dramatic bout of instability and losses in crypto markets – dubbed by some commentators as the ‘crypto-winter’.

“A widespread collapse of crypto-asset valuations has cascaded through the crypto ecosystem and generated a number of high-profile firm failures. The totemic indicator of the crypto winter is that Bitcoin, the signature crypto asset, has lost 70% of its value since November.

“Regulators, of course, have not been slow to comment. And, true to type, I want to pull out four lessons I think we can draw from this episode:

• technology does not change the underlying risks in economics and finance;
• regulators should continue and accelerate their work to put in place effective regulation of the use of crypto technologies in finance;
• this regulation should be constructed on the iron principle of ‘same risk, same regulatory outcome’ ;
• crypto technologies offer the prospect of substantive innovation and improvement in finance. But to be successful and sustainable innovation has to happen within a framework in which risks are managed: people don’t fly for long in unsafe aeroplanes.”

Sir John said the success of crypto depends on effective regulation: “It would also be unwise for innovators and the authorities alike to forget that to be successful and sustainable, technologically-driven innovation needs regulation. 

“A succession of crypto-winters will not, in the end, help the deployment and adoption of these technologies and the reaping of the benefits that they may offer. History also has examples of technologies that have been put aside/ shunned because of dramatic early failures. While the causes of the Hindenburg Zeppelin disaster are still debated, it is very probable that the general development of the use of hydrogen in transport was put aside for decades as a result.”

Commenting on the speech, Petr Kozyakov, CEO of payments firm Mercuryo, said: “It’s incredibly encouraging to see a leading Bank of England official acknowledging the importance of regulation in fostering innovation in crypto and acknowledging the great potential of this technology.

“We echo his sentiments – as does the wider public and business community. Two thirds (68%) of British people tell us they want to see cryptocurrency become more regulated, while 24% of UK firms that don’t currently use cryptocurrency cite a lack of regulatory clarity as a reason why.

“As more regulators and governments mobilise to introduce regulation I hope they ensure that industry leaders are part of the process. We want to be part of the solution to ensure the frameworks being explored work for everyone. 

“Far from a Hindenburg disaster, we want to see crypto soar into orbit, with effective regulation the key to opening it up to even wider adoption and utility.”

11 July: Crypto Hawk Alder To Chair UK Financial Watchdog

The UK’s troubled financial watchdog has named a Hong Kong regulation veteran as its next chairman, writes Andrew Michael.

Ashley Alder will join the Financial Conduct Authority in January 2023 on a five-year term when he takes over from interim chair, Richard Lloyd.

Mr Alder’s appointment, decided by HM Treasury, was one of the first announcements made by Nadhim Zahawi, who became Chancellor of the Exchequer last week.

A lawyer by background, Mr Alder has run Hong Kong’s Securities and Futures Commission (SFC) for the past 11 years having initially joined the organisation as director of corporate finance.

During his time at the SFC, he helped introduce measures to strengthen the territory’s financial system, pushed for greater focus on climate finance, and imposed sizeable fines on banking giants.

Mr Alder’s appointment comes as the FCA attempts to reconfigure itself after criticism over its handling of recent scandals including the failure of Woodford Investment Management, as well as the collapse of mini-bond provider London Capital & Finance.

The FCA is responsible for authorising more than 50,000 financial firms. Its brief extends to ensuring that consumers are treated fairly and that markets run smoothly. It also has the powers to fine regulated companies and individuals and can bar miscreant bankers, brokers and advisers from conducting financial business.

As a regulator, Mr Alder is known for his hawkish stance on cryptocurrencies. These are likely to chime with the FCA’s current view, given that the regulator has issued multiple warnings to consumers in connection with cryptocurrenices over the past two years.

The FCA has multiple concerns about high-return investments based around cryptoassets. These include consumer protection, price volatility, product complexity, charges, and the way such products are promoted.

But earlier this year, the then Chancellor and now prospective Conservative Party leadership contender, Rishi Sunak, announced his intention to make the UK a global hub for cryptoasset technology and investment, potentially stoking tensions between the Treasury and the FCA, given the regulator’s stance.

However, the appointment of Mr Zahawi, another prospective Conservative Party leadership contender, as Chancellor has left questions about the direction of the UK’s crypto policy. 

5 July: Crypto Ownership Numbers Double Year On Year

The number of UK adults that hold or have held cryptocurrencies has almost doubled since last year, according to new analysis, writes Mark Hooson.

HMRC and Kantar Public’s research found 10% of UK adults said they had ever held cryptocurrency. That figure is up from 5.7% in January 2021, based on Financial Conduct Authority (FCA) data.

Men were more likely to have held crypto than women (13% compared to 6%). Younger people were more likely to have held crypto than older cohorts, and people in ethnic minorities were more likely to have held crypto than white people.

Of those who held crypto assets when the research was conducted, 85% were aged 25-44 and 90% had annual incomes of more than £50,000.

Other noteworthy findings included:

• almost one in five (18%) had sold off their entire holdings
• 11% of those who held crypto assets had purchased stablecoins
• almost a third (30%) had invested less than £100
• more than half (52%) bought into cryptocurrency as a ‘fun investment’
• almost one in 10 (8%) invested in cryptocurrency to ‘gamble’
• more than 4 in 10 (43%) of holders had money saved in an ISA account
• most (63%) of crypto owners who sold assets said they made a profit
• 14% of sellers lost money and 14% broke even
• 24% made profits of £500 or less
• 3% lost more than £5,000.

5 July: EuroCoin Launched With Peg To Euro

A new stablecoin pegged to the euro (EUR) has been launched on the Ethereum blockchain, writes Mark Hooson.

EuroCoin (EUROC) is the first major euro stablecoin. The asset is backed by full reserves of the euro, meaning €1 is held in reserve for every EUROC issued. As a stablecoin, the value of one EUROC should remain at one EUR.

The stablecoin is live on a few exchanges, including BitPanda, Bitget and Huobi Global, and is expected to go live on Binance US, Bitstamp and FTX by mid-July. 

EUROC’s issuer, Circle, expects it to launch on other blockchains by the end of the year.

Circle CEO and founder Jeremy Allaire said: “There is clear market demand for a digital currency denominated in euros, the world’s second most traded currency after the US dollar. 

“With USDC (US dollar stablecoin) and EuroCoin, Circle is helping unlock a new era of fast, inexpensive, secure and interoperable value exchange worldwide.”

Even though stablecoins are meant to maintain their 1:1 pegging with the currency they’re associated with, market volatility in 2022 has seen some, such as Terra and Tether, lose their parity with the US dollar.

1 July: European Union Agrees Framework To Regulate Crypto

EU regulators will attempt to tame the “wild west” of the cryptocurrency market with a new regulatory framework agreed this week.

Under the Markets in Crypto-Assets (MiCA) initiative, crypto issuers and exchanges will have to follow new rules if they want to operate within the region. 

The measures are intended to protect consumers. They include provision for asking stablecoin issuers (stablecoins are linked to fiat currencies such as $ and £) to have sufficient liquidity in their reserves to cope with mass withdrawals, as well as daily transaction limits on stablecoins that become too large.

The European Securities and Markets Authority (ESMA) will be able to ban or restrict platforms that fail to protect consumers.

Announcing the news, European Parliament lead negotiator Stefan Berger said: “Today, we put order in the Wild West of crypto assets and set clear rules for a harmonized market that will provide legal certainty for crypto asset issuers, guarantee equal rights for service providers and ensure high standards for consumers and investors”.

Since the UK is no longer an EU member, crypto issuers and exchanges operating in the UK won’t be subject to MiCA rules. As things stand, the cryptocurrency market is unregulated in the UK. 

However, the government does have plans to bring stablecoins such as Tether into existing payments regulation in order to become a recognised form of payment.

Welcome step

Petr Kozyakov, CEO of payment services company Mercuryo, says the EU move is positive: “This provisional agreement by EU regulators to safeguard the crypto sector is a welcome step in the right direction.

“There is a real desire for a clear set of rules to protect individuals and businesses who have adopted cryptocurrencies already, to weed out bad actors, and to encourage others to adopt crypto as a result.”

Mercury research suggests there is strong appetite for crypto regulation in the UK. According to the firm’s data, 68% of British people say they want to see cryptocurrency become more regulated, while 61% worry about falling victim to a cryptocurrency scam, and 47% feel their money is safer in other forms of investment than in a cryptocurrency.

Mr Kozyakov says this sentiment is echoed by UK businesses: “Among those that do not use cryptocurrency, one in four cite a lack of regulatory clarity as a reason why while 37% say it is because they don’t understand cryptocurrency well enough.

“Another quarter are concerned about the risk of scams for their customers, mirroring consumers’ security concerns.”

The research suggests 64% of UK businesses are apprehensive about introducing or accepting cryptocurrency payments, despite 52% also recognising that it could increase the size of their customer base.

30 May: Luna 2.0 Sell-Offs Crash Price

Luna, the cryptocurrency that collapsed the Terra blockchain, has crashed in value after relaunching last week.

Investors in the original project were gifted ‘Luna 2.0’ tokens on Friday, 27 May, to compensate them for their losses following the original Terra’s collapse (see story below).

However, widespread sell-offs of those ‘airdropped’ tokens on Friday saw the asset drop from around $19.50 to around $6 this morning, representing a drop of almost 70%.

Investors who held more than $10,000 worth of Luna pre-collapse received a 30% reimbursement of the token last week, with the remaining 70% to be handed out over the next two years in a bid to reduce the impact of widespread sell-offs that could tank Luna’s value.

27 May: Luna Relaunches On New Blockchain

The Luna cryptocurrency is relaunching on a new blockchain, two weeks after its involvement in the collapse of the Terra blockchain.

The original Terra blockchain had two tokens, luna and stablecoin terraUSD (UST). Luna played a part in pegging UST to the US Dollar, but when UST lost its 1:1 pegging with the US fiat currency, the Terra algorithm began issuing more luna coins to rebalance the system. The hyperinflation caused luna to lose nearly all its value.

In what’s known as a ‘hard fork’, the new Terra chain will separate from the old Terra Classic chain. Terra’s native token will be luna, while Terra’s Classic’s will be luna classic.

Referred to as Terra 2.0 by the project’s creators, the new project will cast off the terraUSD (UST) stablecoin.

Previous luna and UST holders will receive new tokens via airdrop today (Friday 27 May). Those with more than 10,000 tokens will receive 30% now and the remaining 70% over two years to prevent another crash caused by sell-offs.

17 May: Emirates To Allow Air Travellers To Pay With Bitcoin

Emirates, the United Arab Emirates flag carrier, is adding Bitcoin as a payment option and launching non-fungible tokens (NFTs) as part of a drive to build “signature brand experiences.”

The airline will incorporate digital solutions such as those underpinning cryptocurrencies and the blockchain as part of its strategy to improve customer service.

Cryptocurrencies are a digital means of exchange which use cryptography to make transactions secure. Blockchain is the database technology at the heart of nearly all cryptocurrencies.

Headquartered in Dubai, Emirates says it will recruit staff to create NFT collectibles that will be tradable on its website. NFTs are digital assets that provide the owner with unique online versions of artwork, music and video.

The company has not said when the new features would be available.

The airline introduced virtual reality technology on its website and the Emirates app more than five years ago, providing three-dimensional, 360-degree view experiences of its onboard cabin interiors.

25 April: Fidelity To Allow Workers To Bet Retirement On Bitcoin

Investment giant Fidelity Investments is planning to give US workers the option of adding cryptocurrency into the asset mix of their retirement savings plans.

US 401(k) retirement accounts typically feature asset classes such as stocks and shares, bonds and cash.

The move by Fidelity, as reported by the Wall Street Journal, to offer workplace investors the option of adding Bitcoin to their savings accounts, would be a first. Cryptocurrency remains controversial because of its huge volatility and the possibility of incurring significant losses.

The crypto option will be available to the 23,000 employers that use Fidelity to administer their retirement accounts by the summer. With around £8.5 trillion in assets under administration, the fund manager is the largest retirement plan provider in the US.

Fidelity said there is growing interest from retirement plan sponsors for vehicles that allow them to provide their workers with access to digital assets in defined contribution pension plans. 

Such plans enable workers to build up a savings pot from which a pension is eventually drawn. 

Despite the apparent enthusiasm to incorporate crypto into retirement planning arrangements, US regulators have urged caution against accommodating digital assets within 401 (k) arrangements. 

Last month, the Department of Labor urged plan sponsors to exercise “extreme care” before they considered adding a cryptocurrency option into the investment menu of their retirement accounts.

The warnings echo the stance taken by the UK financial regulator, the Financial Conduct Authority (FCA), in relation to crypto assets. 

The FCA frequently warns consumers about the volatile nature of the crypto market, reminding would-be investors that crypto assets in the UK are unregulated, high risk and offer nothing in the way of financial protection if things go wrong.

7 April: Meta Mulls In-App ‘Zuck Bucks’ Currency

Meta, the social media giant formerly known as Facebook, is considering introducing an in-app currency. The tokens have been dubbed ‘Zuck Bucks’ by company insiders, referencing Facebook founder Mark Zuckerberg. 

Unlike a cryptocurrency, Zuck Bucks would have no value outside of the Meta app-sphere, making them comparable to those found in mobile games such as Roblox’s ‘robux’.

Such currencies have garnered media coverage because children have used their parents’ payment details to buy hundreds of pounds-worth of tokens.

The in-app currency development follows February’s winding down of the Facebook-funded Diem stablecoin cryptocurrency, following regulatory challenges.

Speaking at the South By Southwest conference last month, Mr Zuckerberg signalled that Meta has not given up on blockchain technology, telling reporters that non-fungible tokens (NFTs) would soon be coming to its platforms.

4 April: Chancellor Tells Royal Mint To Create NFT

Chancellor of the Exchequer Rishi Sunak MP has told the UK’s producer of notes and coins to create a non-fungible token (NFT) as part of a move to mark the UK’s forward-looking approach to the cryptocurrency industry.

NFTs are digital assets that represent real-world objects, such as unique works of art or mementoes of memorable sporting moments. NFTs, along with cryptocurrencies such as Bitcoin, use blockchain, a multi-point computer ledger designed to safely store digital data.

Speaking today at the Innovate Finance Global Summit, John Glen, economic secretary to the Treasury, announced that Mr Sunak has asked the Royal Mint to release an NFT this summer.

No details were given of what image or object the NFT might represent, nor whether NFTs would be used to generate funds for the exchequer.

Mr Glen said the announcement was one of a series of measures to make the UK a “global hub for cryptoasset technology and investment.”

Other measures announced by Mr Glen included:

• stablecoins, a cryptocurrency designed to have a relatively stable price by being pegged to a currency or commodity, to be regulated, paving the way for their use in the UK as a recognised form of payment
• legislation for a ‘financial market infrastructure sandbox’ by 2023, enabling firms to explore the “potentially transformative benefits of distributed ledger technology”
• a two-day ‘Crypto Sprint’ led by the City watchdog, the Financial Conduct Authority (FCA), in May seeking the financial services industry’s views on key issues relating to the development of a future cryptoasset regime
• establishing a Cryptoasset Engagement Group to work with the financial services industry
• looking at ways to improve the competitiveness of the UK’s tax system to encourage further development of the cryptoasset market.

Today’s announcement to launch an NFT at a time when the UK is in the grip of a cost-of-living crisis may raise eyebrows. Following his recent Spring Statement, Mr Sunak came under pressure from all sides of the political divide for not doing more to help the UK’s increasingly hard-pressed households.

News that May’s Crypto Sprint will be led by the FCA also has the potential to stoke tensions between the Treasury and the UK’s main financial regulator about future plans for the crypto industry.

The FCA issues regular warnings to consumers about the crypto industry, reminding them that cryptoassets are unregulated and high-risk.

The FCA’s current stance on crypto as an investment is that investors “are very unlikely to have any protection if things go wrong, so people should be prepared to lose all their money if they choose to invest in them”.

30 March: Watchdog Extends Deadline For Selected Crypto Firms

The Financial Conduct Authority (FCA), the UK’s financial regulator, has extended a short-term licensing arrangement for several cryptocurrency firms, providing them with more time to get their affairs in order.

The FCA had previously announced that crypto companies operating without permanent licences by 1 April 2022 would be made to stop their UK operations. 

Crypto firms operating in the UK are required to register with the FCA under anti-money laundering regulations. So far, 33 firms have been added to the regulator’s list of registered cryptoasset organisations. 

But the regulator has now said that a dozen firms on its temporary register of cryptoasset businesses will be given additional time providing that they can show they need it.

The FCA’s Temporary Registration Regime for cryptoasset businesses was set up in December 2020. This allowed existing cryptoasset firms, whose applications had yet to be assessed by the regulator, to continue trading providing they had applied to register before 16 December of that year.

The FCA’s temporary register shows that two of the 12 firms now offered extensions include payments and banking app Revolut and Copper, a business that helps financial institutions trade cryptocurrencies.

Crypto firms on the temporary list will be given extra time if they supply more information for their application. According to the FCA: “This is necessary where a firm may be pursuing an appeal or may have particular winding-down circumstances”.

Earlier this year, a House of Commons Treasury Select Committee report criticised the FCA for the amount of time it had taken to deal with applications and recommended that the 1 April deadline should not be extended.

The regulator issues regular warnings to consumers about the crypto industry. It reminds would-be traders that cryptoassets are unregulated and high-risk, which means people are “very unlikely to have any protection if things go wrong, so people should be prepared to lose all their money if they choose to invest in them”.

The FCA’s Financial Services Register includes a list of unregistered cryptoasset businesses. According to the FCA, these “are UK businesses that appear to be carrying on cryptoasset activity that are not registered with the FCA for anti-money laundering purposes”.

Earlier this March, the FCA said it had opened more than 300 cases on unregistered crypto firms in the past six months “many of which could be scams”. 

22 March: Advertising watchdog warns 50 firms over crypto ads

The UK’s advertising regulator has issued an enforcement notice to more than 50 companies promoting cryptocurrencies, setting out its standards for ads and including warnings against encouraging investors to buy through fear of missing out.

The Advertising Standards Authority (ASA) says it issued the notice as part of an ongoing clampdown on “problem” cryptocurrency ads and to ensure that consumers are treated fairly in this area of the financial marketplace.

As part of the notice, ASA provides guidance on how the crypto industry should keep to the rules when promoting its products.

ASA says advertisers should state clearly that cryptocurrencies are unregulated in the UK and that the value of holdings can go down as well as up.

It adds that promotions must not imply that cryptocurrency decisions are trivial, simple, or suitable for anyone, nor must they imply a sense of urgency to buy or create a fear of missing out.

The guidance extends to ads in the press, on TV, via email, outdoor posters, in promoted social media posts and via paid agreements with influencers.

ASA will continue to monitor the situation and warns that it will take “targeted enforcement action to ensure a level playing field” if problem ads persisted after 2 May.

Earlier this year, the government said new rules on cryptocurrency advertising, overseen by City watchdog the Financial Conduct Authority (FCA), would be introduced bringing them into line with traditional financial promotions.

Guy Parker, the ASA’s chief executive, said: “Crypto has exploded in popularity in recent years. We’re concerned that people might be enticed by ads into investing money they can’t afford to lose, without understanding the risks. Working alongside the FCA, we’ll take strong action against any advertiser who fails to ensure that their ads are responsible.”

Sarah Pritchard, executive director of markets at the FCA, said: “People should be wary of any promotion promising high investment returns and do further research before investing, including through the FCA’s InvestSmart website. 

“Crypto assets remain unregulated and those who invest in them should be prepared to lose all their money.”

11 March: FCA Demands Closure Of Crypto ATMs

Watchdog the Financial Conduct Authority (FCA) has told cryptoasset firms to close any automatic teller machines (ATMs) offering crypto services in the UK.

ATMs offering cryptoasset exchange services in the UK must be registered with the FCA and must comply with UK Money Laundering Regulations (MLR).

The regulator says none of the cryptoasset firms registered with it have been approved to offer crypto ATM services. This means that any of them operating in the UK are doing so illegally and consumers should not be using them.

The FCA is contacting operators of crypto ATM machines in the UK to tell them that the machines be shut down or the operators will face further action.

The regulator issues regular warnings to consumers that cryptoassets are unregulated and high-risk, which means people “are very unlikely to have any protection if things go wrong, so people should be prepared to lose all their money if they choose to invest in them.”

4 March: Man City Signs Crypto Deal With OKX

Premier League champions Manchester City have signed a multi-year deal with cryptocurrency exchange OKX.

The partnership, OKX’s first move into football sponsorship, will give the exchange an in-stadium presence at the club’s Ethiad stadium. The deal covers the men’s and women’s teams, as well as City’s e-sports operations.

Seychelles-based OKX claims to be the second largest cryptocurrency exchange with 20 million users worldwide. As part of the deal, it said it would be collaborating with City “to explore future innovation projects together”.

Sponsorship deals between football clubs and the cryptocurrency industry have become a regular occurrence in recent months.

The Bitget exchange recently announced tie-ups with both the Turkish side Galatasaray and the Italian club Juventus. See story from 17 February below. 

17 February: Galatasaray Deal Highlights Sport’s Growing Links To Crypto Sector

Turkish football team Galatasaray has partnered with a cryptocurrency exchange in a brand-building initiative aimed at introducing fans to the crypto sector.  

The sponsorship deal, brokered by Capital Sports Media Group, will feature the Bitget exchange as Galatasaray’s official partner on multiple platforms and media assets across both the club’s football and basketball teams.

The announcement is the latest commercial deal involving football and the cryptocurrency industry. It follows Bitget’s recent association with Italian side Juventus.

Earlier this month, Polish team Legia Warsaw revealed a tie-up with sport and entertainment agency Capital Block, to explore how to market Non-Fungible Tokens (NFTs) – a form of digital collectible – to its fan base.

Last October, Capital Block, the NFT division of Capital Media, advised Galatasaray on its first NFT release, featuring Ali Sami Yen, the club’s founder, which sold out in less than a minute. 

Sandra Lou, CEO of Bitget, said: “Turkey has demonstrated significant interest in the crypto sector and we look forward to growing our community in this market as we continue to lead educational and knowledge sharing opportunities within the space.”

Tim Mangnall, CEO of Capital Block, said: “We have been working with Galatasaray for a while now and we know how committed the club is to being aligned with the most modern and revolutionary technologies out there.”

With the launch of its Phone (1) device, Nothing’s goal is to take the concept of the smartphone back to basics, writes Candiece Cyrus.

The two-year-old London tech firm’s first phone, priced from £399 for those who want to buy the phone from the manufacturer without a contract, represents pressing “a giant reset button” with regards to design.

It can also be purchased in black or white from O2, which offers three 36-month plans with unlimited texts and calls, and a choice of 3GB, 10GB or 30GB of data. 

You will be required to pay £10 upfront, and then £24.20, £27.20 or £32.19 monthly, depending on the amount of data you choose. 

Perks, such as a set number of months on a Disney+ or Amazon Prime Video subscription, and double your data if your household uses Virgin Media broadband, are also included. Delivery takes up to two weeks.

The Phone (1) has a see-through casing to show off the phone’s inner workings, which could be seen as symbolic of the company’s mission “to remove barriers between people and technology, and create a seamless digital future.”

It has a 6.55” OLED display. This compares to the likes of competing flagships from Samsung, iPhone, Google and Huawei for example, that boast 6.8” or 6.7” screens. 

Less disputable is the clarity, range in colour and depth in contrast, that comes from High Dynamic Range 10+ (HDR10+) technology, one of the latest forms of video technology used to make what you see as true-to-life as possible.This is teamed with a display refresh rate of 120Hz.

The 50MP wide and ultrawide dual camera on the rear of the device surpasses the latest iPhone’s 12MP cameras, and can shoot 4K video. However, it does not match the Samsung S22 Ultra’s four-lense setup which includes a 108MP camera. For selfies, there is a 16MP lens.

Powering the device is the Snapdragon processor. What it lacks in speed it makes up for in a large 4,500mAh battery, that can last longer than a day on a single charge.. 

The handset comes with a decent 8GB or 12GB of RAM and 128GB or 256GB of storage.

These features allow Phone (1) to sit comfortably among the competition. However, added details such as the built-in studio lighting on the rear of the phone that doubles as a notification alert light, add to its appeal.

20 June: Streaming Service Throws Down Gauntlet To Netflix, Amazon

Film studio Paramount is bringing its Paramount+ streaming service to the UK on 22 June 2022, joining the likes of Netflix and Amazon Prime in an increasingly competitive streaming market. 

The service will include a catalogue of blockbusters including several Star Trek films, Pulp Fiction, the original Grease, Castaway and Mission Impossible: Fallout, as well as popular television series such as The First Lady and Mayor of Kingstown.

It will also stream original content including the highly anticipated Halo series, based on the popular video game of the same name, Star Trek: Discovery, Star Trek: Strange New Worlds, and a reboot of the bellowed sitcom, Frasier. 

Another Paramount+ exclusive series expected to make a splash is The Offer — a fictionalised account of how producer Albert S Ruddy adapted The Godfather into the iconic film. 

Access to the platform’s 8,000 hours of content will cost viewers £6.99 a month, or £69.90 a year — matching the price for a basic Netflix subscription. New users will also be offered a seven-day free trial period.

How to access Paramount+

As of 22 June, you can sign up to Paramount+ through your internet browser or by downloading the Paramount+ app. Subscribers can stream to three screens at a time on smartphone, tablet, smart TV, or browser.

Paramount+ has also made a distribution deal with Sky, meaning that Sky Cinema customers can access the service at no extra cost through their Sky Q, Sky Glass, or set-top box. 

The streaming service has been available in the US since 2021 and will launch in Italy, France, Switzerland, Germany and Austria later in 2022.

8 June 2022: Universal USB-C Charger Rule In Place From 2024

Electronics manufacturers will be forced to ensure devices they sell in the EU can be charged using a USB-C charger from 2024.

The move, designed in-part to reduce the amount of electronic waste created by the electronics industry, will also affect Apple’s iPhone – which has used proprietary ‘Lightning’ charging cables for 10 years.

It’s understood that, following the UK’s departure from the European Union in 2020 and under the current trading arrangements, the USB-C mandate will apply to devices sold in Northern Ireland, but not in the other UK nations.

The rule change will have the biggest impact on the mobile phone industry, but will also affect manufacturers of tablets, mobile gaming systems and portable speakers.

It’s unclear whether manufacturers will redesign their products to incorporate USB-C charging ports, or simply use adapters to retro-fit them with USB-charging capability.

Newer models of Apple’s iPad Pro, Air and mini tablets already have USB-C charging ports, so it’s not unrealistic to think the smartphone giant will add USB-C charging to future models of its iPhone, regardless of the EU ruling.

USB-C was first announced in 2012 and began to be implemented in the mainstream in 2014/15. 

The pill-shaped connector is reversible, meaning it will work regardless of the orientation with which it’s plugged in. USB-C is capable of transferring data and power simultaneously.

7 June: Apple To Enter United States BNPL Market This Autumn

Apple is to allow users to buy goods and services on credit under a new ‘buy now, pay later’ (BNPL) service called Apple Pay Later.

Launching in the US this autumn, Apple Pay Later will let iPhone users split the cost of purchases into four installments over six weeks with any merchant that currently accepts contactless Apple Pay transactions.

There’s no interest on Apple Pay Later purchases and no fees charged for late payments. Apple Pay will run on the Mastercard payments network.

Users will be able to manage payments in the Wallet app and track deliveries as a result of Apple’s new partnership with ecommerce platform Shopify.

The move to take on other BNPL lenders such as Klarna and Affirm sees Apple move further into the financial services space after launching its own US-only credit card, the Apple Card, in 2019.

It is not yet known whether Apple Pay Later or Apple Card will launch in the UK.

Last summer, Bloomberg reported that Apple was likely working with investment bank Goldman Sachs to cover the cost of purchases under an upcoming BNPL service.

The BNPL market, which is unregulated in the UK, has faced criticism in recent years, with claims its no-fee, no-interest model makes it too easy for consumers to get themselves into debt over purchases they can’t afford.

According to Statista data, Klarna – which is the most downloaded BNPL app in the UK – has almost 1,000,000 active monthly users in the UK.

Data from UK Finance, the body that represents the banking and finance industry, last summer showed that more than 17,000,000 adults had registered for mobile payments such as Apple Pay and Google Pay as of 2020, with 84% of those registered having used their mobiles to pay for a transaction.

Overspending risk

Commenting on Apple’s move, Sarah Coles, at financial advisor Hargreaves Lansdown, said: “Apple’s move into BNPL could fuel another boom in the market, putting more shoppers at risk of overspending.

“Since the start of the year, the phenomenal pace of growth of BNPL has slowed significantly, as people cut back on non-essential spending. However, if Apple chooses to expand its BNPL service into the UK, the arrival of a massive global lifestyle brand in the market could reignite our enthusiasm for borrowing.

“Already we know that people don’t tend to think of BNPL as borrowing – they consider it to be a budgeting solution. The arrival of a brand that’s far less associated with financial services risks reinforcing the misapprehension that BNPL isn’t a debt product, which could mean even more people are tempted to use it without really thinking it through.

“The fact it will be available through the same network as Apple Pay in the US means that, if it adopted the same approach in the UK, it would be available in an enormous number of retailers, both online and offline. BNPL companies have been gradually pushing into stores, and this would mean a step change in the process overnight. It means we may be tempted to use it for even more of our shopping.

“At a time of rising prices, there’s the risk that the arrival of Apple would mean more people using BNPL to make ends meet. Our research shows that already 11% of people have used it to buy essential clothes such as a winter coat, while more than one in 20 people have used it to buy groceries, and one in 10 have used it for other essentials.

“Borrowing to pay for essentials feels like a solution in the short term, but by spreading the cost, it means pushing up your expenses for months, making it even harder to keep on top of your finances. In the short term it feels like a solution, but in the end it just adds to the problem.”

Apple Pay Later was one of a slew of iOS16 features unveiled at Apple’s developer conference WWDC2022 yesterday (Monday).

Other new features of Apple’s latest mobile operating system include the ability to edit text messages after they’re sent, and customisable, context-aware lock screens that can, for example, be set not to show work-related notifications at the weekend.

Apple Safety Check will help to protect people in abusive relationships by allowing users to review who has access to apps that reveal their location, and to revoke that access.

Read more: How To Buy Apple Stock

31 May: Free Mobile Data For Vulnerable Households

A hardship fund is to offer free mobile data to 255,000 households struggling with the cost of living crisis.

Mobile network operator Virgin Media O2 is working with bakery chain Greggs and its charity, the Greggs Foundation, to provide eligible households with free SIM cards and vouchers for 15GB worth of data. 

The SIM cards will be distributed via schools in Scotland, the North East, South East and Midlands on a trial basis. The 15GB allowance is more than three times what an average mobile user consumes each month, according to regulator Ofcom.

The trial forms part of the National Databank scheme, which already has support from Vodafone and Three, and aims to tackle ‘data poverty’ in the UK.

Tracy Lynch of the Greggs Foundation said: “We understand many people struggle to make ends meet and when unexpected costs arise, many can suddenly find themselves in very difficult circumstances. 

“With the Hardship Fund, we are able to offer a helping hand to people who need it most. By joining the National Databank we are now able to provide further essential support to those facing hardship.”

The news follows last week’s announcement from supermarket chain Iceland that it would offer special 10% discounts for customers over the age of 60 every Tuesday.

23 May: Three Reinstates Overseas Roaming Charges

Mobile network Three has reintroduced roaming charges for certain customers using their mobile phones outside of the UK. 

Three previously said its roaming charges would not return after Brexit, but announced a U-turn in September 2021. Three customers who upgraded or took out a new contract after October 2021 will be impacted, with older contracts unaffected. 

From 23 May, making phone calls, sending an SMS, or using mobile data will incur a flat rate of £2 a day within the European Union (EU), rising to £5 per day for some non-European countries including the US, Australia, and New Zealand. 

Roaming charges do not apply to the Republic of Ireland or the Isle of Man. 

For almost five years, UK customers were able to use a Three SIM in EU countries without paying roaming charges, since EU regulations banned temporary roaming fees in 2017. However following Brexit, UK mobile networks are no longer beholden to the rule. 

Three was the third UK network to reintroduce roaming charges. EE and Vodafone both re-introducing a £2 per day roaming charge for selected customers travelling to the EU, based on when they joined their network.

Currently, O2 is the only major UK network that will not be introducing traditional daily roaming charges when customers use their phone in EU countries. 

Instead, the network says it is introducing a ‘fair usage’ policy, which charges customers £3.50 per GB of mobile data they use in Europe above the monthly limit of 25GB. Other than that, O2 mobile customers can use their phone in EU countries at no extra cost.

Our comparison service can help you find the best mobile phone deal.

18 May: O2 Mobile Scores Worst For Customer Service

Mobile and broadband customers waited longer on hold and were less satisfied with how providers handled their complaints in 2021, according to data from the UK telecoms regulator.

Ofcom’s latest research found that, despite relatively high customer satisfaction on the whole, subscribers were being kept waiting for longer to be dealt with. In fact, customers spent longer on hold than they did in 2019, before the pandemic.

O2 mobile phone customers were worst affected, with ‘call waiting’ times up by one minute and 42 seconds on 2020 levels to three minutes and 59 seconds. BT Mobile, EE, Vodafone and iD Mobile’s average waiting times were also longer.

At the other end of the scale, Three performed best. Its customers waited just 16 seconds on average to speak to an operative. 

Tesco Mobile and Virgin Mobile managed to reduce their wait times from 2020 levels but only Sky and Three were able to beat their pre-pandemic performances.

In the broadband sector, KCom also kept customers waiting more than twice as long in 2021 than they did in 2020, at an average of eight minutes and 53 seconds, up from three minutes 19 seconds. NOW broadband performed best, keeping customers on hold for an average of just 31 seconds.

The Ofcom data shows that only half the broadband and mobile customers who complained were happy with the outcome, and most had to speak to their provider more than once to get a resolution.

Complaints handling

Virgin Media customers recorded below-average satisfaction across the mobile, broadband and landline sectors. Subscribers were also less likely to recommend any of its services than the average telecoms customer.

Tesco Mobile was the opposite, with higher than average customer satisfaction levels, the lowest number of complaints and the highest proportion of customers who were willing to recommend it.

Ofcom’s Ian Macrae said: “When things go wrong with your phone or broadband service, it’s incredibly frustrating if you have to wait on hold for ages to get it sorted, or if your complaint is handled badly.

“As we emerge from the pandemic, some companies need to up their game when it comes to resolving problems, especially at a time when prices are going up. It’s never been simpler to switch, so if you’re not happy with the service you’re getting, vote with your feet and look elsewhere.”

12 May: Google Unveils New Pixel Smartphones, Smartwatch And Android 13

Google has announced a new iteration of its Pixel 6 smartphone, its first smartwatch, its next operating system and its next flagship smartphone, the Pixel 7.

The flurry of new product reveals at its IO developer conference yesterday marks a change in direction for the company’s Android division. 

While Google currently produces its own Pixel devices, its Android operating system is used by devices produced by many other third-party manufacturers like Samsung. 

With its newly-announced devices, however, the search giant has signalled a move towards creating its own ecosystem of products, in the same way as Apple.

Here’s a look at what’s new:

Pixel 6a

The Pixel 6a is a new mid-range smartphone priced at £399 and available from 28 July. 

It’s smaller than Google’s flagship 6.4” Pixel 6 device, measuring 6.1”, but includes the same Tensor processor and Titan security chip as its larger sibling. 

The handset comes with 128GB of storage and a choice of three colours: Sage, Chalk and Charcoal. Google has pledged to keep the 6a updated with its latest software for five years, which is longer than it typically does.

Android 13

Google also showed off the next generation of its Android operating system (OS), Android 13.

Due this summer, the free update for Android users will introduce new features, customisation options and privacy settings.

Elsewhere, the new OS will support different concurrent languages, allowing multilingual users to apply different languages to different apps.

Pixel Watch

The Pixel Watch (release date yet to be announced) pairs Google’s Wear OS for wearable devices with Fitbit health tracking, thanks to Google’s acquisition of Fitbit last year. The rival to the Apple Watch will work with many Android devices beyond the Pixel range.

Google didn’t share any specifics about the device beyond its name and images that show a circular watch face with crown-based controls and interchangeable straps – just like Apple’s smartwatch.

There was no release date given for the timepiece, but speculation says it’ll land around October this year, alongside the next flagship Google smartphone – the Pixel 7.

Pixel 7

The IO conference also teased the next generation Pixel devices – the Pixel 7 and Pixel 7 Pro. Details were scant, but we can expect aluminium and glass-wrapped handsets that use a new iteration of Google’s much-vaunted Tensor technology.

Now, thanks to some stellar returns, the so-called water of life – whisky – has joined wine as an alcoholic asset catching the eyes of investors.

Last December, for example, a four-decanter lot of Glenfiddich single malt from the 1950s went under the hammer for £830,000 at The Distillers One of One charity event, setting a record for Glenfiddich sold at auction.

More recently, a collector from Asia paid an eye-watering £16 million for a ‘one of a kind’ 1975 cask of Ardbeg single malt Scotch – a world record figure and way in excess of any amount recorded for whisky at auction.

Given these examples, it might be tempting to think there’s a place for whisky within an investment portfolio. After all, we live in uncertain times where traditional assets, such as shares, are enduring a rough patch.

Take the US stock market which, having fallen by 20% since the start of 2022, is now in classic ‘bear market’ territory.

The global economic backdrop does not exactly make for bright reading, either, characterised as it is by soaring inflation and rising interest rates. In the UK, the prospect of recession seemingly  increases by the day.

Tangible assets

Given these circumstances, it’s understandable for investors to gravitate to tangible assets in the hope that they offer less risk of being affected by market fluctuations.

Take gold. For centuries, the precious metal has been accepted as a ‘safe haven’ asset to which investors have turned during times of tumult and volatility. But what about the prospects for alcoholic liquid gold? Does whisky have a place within an investment portfolio?

Whisky Investment Partners (WIP) believes it has. WIP says Scotch whisky has an export value of £4.9 billion a year and represents 70% of all Scottish food and drink exports. It adds that Scottish cask whisky ownership has consistently delivered average returns of between 8% and 12% a year “in recent decades”.

According to the Scotch Whisky Association (SWA), 44 bottles of Scotch whisky are shipped from Scotland to around 180 markets around the world every second – about 1.3 billion bottles a year.

The figures may make attractive reading but, as with any investment class, in isolation they provide no sure-fire guarantee for would-be investors.

Much of the recent rise in whisky trading has been boosted by overseas buyers, especially buying groups based in China, Japan and India who are interested in single-malts.

To be called Scotch whisky, the spirit must mature in oak casks in Scotland for at least three years. An estimated 22 million casks lie maturing in warehouses in Scotland.

Whisky is a specialist area which should only ever account for a fraction of one’s investments. Ideally, anyone considering an investment in whisky should already be in possession of a balanced portfolio, ideally diversified across a mix of assets such as cash, bonds and shares.

Would-be investors should also bear in mind the same rules that apply to all new investments before dipping their toes into an untried asset class for the first time:

• Keep your ultimate financial goals in mind
• Be prepared to ride out market ups and downs.

Potential investors should also ask themselves these questions:

• Do I understand how I’ll potentially make money from investing in whisky?
• Am I comfortable with the level of risk in question?
• What’s my investing budget?
• Can I afford to lose all my invested money?
• Am I protected financially should things go wrong?

There are two main routes into whisky investment.

Buy whisky by the bottle

One can simply buy bottles of whisky with the hope of selling them on at a higher price. The key, of course, is to buy the right bottles – usually from iconic distilleries in limited releases.

Within this area of interest, single-malt Scotch makes up the majority of the market (investors tend to shun blends of malt and grain whiskies). That’s because, while countries such as Ireland and Japan produce a fair deal of whiskey (Scotch is not spelled with the ‘e’), investment interest in these drinks is more limited. 

Rare Whisky 101 publishes data and intelligence aimed at whisky collectors and investors. Updated monthly, its Rare Whisky Icon 100 index charts the value performance of iconic collectables and is designed to track the marker for highly desirable, regularly traded bottles of single malt Scotch whisky.

As Rare Whisky 101 points out, not all names within the index increase in value. But since the beginning of 2013, when the index was launched, the Icon 100 has returned just over 400% till the end of June 2022.

Numerous Scottish distilleries produce whisky, but certain names see their product increase in value at greater rates than others.

The table below shows Rare Whisky 101’s so-called collectors ranking – a league table based on an equal weighting for volume and value sold at auction in the UK.

Table 1: Collectors ranking 30 June 2021

As well as buying into producers with a successful track record, whisky investors tend to favour certain flavours – and this can affect the price that a bottle ultimately fetches. For example, whiskies aged in sherry barrels tend to sell well. So, too, do darker varieties over comparatively lighter ones.

Would-be buyers need to keep an eye out for auctions and private sales. They should also scour distilleries direct for news of upcoming releases of rare bottles.

Buy whisky by the cask

An alternative way of investing in whisky is by buying it by the cask.

The whisky distilling process is both labour and capital intensive. Bearing in mind the minimum three-year maturation rule that applies to Scotch, distilleries cover costs and raise capital by allowing private investors to buy whisky in casks in their store rooms.

The idea is that investors buy a cask with the aim of watching the spirit inside appreciate in value over time. The older a whisky gets, runs the thinking, the more expensive it becomes – thanks to the taste improving with age, and also because of the increasing rarity factor.

Cask whisky investing can be done while the spirit is still in an early stage of the maturation process, and be carried out directly via a distillery, or through a specialist broker or investment club.

A broker typically strikes a deal with a distillery for a limited run of casks at a discounted price. The broker then sells casks, which are then stored in a secure bonded warehouse and insured, to investors.

Take, for example, Whiskey & Wealth Club (W&WC), which claims to bridge the gap between distilleries and investors.

WW&C says it buys premium new-make spirit at discounted wholesale rates from the best distilleries and brands. Once the spirit is sufficiently matured in cask, an investor can decide to sell back his or her holding to the distillery for profit, to bottle it privately, retain it as a whisky collectable, or sell on the consignment.

When buying whisky as a cask investment, check that the broker in question has the required tax licence relating to the country in which the casks are being stored.

HMRC in Scotland and the Irish Revenue Commissioners in Ireland keep a record of who owns and stores each cash in those respective countries to ensure tax is paid when it is time to bottle and sell on the spirit.

Is it worth buying into whisky as an investment?

Investing in whisky should certainly be chalked up at the risky end of the investment spectrum. Ironically, it can be ‘illiquid’ as well: make the wrong purchase and you could end up struggling to find a buyer.

There’s also the scope for being caught up in scams, such as when inferior whiskies are passed off as high-end varieties. It’s also a physical asset, as well, of course: bottles are at risk of being both broken and drunk.

But at least if your prized asset is unable to provide you with unimaginable riches, the option remains of consoling yourself with a stiff drink.

Between roughly a quarter and a third of the value of their investment will be handed back to them in the form of shares in Haleon, GSK’s newly-created consumer healthcare unit.

Investors will then be faced with three choices: retain their shares in Haleon, sell them and re-invest in GSK itself, or sell the shares and invest somewhere else entirely.

What is happening?

On Monday 18 July 2022, the London stock market will witness the long-awaited break-up – a ‘demerger’ in City jargon – of GSK, one of the UK’s largest and oldest public companies.

At the same time, the move will be accompanied by the London listing of Haleon, the world’s largest consumer healthcare business, spun out of GSK in a joint venture with Pfizer, the US drugs group. From that day, shares in Haleon will start trading on the stock exchange.

When a demerger takes place, investors still own the same assets as before, but effectively hold some through a parent company – in this case GSK – and the rest through new shares in a spin-off business – in this case Haleon.

With an anticipated valuation of between £40 billion to £45 billion, Haleon will immediately take its place as a top 20 ‘Footsie’ company and will become Europe’s largest company listing for over a decade.

The last stock market listing on a similar scale was mining and commodity company Glencore’s entry at a £38 billion market valuation in 2011.

Earlier this year, GSK slapped down a £50 billion bid for the business by consumer goods giant Unilever saying that it undervalued Haleon’s prospects.

Why is the break-up happening?

The demerger was set in train about three-and-a-half years ago when GSK’s chief executive, Dame Emma Walmsley, surprised the City of London with news of the break-up plans.

GSK’s thinking behind the move was that both companies – GSK itself and Haleon – would be able to work more successfully as separate entities.

The separation was formally approved by shareholders earlier this July. The demerger will provide GSK with the opportunity to reset its balance sheet with the aim of unlocking investment in its vaccines and biopharmaceuticals business to boost research after years of weak productivity.

Haleon, meanwhile, will be responsible for a world-leading portfolio of leading consumer health brands including Panadol painkillers and Sensodyne toothpaste.

Analysts say the product focus and investment requirements of the two businesses will be significantly different. For example, GSK says it spends around 15% of sales on research and development while the figure at Haleon will amount to about 3%.

The demerger plans were not met with universal approval. For example, Elliott Advisors, the activist US hedge fund which took a stake in GSK in April last year, publicly encouraged the company to pursue opportunities for a potential sale of the consumer business.

What happens on 18 July?

Eligible GSK shareholders will be given one share in Haleon for each share owned in GSK.

Ordinary shares in Haleon will be listed on the premium segment of the London Stock Exchange. Given the new company’s immediate valuation, it should join the FTSE 100 soon after that.

Once the demerger is completed, GSK will undertake a share consolidation in order to “maintain consistent pricing”, according to index compiler FTSE Russell.

Following the demerger, just over half (54.5%) of Haleon shares will be held by GSK shareholders, about a third (32%) by Pfizer and the balance by GSK itself.

It was previously thought that Pfizer would hold on to its stake after the spin-off, but the company has announced that it will be selling out of its holding in a “disciplined manner”.

In recent years, GSK has been a staple stock in the portfolio of income investors. However, GSK cut its dividend as part of the demerger, paying out 14p a share for the second quarter of 2022, compared with 19p for the same period last year. 

The GSK board has forecast a dividend of 27p per share for the remainder of 2022, rising to 45p per share next year.

Haleon has not announced a dividend policy, but initial indications suggest it will distribute between 30% and 50% of earnings.

What happens next?

On the face of it, dividing up a business to provide the new components with more autonomy and focus makes sense. In practice, however, gains can be harder to realise.

The competition may react aggressively, or the market may not be as enthusiastic about the new arrangement as the management board that proposed it. The demerged business may end up being taken over which, while boosting short-term value, makes it more difficult to assess the merits of the split.

13 July: Gloves Off As Twitter Sues Musk For Ditching Takeover Bid

Twitter has carried through its threat to sue Elon Musk after the Tesla boss announced last week (see story below) that he is walking away from his £36.5 billion bid to buy the social media platform, writes Kevin Pratt.

In what looks set to be a lengthy and acrimonious legal battle – Twitter’s complaint filed with the Delaware Court of Chancery calls Mr Musk’s behaviour “a model of hypocrisy” – the main issues are the number of fake accounts on the platform, and the $1 billion break clause in the original contract.

Mr Musk is refusing to pay the sum, arguing that Twitter has not provided him with the information he needs to verify the number of genuine accounts.

The original offer for Twitter was at $54.20 per share but the stock is now trading below $35. Recent falls are attributed to Mr Musk’s announcement, but the price was already around the $40 per share mark before last weekend.

Twitter’s legal filing reads: “In April 2022, Elon Musk entered into a binding merger agreement with Twitter, promising to use his best efforts to get the deal done. Now, less than three months later, Musk refuses to honor his obligations to Twitter and its stockholders because the deal he signed no longer serves his personal interests.

“Having mounted a public spectacle to put Twitter in play, and having proposed and then signed a seller-friendly merger agreement, Musk apparently believes that he – unlike every other party subject to Delaware contract law – is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away. 

“This repudiation follows a long list of material contractual breaches by Musk that have cast a pall over Twitter and its business. Twitter brings this action to enjoin Musk from further breaches, to compel Musk to fulfill his legal obligations, and to compel consummation of the merger upon satisfaction of the few outstanding conditions.”

In a tweet last night, Bret Taylor, Twitter chairman said: “Twitter has filed a lawsuit in the Delaware Court of Chancery to hold Elon Musk accountable to his contractual obligations.”

Mr Musk responded with a tweet of his own: “Oh the irony lol (laugh out loud)”.

Twitter’s filing to the Delaware court accuses Mr Musk of wanting to back out of the deal because of the drop in the stock market generally and the firm’s share price in particular: “After the merger agreement was signed, the market fell. As the Wall Street Journal reported recently, the value of Musk’s stake in Tesla, the anchor of his personal wealth, has declined by more than $100 billion from its November 2021 peak.

“So Musk wants out. Rather than bear the cost of the market downturn, as the merger agreement requires, Musk wants to shift it to Twitter’s stockholders. This is in keeping with the tactics Musk has deployed against Twitter and its stockholders since earlier this year, when he started amassing an undisclosed stake in the company and continued to grow his position without required notification. 

“It tracks the disdain he has shown for the company that one would have expected Musk, as its would-be steward, to protect. Since signing the merger agreement, Musk has repeatedly disparaged Twitter and the deal, creating business risk for Twitter and downward pressure on its share price.”

The market awaits a fuller response from the Musk legal team in the coming days.

9 July: Two Sides At Loggerheads Over £36.5 Billion Takeover Contract

Elon Musk has told Twitter he is pulling out of the previously agreed £36.5 billion deal to buy the social media micro-blogging platform. Twitter says it is determined to complete the transaction on the original terms, writes Kevin Pratt.

A letter to Twitter, filed with the US Securities and Exchange Commission, says Mr Musk “is terminating the Merger Agreement because Twitter is in material breach of multiple provisions of that Agreement, appears to have made false and misleading representations upon which Mr. Musk relied when entering into the Merger Agreement, and is likely to suffer a Company Material Adverse Effect.”

Mr Musk effectively put the deal on ice in May while his team determined the number of ‘spam’ accounts on Twitter, arguing that he needed accurate information on the number of genuine users to determine the true value of the company.

The latest letter states: “For nearly two months, Mr. Musk has sought the data and information necessary to ‘make an independent assessment of the prevalence of fake or spam accounts on Twitter’s platform’. 

“This information is fundamental to Twitter’s business and financial performance and is necessary to consummate the transactions contemplated by the Merger Agreement because it is needed to ensure Twitter’s satisfaction of the conditions to closing, to facilitate Mr. Musk’s financing and financial planning for the transaction, and to engage in transition planning for the business. 

“Twitter has failed or refused to provide this information. Sometimes Twitter has ignored Mr. Musk’s requests, sometimes it has rejected them for reasons that appear to be unjustified, and sometimes it has claimed to comply while giving Mr. Musk incomplete or unusable information.”

Bret Taylor, Twitter’s chairman, said in a tweet that he is determined to complete the takeover on the original terms: “The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery.”

The dispute between the two camps is likely to be drawn out and acrimonious, not least because the contract includes a £1billion break clause, payable by either party if they withdraw without good reason.

Mr Musk will therefore try to show that the contract is no longer valid because of Twitter’s actions or lack of action, while the company will insist it has acted within the terms of the arrangement. As stated in Mr Taylor’s tweet, it will sue Mr Musk to enforce the deal.

Twitter shares fell by 5% when the news broke that the takeover is in jeopardy. In after-hours trading in New York, they stood at around $35 (£29). Mr Musk’s original offer was for $54.20 (£45) a share.

7 July: Investment Association Says Digital Ledgers Would Benefit Consumers

The UK’s asset management industry is calling on the government to create a new class of fund that incorporates blockchain technology, the digital process that underpins much of the cryptocurrency industry.

The Investment Association (IA), the trade body representing the UK’s investment management firms running nearly £10 trillion worldwide, has urged the government and the City regulator, the Financial Conduct Authority (FCA), to work together “at pace” to approve blockchain-traded funds that would issue digital tokens to investors in place of traditional shares or fund units.

The IA says that the increasing adoption of so-called ‘tokenisation’ would ultimately reduce costs for consumers and improve efficiency in the delivery of funds, through quicker settlement and improved transparency of transactions.

It added that tokenisation may also broaden the assets held within a fund by increasing access to private markets and illiquid assets such as property, that cannot quickly or easily be converted into cash.

According to the IA, the landscape it envisages for funds of the future would offer consumers “more engagement and customisation, while maintaining important consumer protections”.

Greater variety

It added that this could include the provision of a greater variety of portfolios tailored to the specific needs of individual investors and a wider range of financial advice services to address the UK’s current advice gap.

Earlier this year, the Treasury, headed by Rishi Sunak MP, former Chancellor of the Exchequer, announced a series of measures designed to elevate the UK into a global hub for cryptoasset technology and investment.

The FCA issues regular warnings to consumers about the crypto industry, reminding them that cryptoassets are unregulated and high-risk.

The regulator’s current stance on crypto as an investment is that investors “are very unlikely to have any protection if things go wrong, so people should be prepared to lose all their money if they choose to invest in them”.

Chris Cummings, IA chief executive, said: “With the ever-quickening pace of technological change, the investment management industry, regulator and policymakers must work together to drive forward innovation without delay.

“Greater innovation will not only boost the overall competitiveness of the UK funds industry, but will improve the cost, efficiency and quality of the investment experience.”

5 July: Watchdog Unveils Recruits To Oversee Investment And Crypto Sectors

The UK’s financial watchdog has poached a director with specialist knowledge of economic crime and illicit finance from the National Crime Agency (NCA) for a new role overseeing the crypto-asset, e-money and payment markets.

The appointment is one of six new directorships revealed by the Financial Conduct Authority (FCA), as the regulator looks to beef up its top personnel covering traditional areas of investment, while burnishing its credentials amid calls for tougher oversight of the crypto sector.

Matthew Long will join the Financial Conduct Authority in October as director of payments and digital assets. Long is currently director of the National Economic Crime Command, part of the NCA.

He also led the UK Financial Intelligence Unit, which has national responsibility for receiving, analysing and disseminating financial intelligence through the Suspicious Activity Reports (SAR) regime.

SARs are pieces of information that alert law enforcers that client or customer activity is suspicious and might indicate money laundering or terrorist financing.

Joining Long in October will be Camille Blackburn in the new role of director of wholesale buy-side. 

Ms Blackburn will be responsible for policy development and supervision across asset management, alternative investments, custody banks and investment research.

She is currently global chief compliance officer at Legal & General Investment Management. Prior to that she was chief compliance officer at Aviva Investors and was also chair of the Investment Association’s Brexit committee.

Four other new directors have also been appointed in the FCA’s latest hiring round, including former City of London economic crime co-ordinator, Karen Baxter, who joins as director of strategy, policy, international and intelligence.

Three internal promotions – Roma Pearson, director of consumer finance; Anthony Monaghan, director of retail and regulatory investigations; and Simon Walls, director of wholesale, sell-side – complete the appointments.

29 June: Investment Trust Dividends Soar To £5.5 billion

Dividends paid out by investment trusts hit a record high of £5.5 billion in the year to March 2022, propelled by payouts from privately-owned companies not listed on stock markets.

An investment trust is a public limited company, traded on the stock market, whose aim is to make money by investing in other companies. The investment trust sector has become increasingly popular with retail investors in recent years.

According to fund administration group Link, two-thirds of investment trust dividends paid over the 12 months to March focused on so-called ‘alternatives’. These include investments in venture capital, renewable energy infrastructure and property.

Link says the figures equate to an overall increase in dividends of 15% compared with the previous year.

It adds, however, that shareholder payments from investment trusts investing in company stocks flatlined over the period, accounting for £1.85 billion of the total payout. These equity investment trusts traditionally play a key role in the London-listed investment trust sector.

While dividends from alternative trusts have increased nine-fold over the past decade, Link forecasts that shareholder payments from equity trusts will grow more slowly than the market average over the coming year.

Ian Stokes, Link’s managing director, corporate markets UK and Europe, said: “Ten years ago, alternatives were a much smaller segment of the investment trust market, but they have rapidly expanded as new investment opportunities have opened up in response to investor demand.”

Richard Stone, chief executive of the Association of Investment Companies, the trade body representing investment trusts, said: “This report demonstrates that investment companies offer an abundance of benefits to income investors and have continued to do so through challenging market conditions.”

28 June: Platforms Sweeten Deal With Interest Payments

Competition has intensified among online trading platforms as they battle to retain client funds now that the boom in ‘armchair’ share trading during the pandemic has tailed off. 

The rise in the popularity of commission-free trading platforms had already put pressure on the larger platforms to review their fee structures, with AJ Bell reducing their platform and foreign exchange fees from July.

Now interactive investor (ii) has announced that it will start paying interest on British pound and US dollar cash balances held in its Individual Savings Accounts (ISAs) and Self Invested Personal Pensions (SIPPs) accounts from 1 July. 

Historically, platforms have not paid interest on these balances, and investors may even have been charged for the privilege of holding cash in the past.

However, the stock market downturn has encouraged some investors to leave their ISA contributions uninvested as cash in their account. Others have sold their equity investments to hold the proceeds as cash in their ISAs and SIPPs, enabling them to keep the money within its tax-free wrapper.

The move by ii will see interest of 0.25% paid on the value of any balances over £10,000, with each account (eg ISA and SIPP) treated separately, rather than combined for the purpose of the interest calculation.

Richard Wilson, CEO at ii, commented: “Interest rates are still low, but following recent increases, ii will begin paying interest on accounts from 1 July.” 

Mr Wilson also pointed to the benefit for regular traders of overseas shares, who will now earn interest on US dollar balances held on their account.

This announcement brings ii in line with other major trading platforms as follows:

• Hargreaves Lansdown pays interest of between 0.05% to 0.25% on cash held in ISAs, 0.05% to 0.20% on Fund and Share Accounts and 0.05% to 0.45% held in SIPPs.

• AJ Bell offers a lower interest rate of 0.0% to 0.15% for ISAs and Dealing Accounts and 0.0% to 0.25% for SIPPs. 

Hargreaves Lansdown (HL) also announced the introduction of a ‘pay by bank’ service today, allowing clients to transfer funds directly from their bank accounts to their HL accounts, without the use of cards.

George Rodgers, senior product manager at Hargreaves Lansdown, commented: “Our clients can expect a simpler payment journey as well as instant settlement for deposits and withdrawals compared to days under the current system. Our adoption of Open Banking is a key milestone in our digital transformation strategy.”

28 June: Investment Scammers Add To Ombudsman’s Burden

Fresh data from the Financial Ombudsman Service shows that so-called ‘authorised’ scams – where consumers are tricked into transferring money into accounts they believe to be legitimate – increased by over 20% to 9,370 in in 2021/22.

The Ombudsman says fraudsters are increasingly using social media to lure their victims, with many of the total 17,500 fraud and scam cases recorded for the year relating to fake investments.

The Ombudsman says it upheld 75% of scam complaints in the consumer’s favour last year.

As far as insurance is concerned, the Ombudsman recorded 38,496 complaints (including Payment Protection Insurance) in the last financial year, compared to 44,487 the year before. 

The number of travel insurance complaints decreased by 75% from 8,175 in the financial year 2020/21 to 2,116 in the financial year 2021/22.

The fall coincides with an increase in the number of insurers who have added cover for Covid-related issues to their policies.

The Financial Ombudsman Service faced a backlog of complaints throughout the pandemic. Last month, it announced that the number of outstanding complaints had decreased to 34,000 from 90,000 in April last year.

It says it resolved over 58,000 insurance complaints (including PPI) in total in the last financial year. However, it upheld less than 30% (28%) of cases in the complainant’s favour.

Nausicaa Delfas, interim head of the Financial Ombudsman Service, said: “Over the past year, the Service continued to help over 200,000 customers who had problems with financial businesses on issues across banking, lending, insurance and investments. 

“In this period of economic uncertainty it is more important than ever that where problems do arise, they are addressed quickly.  We are here to help to resolve financial disputes fairly and impartially.”

The Financial Ombudsman Service always advises consumers to complain to their product or service provider first. If they are unhappy with how their provider has dealt with their case, they should then take their complaint to the Financial Ombudsman Service.

24 June: Interactive Investor Responds To Woes In ‘Sustainable’ Sector

One of the UK’s largest online investment platforms, interactive investor (ii), has ditched two funds from its buy list of ethical portfolios.

It has also revealed that only two of the 40 funds in its ACE 40 list of environmental, social and governance (ESG) investments – VT Gravis Clean Energy Income Fund and iShares Global Clean Energy ETF USD Dist GBP INRG – delivered positive returns since the start of 2022 until the end of May.

Funds in the sustainable space have become popular among investors, with strong performance underpinned by their bias to so-called growth-oriented sectors (growth investing focuses on companies with better-than-average gains in earnings and which are expected to maintain high levels of profit).

However, since the start of 2022, growth stocks have faltered in the face of strong inflationary headwinds and rising interest rates, as evidenced by the performance of the ACE 40 list overall.

In contrast, value investing – focusing on companies perceived to be underappreciated and undervalued – has gained increased backing from investors this year.

On the advice of Morningstar, which advises on the composition of the ACE 40, ii announced the removal of two funds: abrdn Europe ex UK Ethical Equity, and Syncona Investment Trust. In their place, the company will add M&G’s European Sustain Paris Aligned fund.

Dzmitry Lipski, head of funds research at ii, said: “We continuously review the list to ensure it meets customer needs and, in this instance, given the significant shift in the market environment this year we agreed with Morningstar to make these changes.”

In connection with the removal of Syncona, Morningstar said: “We feel that the level of risk the trust displays is elevated relative to the benefits.”.

Regarding the abrdn fund, it said: “Compared to peers, the team’s fund management experience remains limited. Overall, we believe there are stronger fund options available in this sector and have therefore recommended the removal of this fund from the ACE 40 list.”

14 June: Analysts Warn S&P 500 Could Fall Even Further From January High

US stocks closed in bear market territory yesterday (13 June) after the S&P 500 fell 3.9%, hauling down the stock index’s overall performance by 21.8% since its record high achieved on 3 January this year.

Stock market professionals generally define a bear market as one that has fallen least 20% from its peak.

The sell-off in equities was prompted by nervous investors taking fright at a higher-than-expected May inflation figure of 8.6% as reported last Friday (10 June) by the US Bureau of Labor Statistics.

The announcement stoked expectations that the US Federal Reserve could implement an interest rate rise of 0.75 percentage points at its next monetary policy meeting, which concludes tomorrow (Wednesday).

A rate hike of this magnitude would signal a more aggressive stance from the Fed towards its strategy of tackling soaring consumer prices.

Later this week, the Bank of England’s Monetary Policy Committee is expected to announce a 0.25% hike in the Bank Rate in its own bid to stave off steepling inflationary pressures in the UK.

Stock market analysts warned that the sell-off in US equities potentially has further to go.

Ben Laidler, global markets strategist at social investing network eToro, said: “The S&P 500 closed in bear market territory yesterday, over 20% down for the year, and history tells us there is still a way to go yet. Recession risks are rising and could see this market fall another 20%.”

Laidler added that while S&P 500 bear markets were a relatively infrequent event, when they did happen, they tended on average to last around 19 months and result in a 38% drop in prices: “This one has only lasted five months and is down 21%.” 

Russ Mould, investment director at online broker AJ Bell, said: “There is a lot riding on the Federal Reserve’s policy update tomorrow. Investors look as if they increasingly fear the central bank will become more aggressive with the pace of interest rates to try and curb inflation, given May’s cost of living figures were higher than expected.

“The Fed is focused on inflation and the economy, not the markets, yet its actions have significant influence on the direction of stocks and bonds. A decision to raise rates by more than half a percentage point could cause chaos on the markets and put a bigger dent into investors’ portfolios than they’ve already seen this year.”

7 June: Investors Hold Back Despite Prospect Of Better Returns

Nearly two-thirds of UK adults have money to invest but say they are prevented from doing so because they don’t know where to start, according to the investing app Dodl.

Research carried out by Dodl found that 65% of people do not have an investment account such as a stocks and shares individual savings account (ISA). But the company said the majority of the people in this group (95%) were not put off simply because they didn’t have sufficient disposable cash.

Instead, Dodl said they blame a range of issues such as not knowing where to start, the investment process being too complicated and not knowing what to invest in.

When asked how much money they potentially had set aside for investing, the average amount among respondents was £3,016.

Dodl said that leaving a sum this size in a top easy-access savings account paying 1.5% for 20 years would produce a return of £4,062. The company estimated that, if the same amount were invested over 20 years producing a 5% annual return, the total would be £8,002 after taking charges into account.

The company added that respondents were split when questioned about what would encourage them to begin investing. Just under half (48%) said they would prefer a narrow list of investments to choose from, while just over a third called for a wide range of investing options.

Dodl said nearly half of the responses (40%) were in favour of single funds that invested in mainstream themes such as technology and healthcare.

Dodl’s Emma Keywood said: “With living costs on the rise it is surprising that so many people say they have money saved in cash that they feel they could invest. The problem is they don’t know where to start or find it too complicated.  

“However, once people do a bit of research and dip their toe in the water, they often find that investing isn’t as scary as they’d thought.”

6 June: ISAs Provide Timely Boost To Funds Industry

UK investors returned to the stock market in April after multi-billion pound withdrawals in the first quarter of 2022.

Figures from the Investment Association (IA) trade body showed that investors put £553 million into funds in April. Over £7 billion was pulled from the funds market between January and March this year.

In April, the overall amount in funds under management stood at £1.5 trillion.

The IA said this year’s Individual Savings Account (ISA) season fuelled the turnaround. ISAs are annual plans that allow UK investors to shelter up to £20,000 a year from income tax, tax on share dividends, and capital gains tax.

The plans run in line with the tax year, so there is traditionally a surge in interest in the weeks leading up to the tax-year end on 5 April.

The IA said Global Equity Income was, for the first time, its best-selling investment sector in April. With weaker prospects share price growth – thanks to factors including the war in Ukraine, high global inflation and rising interest rates – company dividends have become increasingly important to the overall returns investors can make from stock and shares.

Also popular were the Volatility Managed, Specialist Bond and North American sectors. The worst-selling sector was UK All Companies.

In April, UK investing platforms were responsible for half of all gross retail fund sales, while UK intermediaries, including independent financial advisers, accounted for just over a quarter (28%). Discretionary fund managers (20%) and direct sales from investment provider to consumer (3%) made up the balance.

Miranda Seath, IA’s head of market insight, said: “Although inflows to ISA wrappers were half those of 2021, they were still the third strongest in the last five years. This is significant as April’s positive sales come after one of the most challenging quarters for retail fund flows on record.”

1 June: Hedgie Investment Strategies Split Along Gender Lines

Hedge funds led by women perform slightly better than those headed up by men over the longer term, according to research from broker IG Prime.

Hedge funds are pooled investment vehicles aimed at high-net worth individuals and other major investors.

In their quest for outsize returns, the investment strategies associated with hedge funds are often more eclectic and involve greater risk-taking than those found in most run-of-the-mill retail funds.

IG Prime’s research focused on the UK, Australia, Singapore, Switzerland and the United Arab Emirates. It considered the extent to which a higher proportion of women in hedge fund leadership roles correlated with improved fund performance.

The company said looking at all investing periods, from one month to five years, the findings suggested there was no consistent correlation between female leadership and either positive, or negative, fund performance.

But IG Prime added that over five-year periods in both the UK and Australia, it found that hedge funds with female management at the helm marginally outperformed investment portfolios run by men.

According to the company, the decision to appoint women as hedge fund leaders may prove “somewhat beneficial… from a financial perspective”.

In spite of this, the research also found that women accounted for just 15% of the leadership roles across international hedge funds compared with men.

IG Prime also found that female and male hedge fund traders adopted differing investment strategies. Nearly two-thirds (60%) of women said they relied on equity-led approaches to investing, compared with just over a quarter (26%) of men.

In contrast, nearly twice as many men (33%) said they focused on macro-investing strategies compared with women (18%). A macro strategy bases its approach on the overall economic and political views of various countries, or their macroeconomic principles.

When it came to cryptocurrencies, about a third (31%) of male traders said they were likely to incorporate crypto assets within their portfolios, compared with 20% of female traders.

IG Prime said: “When making investments in funds, the focus should be on people’s past performance and intended strategy for the funds. Due to the unique nature of funds, it remains a wise decision to tailor each investment decision to each fund.”

26 May: Investors Identify Retirement As Main Savings Goal

The majority of non-professional investors believe investing with a life goal in mind leads to more successful outcomes compared with trying to make money in the abstract, according to research from Bestinvest.

The investment service’s Life Goals Study found that 80% of investors with a financial target on the horizon believed that this would help them secure a more satisfactory result.

Bestinvest also said that nearly nine in ten investors (89%) had a set goal in mind that they are trying to achieve by making their money work harder for them via an investment strategy.

Three-quarters (77%) of investors referred to a retirement-related investment incentive, either one that helped them to give up work sooner, or to help fund a comfortable income stream alongside their state pension.

Other major goals driving investment strategies included building up a pot of wealth to provide financial security, boosting lifestyles in the run-up to retirement, paying for future family costs such as weddings or tuition fees and building up wealth to hand on to future generations.

Despite both men and women sharing the belief that having an investment goal would lead to better results, Bestinvest said women “were noticeably less likely to check whether they are on course to achieve their goals than men”.

Bestinvest’s Alice Haine said: “It’s concerning that female investors are choosing to pay less attention to their investments. Women are often more vulnerable to pension poverty as they have less money squirrelled away than men, either because of the gender pay gap, or because they have taken time out of their careers to care for children or loved ones.”

• The average age of women when they start investing is 32, compared with men who typically start at the age of 35, according to research from Janus Henderson.

The fund manager also found that, on average, UK investors allocate around 16% of their money to investing. The majority of investors cited a lack of spare cash as the reason why they hadn’t started investing earlier.

26 May: Age Split On Prospects For Economy And Personal Wealth

Well-heeled older investors say inflation is their number one worry when it comes to the state of the UK economy and the prospects for their own finances, according to research from a wealth manager.

The Saltus Wealth Index also found that older high net worth individuals (HNWIs) – those with investable assets of more than £250,000 – have a far gloomier outlook about their finances compared with the affluent young.

According to the findings, the majority of younger HNWIs said they felt confident over the next six months about both the future of the UK economy as well as their own finances.

But when posed with the same questions, older HNWIs expressed significant concerns. According to Saltus, a third (34%) of HNWIs in the age-range 55 to 64 said they were confident about future prospects. The proportion fell further, to 23%, among HNWIs aged 65 or over.

When asked what they saw as the biggest threat to their finances, older HNWIs pointed to inflation (33%), Covid-19 (30%), exchange rates (25%), cyber security (25%) and geo-political risk (22%).

Saltus said this marked a shift from 2021, when Covid-19 was the top threat, followed by inflation, return on investments, Brexit and climate change.

UK inflation rocketed to 9% in April 2022, its highest level in 40 years, as prices felt the effect of soaring energy costs and the impact of the ongoing conflict in Ukraine. 

The rise has exacerbated a cost-of-living crisis that was already playing havoc with the finances of millions of UK households.

Michael Stimpson, a partner at Saltus, said: “There are a number of factors causing feelings of unease, with the impact of rising inflation the key concern, especially among older people whose fears about how it will affect their retirement plans highlights more than ever the importance of having a robust financial plan in place.”

• The UK’s millionaires are prioritising recycling as part of their efforts to be environmentally friendly, instead of changing their investments, which could have a bigger impact.

According to Coutts, the private bank, wealthy individuals remain focused on sorting out plastic from paper. But the majority – 85% – have not made changes to their investment portfolio, despite evidence that this is the best way to enjoy a more eco-friendly lifestyle.

25 May: UK Dividend Payments Totalled £11.2 billion In First Quarter

Payouts to shareholders made by companies out of their profits jumped 11% to a record £242 billion ($302.5 billion) worldwide in the first quarter of 2022, according to the latest dividends data from Janus Henderson.

Dividends provide a source of income for investors, especially as part of a retirement planning strategy.

The investment manager’s Global Dividend Index said the growth in dividends could be a result of the “ongoing normalisation” of payouts following the disruption caused by the Covid-19 pandemic.

During 2020, companies worldwide cut back sharply on dividend payments to shareholders, opting instead to retain cash as a defence against the worst effects of the pandemic.

Janus Henderson reported that every region experienced double-digit growth in dividend payouts in the first quarter of this year, thanks to a stronger economic backdrop and the ongoing catch-up in payments following cuts during 2020 and early 2021.

However, it warned that the global economy faces challenges during the remainder of 2022 and predicted that the resulting downward pressure on economic growth would affect company profits in a number of sectors.

In the UK, oil companies in particular helped boost payouts to shareholders by 14.2% in the first quarter of 2022 to £11.2 billion ($14.7 billion).

Distributions in the healthcare sector also rose, after pharmaceutical giant AstraZeneca hiked its dividend for the first time in nearly 10 years. Janus Henderson said telecom operator BT also made a significant contribution to growth.

The US, Canada and Denmark each set all-time quarterly records paying out £114 billion ($142 billion), £10.7 billion ($13.4 billion) and £7.8 billion ($9.8billion), respectively.

Janus Henderson’s Jane Shoemake said: “Global dividends had a good start in 2022, helped by particular strength from the oil and mining sectors.

“The world’s economy nevertheless faces a number of challenges – the war in Ukraine, rising geopolitical tensions, high energy and commodity prices, rapid inflation and a rising interest rate environment. The resultant downward pressure on economic growth will impact company profits in a number of sectors.”

19 May: FundCalibre Ranks ESG Portfolios Using ‘Simple’ Definitions

FundCalibre, the online fund research centre, has launched what it says is a “simple” set of definitions it will use to scrutinise investment portfolios structured along environmental, social and (corporate) governance (ESG) lines.

ESG investing is as concerned with its impact on people and the environment as it is with potential financial concerns.

The concept has moved centre-stage within the investment arena to the point where trillions of pounds in assets are managed globally along ESG principles.

FundCalibre says it now includes an ESG assessment on the notes of each of the 228 ‘Elite Rated’ and ‘Radar’ funds that appear on its website. The assessments are each broken down into one of three categories: explicit, integrated, and limited.

‘Explicit’ funds are those that have an ESG or sustainable approach at the heart of their investment philosophy. Funds placed in this category are likely to have an independent panel or rely on a consumer survey to determine their ESG criteria.

‘Integrated’ funds are those that embed ESG analysis within the investment process as a complementary input to decision making. 

‘Limited’ funds contain an element of ESG in their process, but the portfolio is not influenced overall by the ideal of ethical investing.

Each assessment is publicly available and free to view.

Professional fund managers typically put together investment portfolios according to various ESG criteria and themes. But because ESG is a wide-reaching concept, there is no absolute set of principles to which funds must adhere.

Ryan Lightfoot-Aminoff, senior research analyst at FundCalibre, said: “With each fund manager doing something different, it has become very difficult for investors to know exactly how responsible a fund really is. What’s more, a lack of trust in asset managers’ ESG claims remains a barrier to investment.

“We launched a responsible investing sector in 2015 highlighting the funds in this category that our research team believe to be among the very best. We have now gone one step further and have included an ESG assessment.”

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17 May: Investors Bemoan ‘Time-Consuming’ And ‘Complicated’ Process

Nearly half the UK’s young investors make investment choices while engaged in another activity, according to the City regulator and the nation’s official financial lifeboat.

In a survey exploring attitudes towards investing, 42% of respondents aged between 18 and 24 said they made their latest investment while sitting in bed, watching TV or returning home from the pub or a night out.

The research, carried out for the Financial Conduct Authority (FCA) and the  Financial Services Compensation Scheme (FSCS), also found around half of investors (44%) did not research their investments because they found the process “time-consuming” and “too complicated”.

The FSCS warned that, if consumers do not understand where they are investing their money, it increases the potential for them to fall foul of investment scams.

Earlier this year, a group of MPs warned of an alarming rise in financial frauds being perpetrated in the UK. The Treasury Select Committee suggested social media giants should pay compensation to people duped by criminals who use their websites.

According to the FSCS/FCA survey, around a quarter of investors (27%) said they were more likely to invest in an investment opportunity with a “limited timeframe” – such as one that was only available for the next 24 hours.

The FCA says time pressure is a common tactic used by scammers. It advises consumers to check its Warning List to see if an investment firm is operating without authorisation.

About one-in-five survey respondents said they hadn’t checked, or didn’t know, if their investment is FSCS-protected. The FCA says this puts consumers at risk of choosing investments with no possibility of compensation if their provider goes out of business.

FSCS protection means consumers can claim compensation up to £85,000 against an FCA-authorised business that has failed.

Consumers can check if their investment is financially ring-fenced by the FSCS via its Investment Protection Checker. 

Mark Steward, enforcement director at the FCA, said: “Fraudsters will always find new ways to target consumers, so make sure you do your homework and spend some time doing research. Just a few minutes can make a big difference.”

16 May: Older Investors ‘Less Likely To Embrace ESG Values’

Feelings among investors are sharply divided by age in relation to environmental, social and governmental (ESG) issues, according to research carried out on behalf of wealth managers and financial advisers.

ESG, one of several approaches within the wider concept of ‘ethical’ investing, is as concerned with its impact on people and the environment as it is with potential financial returns.

A study carried out by the Personal Investment Management & Financial Advice Association (PIMFA) – an industry body representing investment firms and advisers – reveals a “significant generational divide” in attitudes to ESG investing.

PIMFA found that a large majority (81%) of people across all generations rate ESG factors as either ‘very important’ or ‘important’ drivers of their investment decisions.

But while nearly three-quarters (72%) of investors aged between 18 and 25 believe some, if not all, of their investments should aim for the greater good, less than a third (29%) aged between 56 and 75 feel the same. Among investors aged 75 or over, the proportion drops further to one-in-five (21%).

PIMFA also found that ESG investment issues were more important to women than men, with 86% of women across all generations saying it is a factor in their investment strategy. 

However, while female investors are keener than men for their money to contribute to the greater good, a larger proportion of women (37%) say they lack confidence and ESG investment knowledge compared with men (26%).

Liz Field, PIMFA chief executive, said: “One of the more pronounced effects of the Covid-19 pandemic was the marked increase in interest in all things ESG. Of particular interest is how the five basic generational groups differ in their responses to ESG.

“The wealth management industry has a big opportunity to harness ESG investing as a catalyst to encourage more women to invest and secondly, to use ESG as both an educational and a practical tool to stimulate a much broader culture of savings and investment in the wider market.”

13 May: First Quarter Performance Figures Show That Value Managers Trump Growth Rivals

Investment performance at the UK’s largest wealth managers has experienced a dramatic U-turn this year, according to a leading investment consultancy. 

Asset Risk Consultants’ (ARC) analysis of 300,000 portfolios, managed by more than 100 wealth management firms, found that growth-orientated strategies have struggled given the prevailing economic conditions of 2022, while value-biased portfolios have enjoyed a revival in fortune.

Growth-based strategies represent the process of investing in companies and sectors that are growing and are expected to continue their expansion over a period of time.

Value investing concerns itself with buying companies that are under-appreciated both by investors and the market at large.

ARC says the scenario is a complete reversal from the end of last year. Many portfolios that were riding high at the end of 2021 are now languishing in the bottom quartile for performance, having been replaced with former laggards from the same period. 

Bottom quartile represents the worst-performing 25% of portfolios.

ARC says its findings show that the changing economic landscape has had a significant impact on managers whose investment strategies were previously based on a low inflation, low interest rate environment.

The company says that strategies favouring growth stocks, smaller companies and long-dated bonds had suffered the most. At the same time, around a third (30%) of managers with a value bias jumped from the fourth quartile at the end of 2021 to the top quartile in the first quarter of this year.

Graham Harrison, managing director of ARC, said: “The cause is the invasion of Ukraine by Russia, which has wide-reaching and long-term geo-political implications.”

Harrison pointed to other contributory factors including “a populist trend toward more protectionism, supply chain shortages caused by Covid-19 and a decade-long lack of real wage growth.”

He added: “The easy money has been made. We are at an inflection point for financial markets and investment strategies. The next decade will be significantly different for investors than it has been during the past three.”

6 May: Fund Outflows Mount As Uncertainty Rises

UK retail investors withdrew more than £7 billion from funds in the early months of the year, with March 2022 alone responsible for nearly half of that figure, according to the latest figures from the Investment Association (IA).

The IA reports that outflows spiked up from £2.5 billion in February this year to £3.4 billion in March. Investors also withdrew funds amounting to £1.2 billion in January 2022.

The pace of withdrawal by investors accelerated sharply over the first quarter of the 2022 exacerbated by tightening monetary policy in major markets and compounded by Russia’s invasion of Ukraine.

Surging inflation, rising interest rates and the Ukraine crisis have combined to trigger an investor flight from risk, particularly in relation to bond funds and, to a lesser extent, in equity-based portfolios.

Laith Khalaf, head of investment analysis at brokers AJ Bell, said: “The outflows from equities look modest compared with the withdrawals registered by bond funds. Over the course of the first quarter, investors withdrew £1.9 billion from equity funds, but £6 billon from bond funds.”

Chris Cummings, IA chief executive, said not all fund sectors witnessed outflows over the period: “March was a story in two parts, and outflows were balanced by many investors using their Individual Savings Accounts and seeking potentially safer havens in diversified funds, with multi-asset strategies benefiting in particular.
“Inflows to responsible investment funds continued to be a bright spot and demonstrate investors’ commitment to sustainable investing.”

4 May: Fund Manager Says Fewer Than 1% Of Funds Achieve Consistent Top Performance

Fewer than 1% of funds – out of a total of more than 1,000 – have managed to deliver sustained top performance over time, according to the latest research from BMO Global Asset Management.

The investment firm’s latest Multi-Manager FundWatch survey found that just five (0.45%) of the 1,115 funds it covers achieved top quartile returns over three consecutive 12-month periods running to the end of the first quarter of 2022.

It says this is the lowest number of funds it has recorded in this bracket since its survey began in 2008. It describes the figure as “well below” the historic average number of consistent, top-performing funds, which usually stands around the 3% mark.

The company points to market events that have damaged fund performance in the last three years, including Covid, inflation, climate change and related environmental, social and governance (ESG) considerations.

It also highlights the war in Ukraine and its geopolitical effect on the supply of resources for the dramatic drop in the number of consistent high-performing portfolios.

Rob Burdett, head of the multi-manager team at BMO, said: “The war in Ukraine is the latest in market shocks, with the resulting sanctions having a significant impact on commodities, inflation and interest rates, as well as the impact at a sector level, with knock-on effects for defence and energy stocks.

“These crises have caused significant gyrations in financial markets and underlying asset classes, resulting in the lowest consistency figures we have ever seen in the survey.”

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3 May: Fundscape Warns Of Tough Year Ahead For Platforms

Assets held on investment platforms offering their services direct to consumers (D2C) have dipped below £300 billion in what could be a tough year for providers, according to Fundscape.

The fund research analysts says rampant inflation, fuel price increases, National Insurance hikes and the cost-of-living crisis have taken a toll both on investor sentiment and market prices in the first quarter of this year, even before factoring in the effect of the Russian invasion of Ukraine.

Fundscape says the overall result has led to a 6% reduction in the combined assets under management held on D2C platforms from approximately £315 billion to £297 billion at the end of March 2022.

D2C providers tend to earn the bulk of their revenues during the Individual Savings Account season between January and March each year, heightening the damage caused by a sluggish first quarter. 

Fundscape’s Martin Barnett said: “The first quarter of the year is the bellwether of investor sentiment and sets the tone and pace of investments for the rest of the year. 2022 could be a tougher year for many D2C houses, especially the robos.”

Robos, or robo advisers, provide an automated, half-way house option for investors looking for an alternative either to do-it-yourself investing, or delegating the full-blown management of their investments to a professional adviser.

28 April: CFA Reports Leap In Trust For Financial Services

A new Chartered Financial Analyst (CFA) Institute study shows that 51% of UK retail investors now trust the financial services sector, compared with just 33% in 2020. 

The CFA Institute is a global body of investment professionals, which administers CFA accreditation and publishes regular investment research, including its biennial report on investor trust.

According to the latest report, the majority of UK retail investors (59%) now believe it’s ‘very likely’ they will attain their most important financial goal. For 58%, this is saving for retirement, while a further 12% are prioritising saving for a large purchase such as a home or car. 

The CFA surveyed over 3,500 retail investors across 15 global markets, and found that trust levels have risen in almost every location. On average, 60% of global retail investors say they trust their financial services sector.

The CFA study views last year’s strong market performance as a key driver for investor trust. In 2021, both the S&P 500 and NASDAQ achieved average returns of over 20%, while the FTSE 100 returned 14.3% — its best performance since 2016 (although global markets have since suffered falls in line with the general economic downturn).

Another factor is the uptake of technologies such as artificial intelligence-led investment strategies and trading apps, which can improve market accessibility and transparency. Half of retail investors say increased use of technology has instilled greater trust in their financial advisor.

The study also revealed investor desire for personalised portfolios that align with their values. Two-thirds say they want personalised products, and are willing to pay extra fees to get them.

Investment strategies that prioritise ESG (Environmental, Social, and Governance) credentials are a key target area for this personalisation, with 77% of retail investors saying they are either interested in ESG investment strategies or already use them.

Rebecca Fender, head of strategy and governance for research, advocacy, and standards at the CFA Institute says: “The highs we’re now seeing in investor trust are certainly cause for optimism, but the challenge is sustaining trust even during periods of volatility.

“Technology, the alignment of values, and personal connections are all coming through as key determinants in a resilient trust dynamic.”

20 April: AJ Bell Aims Trading App At Market-Shy Investors

Investing platform AJ Bell has launched what it claims is a “no-nonsense” mobile app aimed at investors with considerable sums to invest, but who are daunted by the prospect of stock market trading.

AJ Bell is hoping that its Dodl app will appeal to savers disappointed with low returns on their cash and who are looking for an easy way both to access the stock market and manage their investments.

City watchdog, the Financial Conduct Authority, recently identified 8.6 million adults in the UK who hold more than £10,000 of potentially investable cash.

Research by AJ Bell prior to the launch found that about a third of people who don’t currently invest (37%) are put off from doing so because of not knowing where to start. About half (48%) said being able to choose from a narrow list of investments would encourage them to start investing.

Dodl will therefore limit investors to a choice of just 80 funds and shares that can be bought and sold via their smartphone. In contrast, rival trading apps offer stock market investments running into the thousands.

The app will offer several products that people need to save tax efficiently, including an Individual Savings Account (ISA), Lifetime ISA and pension. Dodl will also feature “friendly monster” characters that aim to break down traditional stock market barriers and make it easier for customers unfamiliar with the investing process.

AJ Bell says a Dodl account can be opened via the app in “just a few minutes”. Customers are able to pay money into accounts via Apple and Google Pay, as well as by debit card and direct debit.

Dodl has a single, all-in annual charge of 0.15% of the portfolio value for each investment account that’s opened, such as ISA or pension. A £1 per month minimum charge also applies. The annual cost of holding a £20,000 ISA via Dodl would be £30.

Buying or selling investments is commission-free, and no tax wrapper charges apply. AJ Bell says customers investing in funds will also be required to pay the underlying fund’s annual charge as they would if they were investing on the company’s main platform.

Andy Bell, chief executive of AJ Bell, said: “Investing needn’t be scary. In developing Dodl, we’ve focused on removing jargon, making it quick and easy to open an account and narrowing the range of investments customers have to choose from.”

14 April: Market Turbulence Takes Toll On Wealthy Investors

Millionaire UK investors experienced greater losses compared with their less well-off counterparts since the start of 2022, with market volatility doing more damage to riskier portfolios favoured by those with greater amounts to invest.

Interactive Investor’s index of private investor performance shows that those of its customers with £1 million portfolios experienced losses of 4.2% in the first quarter of this year.

By comparison, average account holders were down 3.6% over the same timeframe, while professional fund managers had lost 3.7% of their money.  

Figures stretching back over longer periods reveal an improvement in overall performance figures. Typical customers experienced losses of 1% over six months but were up by 5.4% over the past year. 

Professional managers fared marginally worse, being down 1% over six months and up 5.3% over the last 12 months.

Stock markets worldwide have endured a troubled time in the first quarter of this year. According to investment house Schroders: “Russia’s invasion of Ukraine in late February caused a global shock. The grave human implications fed through into markets, with equities declining.”

Richard Wilson, head of Interactive Investor, said: “The horror unfolding in Ukraine has framed what was already a torrid time for markets. So, it’s no surprise to see the first quarter of the year chart the first negative average returns since we first started publishing this index.

“Markets don’t go up in a straight line, and this index is a sobering reminder of that. It’s also a reminder of the importance of taking a long-term view, and not putting all your eggs in any one regional basket.”

[] In recent months, those with money in savings have become more wary about investing in markets.

Hargreaves Lansdown (HL), the investment platform, said that roughly one-third of investors who put money into a stocks and shares ISA this year have kept their money in cash rather than investing it.

In the previous two years, HL said that about a quarter of investors have favoured cash over markets-based investments.

31 March: Research Reveals Investor Inflation Concerns 

Most investors with individual savings accounts (ISAs) are concerned about the short-term impact of inflation on their portfolios, according to research from online investing platform Freetrade.

ISAs comprise a suite of government-backed savings plans which, depending on the product chosen, allow interest or investment growth to accumulate tax-free

In a poll of 1,000 ISA holders, commissioned by the company in association with the Investing Reviews website, two-thirds (67%) said they were worried about the effect of inflation on their investment gains over the next three years.

Freetrade found the typical investor expects to make returns of 5.8% per annum over that period. But with the consumer prices measure of UK inflation recently soaring to a 30-year high of 6.2%, the majority of investors expect to find it harder to make real gains in the foreseeable future.

Despite rising interest rates and increased stock market volatility because of the conflict in Ukraine, Freetrade said a significant proportion of investors – one-in-five (19%) – still expect to make double-digit gains in the immediate years ahead.

In another finding, less than a third (31%) of investors believe that a strategy of holding single company stocks promised the best future returns. In contrast, nearly half (49%) thought low-cost funds were likely to offer the strongest performance.

The poll also revealed more optimism about the potential of UK equities, following record outflows of £5.3 billion from the sector during 2021. One-in-five investors intend to increase their exposure to domestic assets, while 4% are inclined to sell off their UK holdings.

Freetrade’s Dan Lane said: “Maybe the UK market’s relatively cheap valuation is proving too hard to resist, or maybe the allure of US tech is waning slightly. Whatever the reason, the UK seems to be back on the menu in 2022.”

* For savers and investors who haven’t already done so, time is running out to use this tax year’s ISA allowance. All UK adults have an ISA allowance each tax year worth £20,000. The 2021-22 tax year ends on 5 April and the 2022-23 equivalent begins the following day. 

1 March: Global Dividends At Record High In 2021

Payouts to shareholders made by companies out of their profits surged to a record level in 2021, but global growth in dividends is forecast to slow sharply this year.

According to investment manager Janus Henderson, this trend was in evidence even before Russia’s invasion of Ukraine.

The company’s Global Dividend Index reported that companies paid out $1.47 trillion to shareholders in 2021, an increase of nearly 17% on the year before.

The figure represents a major rebound from the sharp cuts imposed on dividends by companies during 2020, when their preference was to retain cash due to the effects of the Covid-19 pandemic.

Dividends are a common source of income for investors, especially as part of a retirement planning strategy.

Janus Henderson said payouts reached new records in several countries last year including the US ($523 billion), China ($45 billion) and Australia ($63 billion).

In the UK, dividends rose to $94 billion, a 44% increase in 2021 compared with the previous year. The recovery came from a base of particularly severe cuts during 2020 that meant payouts still lagged pre-pandemic levels.

Janus Henderson said that 90% of companies globally increased or held their dividend steady during 2021. Banks and mining stocks alone were responsible for around 60% of the $212 billion increase in last year’s payouts. Last year, BHP paid the world’s largest-ever mining dividend worth $12.5 billion.

For the year ahead, before Russia’s attack on Ukraine, Janus Henderson had forecast dividend growth at a more moderate 3.1%. The figure may now need to be trimmed further.

Jane Shoemake at Janus Henderson said: “A large part of the 2021 dividend recovery came from a narrow range of companies and sectors in a few parts of the world. But beneath these big numbers, there was broad based growth both geographically and by sector.” 

17 February: Crypto Take-Up Doubles Among Younger Investors 

Investors aged 45 or under who own crypto assets have doubled in number in a year, according to research from Boring Money.

The consultant’s Online Investing Report 2022, based on a survey of more than 6,300 UK adults, also shows that mobile comms is becoming the dominant medium for younger investors buying funds and shares. 

Boring Money said the proportion of adults aged under 45 who own crypto assets has risen from 6% in 2021 to 12% over the past 12 months. Ownership among the over 45s was significantly lower at 3% this year, compared with 2% in 2021.

The Financial Conduct Authority, the UK’s financial watchdog, warned last year about the volume of newer investors who were being attracted to high-risk investments such as cryptocurrencies, and also the risk of ‘low friction’ trading on mobile.

Low friction trading allows investors to start trading within just a few clicks of their smartphone or tablet. The FCA says that adding a small amount of ‘friction’ to an online investment process, through the use of disclosures, warnings and tick boxes, helps investors to better understand risk.

According to Boring Money, 43% of investors say they have used their mobile in the past 12 months as a means of checking the balance on an investment account. This compares with 36% of investors in 2021. 

About one-in-five investors (19%) also reported that they had bought or sold through a mobile app compared with 16% last year.

Boring Money said one-in-five (19%) of the total UK retail investor population is made up of individuals with less than three years’ experience of investing, while 7% have been investing for less than a year.

Holly Mackay at Boring Money, said: “There is a ‘book-end’ effect in the DIY investment market today. At one end we have millions of people in cash, with significant balances and no investments. At the other end, we have some relatively inexperienced, mostly younger investors holding extremely volatile assets.

“There is a more natural middle ground for millions, and providers have to find some answers on how to transition more customers to that more comfortable area.”

• The organisation that makes recommendations to the G20 nations on financial rules has said that the risks posed by cryptocurrencies to global financial stability could “escalate rapidly”.

The Financial Stability Board (FSB) warned that policymakers must act quickly to come up with rules covering the digital asset market, given its increasingly overlapping links with the traditional financial system.

According to the FSB, some parts of the crypto market – worth around $2 trillion globally – are hard to assess because of “significant data gaps”. 

14 February: Bestinvest Spotlights ‘Dog’ Investment Funds

Investment funds worth a combined £45 billion have been named and shamed as consistent underperformers by research from online investing service Bestinvest.

The firm’s latest Spot the Dog analysis shows that fund groups abrdn and Jupiter and wealth manager St James’s Place and were each responsible for six relatively poor-performing funds out of 86 so-called ‘dogs’ identified by the twice-yearly report. 

The research defines a ‘dog’ fund as one which fails to beat its benchmark over three consecutive 12-month periods, and also underperforms its benchmark by 5% or more over a three-year period.

A benchmark is a standard measure, usually a particular stock market index, against which the performance of an investment fund is compared. 

Bestinvest said the funds, despite their underperformance, will generate £463 million in management fees this year, even if stock markets remain flat. 

The analysis highlighted 12 funds that were each worth over £1 billion. These included JP Morgan’s US Equity Income fund worth £3.93 billion, Halifax UK Growth (£3.79 billion) and BNY Mellon Global Income (£3.47 billion).

Also featured in the analysis were Invesco’s UK Equity Income and UK Equity High Income portfolios, described by Bestinvest as “perennially misbehaving funds”.

Bestinvest’s previous Spot the Dog report last summer identified 77 funds worth just under £30 billion. The company says the reason for an increase in the number of poor performers is because of additions from the Global and Global Equity Income investment sectors.

Jason Hollands, managing director of Bestinvest, said: “Spot the Dog has helped shine a spotlight on the problem of the consistently disappointing returns delivered by many investment funds. In doing so, not only has it encouraged hundreds of thousands of investors to keep a closer eye on their investments, but it has also pushed fund groups to address poor performance.

“Over £45 billion is a lot of savings that could be working harder for investors rather than rewarding fund companies with juicy fees. At a time when investors are already battling inflation, tax rises and jumpy stock markets it is vital to make sure you are getting the best you can out of your wealth.”

3 February: Half Of DIY Investors Unaware Of Risk Of Losing Money

Nearly half the people who make investment decisions on their own behalf are unaware that losing money is a potential risk of investing, according to new research from the UK’s financial watchdog.

Understanding self-directed investors, produced by BritainThinks for the Financial Conduct Authority (FCA), found that 45% of self-directed investors do not view “losing some money” as a potential risk of investing.

Self-directed investors are defined as those making investment decisions on their own behalf – selecting investments and making trades without the help of a financial adviser.

In recent years, do-it-yourself trading has become increasingly popular among retail investors. 

According to the FCA, over one million UK adults increased their holdings in high-risk products such as cryptocurrencies or crowdfunding investments in the first seven months of the Covid-19 pandemic in 2020.

The research says “there is a concern that some investors are being tempted – often through misleading online adverts or high-pressure sales tactics – into buying complex, higher-risk products that are very unlikely to be suitable for them, do not reflect their risk tolerance or, in some cases, are fraudulent.”

It added that self-directed investors’ investment journeys are complex and highly personalised, but it was possible to categorise investors into three main types: ‘having a go’, ‘thinking it through’ and ‘the gambler’.

The FCA used behavioural science to test various methods of intervention to help investors pause and take stock of their decisions before committing in “just a few clicks”.

It found that adding small amounts of ‘friction’ to the online investment process, such as ‘frequently asked questions’ disclosures about key investment risks, warnings and tick boxes, helped investors comprehend the risks involved.

Susannah Streeter, senior investment and markets analyst at investment platform Hargreaves Lansdown, said: ‘’The boom of high-risk investing is causing huge nervousness among regulators, with the FCA increasingly concerned that vulnerable consumers are being swept up in a frenzy of speculation. 

“The ‘fear of missing out’ effect which took hold during the pandemic, has been drawing more people into the murky world of crypto investments and almost half still don’t understand the risks involved.”  

26 January: M&G Partners With Moneyfarm On Consumer Investment Service

M&G Wealth is teaming up with financial app Moneyfarm to provide a direct digital investment service aimed at meeting a range of customer risk appetites and profiles.

It will offer a collection of multi-asset model portfolios, backed by a range of actively managed and passive funds. 

Multi-asset investing provides a greater degree of diversification compared with investing in a single asset class, such as shares or bonds. Passive funds typically track or mimic the performance of a particular stock market index, such as the UK’s FT-SE 100.

Moneyfarm will deliver the operating models, including dedicated “squads” to support the technology platform and customer relationship management, together with custody and trading services.

Direct investing in the UK has witnessed rapid growth in the past five years, with an annual average increase in assets under management of 18% to £351 billion at the end of June last year, according to researchers Boring Money.

David Montgomery, M&G Wealth’s managing director, said: “With the launch of a direct, mobile-based investment platform, our customers will be able to access the channel, advice and investment proposition that most suits their financial situation and needs.”

Moneyfarm was launched in Milan in 2012 and has 80,000 active investors and £2 billion invested via its platform. 

25 January: Bestinvest Relaunches DIY Investment Platform

Bestinvest, part of Tilney Smith & Williamson (TS&W), is relaunching its online DIY investment platform with new features including free coaching, ready-made portfolios and a range of digital tools.

The company says it is revamping its existing platform into a “hybrid digital service that combines online goal-planning and analytical tools with a human touch”. Customers can ask for help from qualified professionals through free investment coaching.

If desired, clients can also choose a fixed-price advice package covering either a review of their existing investments or a portfolio recommendation. Bestinvest said one-off charges of between £295 and £495 will apply depending on the package selected.

The new site will go live to coincide with the end of the tax year on 5 April.

A range of ready-made ‘Smart’ portfolios offering a range of investment options to suit different risk profiles will accompany the launch.

The portfolios will be invested in passive investment funds, while being managed actively by TS&W’s investment team. Passive funds typically track or mimic the performance of a particular stock market index, such as the UK’s FT-SE 100. The TS&W team will adjust portfolios’ exposure to markets and different asset classes according to prevailing investment conditions.

Bestinvest said the annual investment cost will range between 0.54% and 0.57% of each portfolio’s value. 

From 1 February, the company added that it is reducing its online share dealing costs to £4.95 per transaction, regardless of deal size.

Bestinvest produces a twice-yearly report on underperforming or “dog” investment funds. It said it wants to bridge the gap between existing online services for DIY investors and traditional financial advice aimed at a wealthier audience.

Holidaymakers are facing flight cancellations and lengthy delays as airlines and airports struggle to meet demand. If your flight is affected, you are entitled to support and financial redress. But the rules are complex, taking into account the length of delay and the journey distance. For a comprehensive look at your rights, please visit our dedicated page.

12 July: Heathrow Imposes Cap On Passengers Until 11 September

Heathrow Airport has today introduced a cap on the number of passengers it can handle each day. It says airlines have not cut enough services from their summer schedules after a request from the government to reduce flights and cut the risk of last-minute cancellations, writes Kevin Pratt.

From 12 July until 11 September, the daily cap on passengers will be 100,000, which is 4,000 lower than the airport’s estimate of volumes for the days concerned. Heathrow is asking airlines to stop selling tickets for flights during the period.

Heathrow yesterday warned of likely disruption over the summer (see story below), despite the government ‘amnesty’ on airlines cancelling flights meaning they would not lose valuable airport slots as a result.

John Holland-Kaye, Heathrow chief executive, said: “Over the past few weeks, as departing passenger numbers have regularly exceeded 100,000 a day, we have started to see periods when service drops to a level that is not acceptable: long queue times, delays for passengers requiring assistance, bags not travelling with passengers or arriving late, low punctuality and last-minute cancellations. 

“This is due to a combination of reduced arrivals punctuality (as a result of delays at other airports and in European airspace) and increased passenger numbers starting to exceed the combined capacity of airlines, airline ground handlers and the airport. Our colleagues are going above and beyond to get as many passengers away as possible, but we cannot put them at risk for their own safety and wellbeing.   

“Last month, the Department for Transport and the Civil Aviation Authority wrote to the sector asking us all to review our plans for the summer and ensure we were prepared to manage expected passenger levels safely and minimise further disruption. Ministers subsequently implemented a slot amnesty programme to encourage airlines to remove flights from their schedules with no penalty. We held off putting additional controls on passenger numbers until this amnesty process concluded last Friday and we had a clearer view of the reductions that airlines have made.    

“Some airlines have taken significant action, but others have not, and we believe that further action is needed now to ensure passengers have a safe and reliable journey. We have therefore made the difficult decision to introduce a capacity cap with effect from 12 July to 11 September. Similar measures to control passenger demand have been implemented at other airports both in the UK and around the world.  

“Our assessment is that the maximum number of daily departing passengers that airlines, airline ground handlers and the airport can collectively serve over the summer is no more than 100,000. The latest forecasts indicate that, even despite the amnesty, daily departing seats over the summer will average 104,000 – giving a daily excess of 4,000 seats.

“On average only about 1,500 of these 4,000 daily seats have currently been sold to passengers, and so we are asking our airline partners to stop selling summer tickets to limit the impact on passengers.”

Mr Holland-Kaye says the action taken today is designed to protect flights for the majority of passengers at Heathrow but added: “We recognise that this will mean some summer journeys will either be moved to another day, another airport or be cancelled, and we apologise to those whose travel plans are affected.”

11 July: Heathrow Warns Of Potential Continued Disruption Despite Govt Intervention

Heathrow has warned of possible further disruption this summer despite the government taking action to allow airlines to reschedule their flights without penalty, writes Candiece Cyrus.

The news comes on the day the airport cancelled a further 60-plus flights because of lack of capacity to handle passengers.

Last month the government implemented a ‘slot amnesty’ which gave airlines until last Friday (8 June) to remove flights from their schedules without losing the ability to use the airport a set number of days a year (see more in ‘4 July’ entry below). 

The government also told airlines to give passengers at least 14 days’ notice of cancellations to help limit disruption during the busy summer period. 

However, John Holland-Kaye, Heathrow chief executive, warned the measure may not be enough to end the chaos: “We will review the schedule changes that airlines have submitted in response to the government’s requirement to minimise disruption for passengers this summer and will ask them to take further action if necessary. 

“We want everyone who is travelling through Heathrow to be confident that they will have a safe and reliable journey.”

The airport has blamed ongoing travel delays and cancellations on the recent surge in passenger numbers, saying the growth in the past four months is equal to that in the previous 40 years

The airport says it started recruiting in November last year in anticipation of demand for travel recovering over this summer, but its staff numbers still do not match pre-pandemic levels.

7 July: British Airways Axes 10,000-Plus Short-Haul Flights

British Airways has responded to a government amnesty on flight cancellations by cutting a reported 10,300 short-haul flights from its schedule between August and October, writes Kevin Pratt.

As reported below, the government has given airlines until tomorrow (Friday) to announce cancellations without risking losing their reserved slots at UK airports. Normally, if an airline repeated cancels flights, it can lose its slot and thus its ability to operate a particular route from a given airport.

British Airways says it is taking the drastic action so that it can consolidate operations and provide certainty to passengers with bookings.

Travellers who are affected will be contacted with alternative flight arrangements with BA or another carrier, or they will be offered a refund.

If notice of cancellation is given more than 14 days before scheduled departure, there is no entitlement to compensation.

In a statement quoted in the Evening Standard, BA said: “The whole aviation industry continues to face into significant challenges and we’re completely focussed on building resilience into our operation to give customers the certainty they deserve.

“The Government recently decided to give the whole industry slot alleviation to minimise potential disruption this summer. While taking further action is not where we wanted to be, it’s the right thing to do for our customers and our colleagues.

“This new flexibility means that we can further reduce our schedule and consolidate some of our quieter services so that we can protect as many of our holiday flights as possible.

“While most of our flights are unaffected and the majority of customers will get away as planned, we don’t underestimate the impact this will have and we’re doing everything we can to get their travel plans back on track.

“We’re in touch to apologise and offer rebooking options for new flights with us or another airline as soon as possible or issue a full refund.”

In common with its rivals, BA has been plagued by staff shortages as demand for international travel has picked up following pandemic shutdowns.

4 July: Deadline Nears For Flights Scheduling Amnesty

With air passengers facing the threat of cancellations and disruption this summer, the government has given airlines until Friday to adjust their schedules to show fewer flights without their reserved airport slots being put at risk.

It is also requiring airlines to tell affected passengers at least two weeks ahead of a cancelled flight.

The ‘amnesty’ on the possibility of losing valuable slots was announced to “help airlines make sensible decisions about schedules, avoiding last-minute cancellations and providing passengers with more certainty” (see story below).

Under the terms of the amnesty, airlines should return slots at least 14 days before use, so they can be reallocated to other airlines to use throughout the summer. They will subsequently be returned to the original airline.

Slots grant an airline permission to use an airport a given number of times a year, but they can be withdrawn if the airline repeatedly cancels flights.

Tim Alderslade, CEO of Airlines UK the trade body for UK-registered airlines welcomed the plans. He said: “We will continue to work with ministers and the whole aviation ecosystem to ensure the summer peak runs as smoothly as possible for our passengers.”

1 July: Govt Unveils 22-Point Plans To Cut Airport Chaos

The government has announced a 22-point plan to help tackle disruption at UK airports, as the demand for travel continues to grow leading up to the summer holidays.

In the latest of a catalogue of events to blight customers, Heathrow cancelled 30 flights yesterday (Thursday).

Announcing the initiative on Twitter, Grant Shapps MP, transport secretary  said: “Holidaymakers deserve certainty ahead of their first summer getaways free of restrictions. That’s why today I’ve set out 22 measures to support the aviation industry to minimise disruption and protect passengers – helping with everything from recruitment to scheduling.”

The measures include an expectation from the government and the Civil Aviation Authority (CAA) that summer schedules will be reviewed to ensure they are deliverable, with passengers informed promptly of their rights and compensated if something goes wrong with their booking. 

Airlines will also have more freedom to cancel flights in advance, if they cannot operate them.

The government will launch a new Aviation Passenger Charter, to inform passengers of their “rights, responsibilities and what they can reasonably expect of the aviation industry when flying”. 

It has put forward proposals for strengthening consumer protection for customers, including increasing the CAA’s role in enforcement.

Airlines have been reminded of their legal responsibilities to provide “information, care and assistance, refunds, and compensation”.

To help speed up processing and reduce queues and delays, the government and CAA will launch a campaign of information so customers know what is expected of them prior to departure.

Richard Moriarty, head of the CAA, said: “We share government’s ambitions for resolving the travel issues we’ve seen in previous months. These actions will help the sector be more resilient in dealing with strong consumer demand.

“We will work alongside government and the wider industry to help deliver a better experience for passengers”

24 June: Looming Strikes Threaten Summer Holidays Turmoil

British Airways (BA) staff at Heathrow airport, as well as easyJet staff in Spain, are planning strikes for the peak summer travel period that could cause disruption for holidaymakers

The specific dates for the industrial action at Heathrow have yet to be confirmed.

The GMB Union says its members who are British Airways staff at Heathrow are angry that a 10% pay cut during the pandemic has not been reinstated, while bosses have had their pre-covid pay rates reinstated.

It also says that while other BA staff have been given a 10% bonus, check-in staff have not received the same.

Nadine Houghton, GMB National Officer, said: “With grim predictability, holiday makers face massive disruption thanks to the pig-headedness of British Airways. 

“BA has tried to offer our members crumbs from the table in the form of a 10% one-off bonus payment, but this doesn’t cut the mustard. Our members need to be reinstated the 10% they had stolen from them last year with full back pay and the 10% bonus which other colleagues have been paid.

“GMB members at Heathrow have suffered untold abuse as they deal with the travel chaos caused by staff shortages and IT failures. At the same time, they’ve had their pay slashed during BA’s callous fire and rehire policy. 

“What did BA think was going to happen? It’s not too late to save the summer holidays – other BA workers have had their pay cuts reversed, do the same for ground and check-in staff and this industrial action can be nipped in the bud.” 

In an official statement, British Airways said: “We’re extremely disappointed with the result and that the unions have chosen to take this course of action. 

“Despite the extremely challenging environment and losses of more than £4bn, we made an offer of a 10% payment which was accepted by the majority of other colleagues. 

“We are fully committed to work together to find a solution, because to deliver for our customers and rebuild our business we have to work as a team. We will of course keep our customers updated about what this means for them as the situation evolves.”

It is expected that easyJet cabin crew, based in Spain, will strike between 1-3, 15-17 and 29-31 July, at its bases in Barcelona, Malaga, and Palma.

The USO union in Spain, representing disgruntled staff, said among other reasons, the planned strikes are due to easyJet’s refusal to reduce the difference in basic pay, and the difference in guaranteed minimum wage, that exists between the company’s staff in Spain and its other staff in Europe.

It said it does not know how many flights will be affected by the strikes.

EasyJet said: “We are extremely disappointed with this action as we have made considerable progress towards a new CLA (Collective Labour Agreement)  and so would like to continue the constructive dialogue.

“Should the industrial action go ahead there could be some disruption to our flying programme to and from Malaga, Palma and Barcelona during the strike period but at this stage, easyJet plans to operate its full schedule and we would like to reassure customers that we will do everything possible to minimise any disruption.” 

22 June: Government Intervenes On Flight Cancellations

The government has intervened in a bid to prevent travel disruption caused by last-minute flight cancellations this summer.

Ministers have laid out new regulations allowing airlines to plan schedules with fewer flights without jeopardising their contracts with airports as part of a one-off ‘amnesty’ on flight slots.

These slots are granted to airlines on the understanding they use them and their associated infrastructure – such as runways, terminals and gates – a certain number of times each year. 

With airlines forced to cancel flights at short notice because of staffing issues, however, carriers have faced difficulty meeting their obligations.

Under the amnesty, airlines will be allowed to hand back the slots they’re not confident they’ll be able to use, without risking their tenancy with airport operators.

Grant Shapps MP, transport secretary, said: “Today’s announcement aims to help airlines provide certainty to passengers and ensure the next few months are as smooth as possible.”

Richard Moriarty, chief executive of the Civil Aviation Authority, welcomed the amnesty, but warned further planning was necessary: “Short-term measures are welcome, but a continued focus on the unplanned and inevitable operational challenges is crucial for consumer confidence this summer.”

Tim Alderslade of Airlines UK said: “We will continue to work with ministers and the whole aviation ecosystem to ensure the summer peak runs as smoothly as possible for our passengers.”

20 June: Heathrow Dogged By Baggage Snarl-Ups As Disruption Continues

London Heathrow Airport continues to be plagued by disruption, with airlines asked to cancel flights to ease congestion and the disruption caused by a baggage-handling backlog from the weekend.

Up to 5,000 passengers may have been affected across up to 30 flights on Monday.

Heathrow has blamed the disruption on a technical issue with the baggage system in its Terminal 2, rather than staff shortages. Airlines and airports have been blighted by Covid-related staff absences in recent weeks, as the summer holidays near and the demand for travel rises.

Over the weekend, according to reports on social media, hundreds of passengers at Heathrow were forced to wait three hours to retrieve their luggage.

A Heathrow spokesperson said: “We apologise unreservedly for the disruption passengers have faced over the course of this weekend. 

“The technical issues affecting baggage systems have led to us making the decision to request airlines operating in Terminals 2 and 3 to consolidate their schedules on Monday 20th June. 

“This will enable us to minimise ongoing impact and we ask that all passengers check with their airlines for the latest information.” 

Heathrow has not stated how long it expects the disruption to continue.

Meanwhile, industrial action is expected to disrupt rail services across the UK on 21, 23 and 25 June. Heathrow Express will be running a limited service and the Elizabeth Line will be running every 30 minutes, from 7.30am to 6.30pm, on these days. 

Heathrow advises passengers to allow more time for their journeys if using the roads around the airport on these days.

On 21 June, London Underground services will also be severely affected due to industrial action. 

Gatwick has advised passengers not to use public transport between Tuesday 21 and Sunday 26 June.

Manchester airport advises passengers to not use trains to travel to the airport. However, it adds that passengers between 21 and 25 June should check the status of their service before arriving at the train station and  plan ahead as it expects services to be busier than usual.

Passengers who make every effort to catch their flight but are prevented from doing so by travel disruption on their way to the airport may be able to claim on their travel insurance – they should check their policies for details.

10 June: US Drops Negative Test Requirement, Vaccinations Still Needed

International travellers no longer need to provide a negative Covid test or documentation of recovery before they board a flight to the United States as of 12:01AM Eastern Time (5.01am UK BST) on Sunday June 12, 2022.

The time applies to when the flight departs from its point of origin.

Only fully-vaccinated travellers may enter the US unless they are exempt from the requirement to be vaccinated – airlines will continue to check vaccination status before boarding.

You can find details here of who might be classed as exempt.

Children 17 and under are exempt from the vaccination requirement if travelling with a vaccinated adult. 

The US Centers for Disease Control & Prevention is continuing to recommend the wearing of masks in “indoor transportation settings”.

Grant Shapps MP, UK minister for transport, greeted the news of the removal of the testing requirement by tweeting: “All Covid testing requirements for travellers entering USA dropped this Sunday – huge boost for transatlantic travel. Follows UK dropping ALL restrictions in March & our discussions with US about fully restarting international travel.”

24 May: Elizabeth Line Offers Heathrow Alternative

Passengers can now get to Heathrow airport using the Elizabeth Line – formerly known as Crossrail – which opened today. 

The project, which has cost over £19 billion and is several years behind schedule, will offer a third major public transport link to Heathrow Airport, after the Tube and the Heathrow Express.

The Elizabeth line route to and from Heathrow will initially run from Paddington train station, but will be extended to Reading in Berkshire, and Shenfield in Essex, by the autumn.

Elizabeth Line passengers travelling from Paddington to Heathrow should expect a 28-minute journey, via six other stops including West Ealing and Southall.

This compares to 56 minutes, with at least one change of train when making the same journey by Tube. However, it adds 13 minutes when compared to the 15-minute journey by Heathrow Express, again departing from Paddington.

In terms of cost, the Tube remains the cheapest option for train travel between zone 1 (where Paddington station is located) and Heathrow Airport. Fares cost £3.50 during off-peak times or £5.50 during peak times (6.30am to 9.30am and 4pm to 7pm).

This compares to an off-peak cost of £10.70 when travelling from Paddington to Heathrow on the Elizabeth Line and £12.70 during peak times.

The Paddington Heathrow Express, which runs non-stop to the airport, costs £25 for an Anytime Single fare, although it’s cheaper if you book in advance. For example, if you book 90 days in advance, the price drops to £5.50.

According to Transport for London, a black cab for the journey between central London and Heathrow costs between £52 and £97 depending on the time taken, although traffic delays will bump up the cost if the journey takes over an hour. The price includes an extra charge of £5.20 to help cover the cost of Heathrow’s Terminal Drop-Off Charge.

To take an Uber will cost from around £35-£40 depending on the journey time.

23 May: Barbados Drops Testing For Vaccinated Arrivals

Fully vaccinated travellers will no longer need to take a Covid test to enter Barbados from Wednesday 25 May. The change was announced over the weekend by Barbados Prime Minister Mia Amor Mottley. 

The news comes following the announcement that Spain has changed its entry requirements to allow in unvaccinated travellers who can produce a negative Covid test (see story below).

It is hoped that removing the test will have a positive impact on Barbados’ tourism sector and speed up processing times at its Grantley Adams International Airport.

The relaxation of entry requirements should encourage more families to travel to the popular island destination this summer after a steep 90% decline in the number of visitors over the last two years.

The compulsory wearing of masks will also be restricted to indoors and on public transport only. Outdoors, masks will be optional.

Currently, all arrivals to Barbados must show proof of a negative pre-departure Covid PCR test or rapid antigen test, taken within one day prior to arrival, or a negative RT-PCR COVID-19 test taken within three days prior to arrival.

From Wednesday, unvaccinated arrivals should continue to quarantine at approved facilities (a designated holding hotel, approved villa or a government facility, at their own expense) for three days on arrival. On Day 4 of arrival, they must take a PCR test and test negative to come out of quarantine. 

Travellers who have recently recovered from Covid, but have taken a positive pre-departure PCR test, should carry a letter from their medical practitioner with their lab test result, including the date of diagnosis and recovery. 

On arrival, they may need to stay at one of the government isolation facilities for up to 48 hours before being released from quarantine.

Children aged 17 and under who are accompanied by fully vaccinated travellers, can follow the rules for fully vaccinated travellers to enter Barbados. Children aged 17 and under who are travelling unaccompanied should show evidence of a valid test result.

22 May: Spain Allows Unvaccinated UK Visitors To Enter With Negative Test

Travellers to Spain from the UK can now enter the country if they are unvaccinated provided they are able to produce a negative Covid-19 test on arrival. A negative PCR or antigen test will be accepted.

Those who are vaccinated must still show proof of vaccination.

This means the following will be accepted by the Spanish authorities for those wishing to enter the country:

• Vaccination certificate
• Negative test certificate
• Certificate of recovery from at least 11 days after first testing positive.

The UK’s proof of vaccination is accepted in Spain, in digital form or as a print-out.

PCR tests must be carried out in the 72 hours prior to departure to Spain or an antigen test in the 24 hours prior to departure.

Children under 12 are not not required to present any certification.

18 May: Update On Travel Restrictions For Popular Destinations

With countries around the world continuing to relax their Covid border restrictions, many families will be planning a holiday abroad for the summer. However, some popular destinations still have restrictions and requirements in place, often affecting children.

With that in mind, here’s a rundown of the current rules for the United States, Italy, Cyprus, Portugal and Spain.

Note that Cyprus and Portugal do not accept self-administered Covid tests.

United States

• All travellers over two years of age must take a negative Covid pre-departure test, regardless of their vaccination status
• It is recommended another test is taken within three to five days of arrival, unless they have recovered from Covid in the 90 days before departure
• Fully-vaccinated travellers are allowed entry for work and leisure purposes. Children 17 and under are exempt from the vaccination requirement
• Unvaccinated travellers are only allowed entry if they are US citizens, US nationals, US lawful permanent residents or meet the criteria for an exception.

Italy

• Until 31 May travellers aged six and over must show either proof of vaccination, a negative PCR test taken within 72 hours before arrival or a negative rapid lateral flow test taken within the 48 hours before arrival, or a Covid-19 recovery certificate, showing they have recovered from Covid-19 in the last six months
• If they cannot show proof of the above, they must: travel to their final destination in Italy by private transport, self-isolate for five days and take another PCR or rapid lateral flow test at the end of the five days. If the test is negative, they can leave self-isolation.
• Travellers under the age of six are exempt.

Cyprus 

• Vaccinated or recovered passengers must show a valid Covid-19 certificate of vaccination or recovery (i.e. NHS Covid Pass)
• Arrivals can present their vaccination certificate or recovery certificate in printed or electronic form. There may be additional requirements on arrival such as testing (travellers will be selected at random)
• Travellers aged 12 and over who are unvaccinated or do not hold a valid vaccination or recovery certificate, may enter Cyprus if they provide proof of a negative result (in electronic or printed form) from either a Covid-19 test (RT-PCR) taken 72 hours prior to departure, or a rapid antigen test taken 24 hours prior to departure
• The test must be carried out by a trained healthcare professional. Self-administered tests are not accepted
• Travellers under the age of 12 do not need to present a negative PCR or rapid test certificate. 

Portugal

• Vaccinated travellers must have had a full course of a vaccine approved by the European Medicines Agency, at least 14 days and no more than 270 days before arrival or a full course of a vaccine, plus a booster vaccine approved by the European Medicines Agency at least 14 days before arrival
• Unvaccinated travellers aged 12 and over must show either proof of a negative PCR test (taken no more than 72 hours before boarding), a rapid lateral flow test (taken no more than 24 hours before boarding) or proof of recent recovery from Covid-19 
• The test must be carried out by a trained healthcare professional. Self-administered tests are not accepted
• If they take a rapid lateral flow test, it should meet the standards set out in the EU common list of Rapid Antigen Tests
• If they’ve tested positive for Covid-19 in the last year, they will be required to present a Covid -19 recovery certificate (i.e. UK Covid Pass ) for entry. It must show recovery from the virus no less than 11 days and no more than 180 days before travel. A test will not be required
• If their airline allows travel to mainland Portugal or the Azores without a negative test or valid recovery certificate, they will need to pay for a Covid-19 test on arrival or face a fine

Spain

• Spain also requires unvaccinated travellers aged 12 and over to take a negative test to be able to enter the country. See more in the post below.

With border requirements for certain destinations still significantly varied for travellers depending on their vaccination status, age and sometimes departure country, there’s risk of confusion for UK holidaymakers. 

Travellers should check with gov.uk and the destination country official websites to identify which tests they need to take and their destination’s entry requirements, noting that these can change without notice.

Nick Markham from Cignpost warns that travellers who arrive at airports without the right test could risk missing their flight: “It’s great to see people are travelling abroad again, but as individual countries are responsible for their own Covid testing rules, travellers must remain wary to ensure they’ve taken the right tests for their destination.

“The risk is that they can’t get a last-minute test in time for their flight, so pre-booking the right test at the airport should be thought of as a holiday essential, like buying insurance or finding the best deal for your travel money.”

13 May: Spain Extends Covid Border Rules Until 15 June

Spain’s Ministry of the Interior has announced that its current Covid-19 entry restrictions will be extended to 15 June at least.

This means arrivals from the UK – which is designated a ‘third’ country by Spain, and thus outside the more liberal rules applying to EU countries – will need to provide valid proof of vaccination or recovery.

Those unable to produce such evidence will be denied entry to the country, although children under 12 are exempt from the rules and, for those between 12 and 18, a negative PCR test result taken prior to departure will suffice.

The original date for the review of the current rules was set to be 15 May, but the change was revealed earlier this week when Spain announced the re-opening of its land border with Morocco.

11 May: EU Air Travel Mask Mandate Ends Monday 16 May

The European Union Aviation Safety Agency (EASA) and European Centre for Disease Prevention and Control (ECDC) have today updated their Covid-19 safety measures for air travel. As a result, masks will no longer be required on flights or in airports from Monday 16 May. 

Despite the new recommendations coming into effect next week, individual airlines will still be able to implement their own rules on mask-wearing. The EASA and ECDC recommend that mask wearing is encouraged for flights to, or from, a destination where masks are required on public transport. 

Patrick Ky, executive director at EASA, said: “It is a relief to all of us that we are finally reaching a stage in the pandemic where we can start to relax the health safety measures. For many passengers, and also aircrew members, there is a strong desire for masks to no longer be a mandatory part of air travel.”

11 May: New Zealand To Fully Open Borders by 31 July

New Zealand has confirmed a full opening of its borders to tourists and visa-holders from 11.59 pm on 31 July, three months earlier than originally planned. 

Previously, entry was restricted to tourists from around 60 specified visa waiver countries, which included the UK (see story below, 29 April). Maritime borders will also open to cruise ships on the same date.

Visitors over the age of 16 are required to be fully vaccinated to enter New Zealand, subject to medical exemptions. Fully vaccinated travellers entering New Zealand do not need to self-isolate upon arrival.

Visitors from the UK (aged two and over) must provide a negative PCR test (with the results no more than 48 hours before departure) or a supervised rapid antigen test (RAT) or loop-mediated isothermal amplification (LAMP) test (with the results no more than 24 hours before departure). 

You will still need a test even if you have been vaccinated for Covid-19.

If you have recently recovered from Covid-19, you still need to take a pre-departure test. If this is positive, you will need to be examined by a medical practitioner. If they are confident that you do not currently have a Covid-19 infection, they should provide a medical certificate within 48 hours of departure.

Vaccinated and eligible travellers entering New Zealand must also take two RATs after they arrive. These will be provided on arrival at the airport and a test must be taken on day zero or one (when you arrive in New Zealand) and day five or six.

6 May: Spain Maintains Entry Requirements For UK Visitors

Spain has extended its Covid-related travel restrictions for British visitors until at least 15 May, when the situation will be reviewed.

Arrivals from the UK will still be expected to provide valid proof of vaccination or recovery. 

The former must show the traveller has received a recognised vaccination e.g. Pfizer, Astrazeneca, Moderna etc. within the last 270 days. The latter must show a traveller has recovered from the virus within the last 180 days.

Children under 12 are exempt from both requirements.

Travellers on Spain’s exemption list, which includes health professionals, transport personnel, diplomatic and consular personnel, students, and highly qualified workers, are allowed to enter the country without proof of vaccination or recovery if they can provide a negative PCR test taken within 72 hours prior to arrival.

Travellers are not required to wear face coverings once in Spain.

3 May: Croatia, Serbia Drop Covid Entry Requirements

Croatia and Serbia have dropped all their Covid-19 travel restrictions, as of today.

The neighbouring European countries will welcome tourists and travellers from any destination without any testing or vaccination requirements.

Visitors are still recommended to wear masks indoors while in Serbia, and are required to do so in the country’s healthcare settings.

The countries’ relaxation of restrictions follows similar moves over the weekend in Greece and New Zealand (see story below).

29 April: Greece and New Zealand Relax Travel Rules

Greece and New Zealand will relax entry requirements for British travellers from this Sunday, 1 May.

Visitors to Greece won’t need to provide proof of vaccination or negative PCR tests, though mask wearing will remain mandatory while indoors and when using public transport.

New Zealand will allow fully vaccinated travellers to enter the country from 11.59pm on Sunday. New Zealand citizens, children aged 16 and under and those who can evidence themselves as medically exempt will not need to provide proof of vaccination.

‘Fully vaccinated’ in this context means you’ve received at least two courses of an approved Covid 19 vaccination e.g. Pfizer, AstraZeneca and Moderna.

Visitors to New Zealand will also need to provide three negative PCR tests: one before departure, one on arrival and a third five or six days after arrival. Pre-departure tests must be conducted no more than 48-hours before the flight leaves the UK.

No quarantines are necessary if your post-arrival antigen tests are negative. 

Face coverings are still required on all public transport and internal flights in New Zealand. Domestic air travel may require either proof of vaccination or a negative PCR test taken within the 72 hours prior to departure.

14 April: Chaos Worsens As P&O Cancels Easter Dover Crossings

P&O Ferries has confirmed its Dover-Calais route will remain suspended over the Easter weekend. Two of its ferries – the Pride of Kent and Spirit of Britain – have been withdrawn from service because of safety concerns.

The firm has sent the following messages via twitter:

#PODover#POCalais 15/04 00:01 – 18/04 23:59 Our Passenger Services are suspended this weekend. We sincerely apologise, for travel 15-18 April please re-book directly with another operator before arriving at the port. DFDS are not able to transfer PO customers onto their ships

For travel between 15/04 00:01 – 18/04 23:59, we will provide a full refund of your ticket. We will also pay back the difference in cost between your P&O Ferries ticket and your new booking with another operator. Claims should be sent to help@poferries.com

Travellers flying out of the UK today have been hit with yet more flight cancellations. More than 80 flights have been cancelled by British Airways and easyJet. 

British Airways has grounded at least 52 flights to and from Heathrow, while easyJet has cancelled at least 30 flights to and from Gatwick.

13 April: Greece to lift Covid requirements in time for summer holidays

UK travellers planning to visit Greece can expect a relaxation of Covid rules this summer.

Today its Ministry of Health confirmed that, from 1 May, the requirement to show Covid passes to enter public venues, bars and restaurants will be lifted, with the rule change to be reviewed on 1 September.

From 1 June the requirement to wear masks in most venues will also be dropped. Exceptions will be announced closer to the date.

The Ministry also signaled that it may remove Covid restrictions for entry to the country from 1 May. It said that the need for proof of vaccination for entry will be “examined” and there will be “newer announcements”.

Currently, all travellers over five years of age, must show an EU Covid Digital Certificate as proof of either:

• vaccination
• recovery from Covid
• a negative PCR or antigen Covid test result.

PCR tests must be taken in the 72 hours prior to departure, while antigen tests should be taken in the 24 hours prior to departure.

12 April: Passport Applicants Told To Allow 10 Weeks

The government is reminding anyone needing a British passport to apply 10 weeks ahead of their planned departure date as demand remains at an “all-time high”.

HM Passport Office says it saw a significant drop in the number of people applying for passports during the Covid-19 crisis. It says over 5 million people delayed their applications in 2020 and 2021.

Now, however, with Covid restrictions being eased or removed in the UK and elsewhere, and with international travel returning to normal, more people are filing passport applications.

Abi Tierney, head of the Passport Office, said: “While there are urgent services for people who need their passport more quickly, appointment availability is limited. People are therefore strongly advised to apply early and help ensure that their holiday plans go smoothly.”

You can find out more about the application process and apply online using this link.

Continued disruption

Tuesday has brought further disruption to air and ferry travellers, including:

• British Airways has cancelled 58 of its flights to and from Heathrow
• easyJet has cancelled at least 32 flights from Gatwick
• P&O Ferries Dover-Calais route is suspended until Friday. P&O continues to advise passengers travelling from Dover to Calais to go to the DFDS check-in booths at the port, while those travelling on the Calais-Dover route should head to the P&O check-in booths for further assistance.

11 April: Travellers Hit By Strife As Easter Approaches

The airport saga that has blighted international travel for over a week continues today, with easyJet and British Airways cancelling more than 100 flights due to staff shortages.

easyJet has cancelled at least 32 flights from Gatwick airport, in addition to grounding planes from Luton and Edinburgh. British Airways’ cancellations include 58 flights to and from Heathrow.

Leeds Bradford airport is advising travellers to arrive two to three hours before departure to allow for security queues. Manchester airport, which is experiencing its own staff shortages, continues to recommend travellers arrive three hours before departure due to delays and long queues that it said last week would last until summer.

As well as factoring in extra time for queuing, you can also make sure your journey goes as smoothly as possible by:

• checking Covid entry requirements for your destination, including any need to provide proof of vaccination or show the results of a negative test
• double-checking your passport is still valid. Validity requirements vary between destinations, with Spain for example, requiring that passports remain valid for at least three months after the departure date
• making sure your travel insurance provides the necessary cover for your destination. Many insurers boost medical cover and liability insurance levels for the US, Caribbean, Canada and sometimes Mexico on account of their higher costs.
• some destinations require that you show proof of insurance, including cover for Covid-related risks. To be safe, take hard copies as well as digital copies of your policy away with you.

P&O Ferries Dover-Calais route suspended

After a chaotic weekend of sailing suspensions for P&O Ferries, services have mostly returned to normal today for the Larne – Cairnryan, Hull – Rotterdam and Liverpool – Dublin routes.

However, services on the Dover-Calais route remain suspended. Passengers travelling from Dover to Calais are advised to go to the DFDS check-in booths, while those travelling on the Calais-Dover route should head to the P&O check-in booths. 

Record levels of road congestion this Easter weekend

The RAC has warned that this Easter weekend could be the busiest on UK roads in recent times. It estimates that over 21 million Easter getaways will be made by car, the highest number since the company started recording motorist’s plans in 2014.

The busiest day is due to be Good Friday, when an estimated five million leisure trips will be made. The next busiest day will be Monday as nearly 4 million drivers will start their journeys. Saturday and Sunday will each see 3.6 million travellers head out on their Easter travels by car. 

According to transport analytics specialists INRIX, the congestion will be exacerbated by railway network closures, including major engineering work between London and Birmingham, and football fans making their way from Manchester and Liverpool to Wembley to watch the semi-final of the FA Cup on Saturday. Rail strikes could also take place in Scotland and the North of England.

It says drivers should expect the following routes to be busiest: 

• M6 north between Liverpool and the Lake District and south towards Stoke-on-Trent
• M25 between Surrey and the M40 exit 
• A303 near Stonehenge.

RAC advises that drivers:

• head off as early as possible, or start their trips at the end of the day to avoid the worst of the traffic
• check their cars are road-worthy before leaving to limit the chance of breaking down.

11 April: Czech Republic Lifts Covid Restrictions

The Czech Republic is now open without restriction to vaccinated and unvaccinated travellers in time for Easter.

As its entry rules return to pre-Covid norms, all visitors can now enter the country without proof of vaccination or negative pre-departure test, or need to fill in arrival forms. Unvaccinated travellers do not need to take a test on arrival. 

The country’s Ministry of the Interior stated this weekend: “As of 9 April 2022, the protective measures regarding the conditions of entry into the Czech Republic in relation to the epidemic of Covid-19 have been suspended.

“Entry into the Czech Republic is no longer subject to any special epidemiological conditions to prevent the spread of the disease. The entry-ban for foreigners from third countries and the obligation to prove infection-free status have been lifted.”

‘Third countries’ are those that are not European Union (EU) members or do not benefit from the right to free movement – freedom of its citizens to travel between and reside in EU member states.

Certain Covid rules still apply once in the Czech Republic, such as the mandatory wearing of Covid facemasks on public transport, in hospitals and pharmacies.

8 April: Disruption Plagues Air Travellers, P&O Suspends Services

Travellers using UK airports – notably Manchester, Heathrow and Gatwick – are facing cancellations, delays and disruption due to staff shortages. 

British Airways has today cancelled 68 flights across the UK, while easyJet has pulled 42 from its schedule, saying staff are absent due to Covid-related illness. Airports in particular are saying they are also struggling to recruit staff after laying off employees during the pandemic shutdowns.

There are fears this weekend could bring further chaos as more schools close for Easter and families head for international holiday destinations.

Passengers are being urged to check with their airline before setting off to the airport. If their flight is operating, they are recommended to allow extra time for check-in and security clearance, where lengthy queues are being reported.

Charlie Cornish, boss of Manchester Airport Group, said he could not apologise enough for disruption at the airport in recent weeks: “The simple fact is that we don’t currently have the number of staff we need to provide the level of service that our passengers deserve.”

He advised travellers to arrive at the airport three hours before their flight leaves, to allow enough time to check-in, get through security and reach the departure gate, adding: “These measures are temporary and we are focused on getting back to normal in time for the peak summer season.  

“As new staff join us, the operational pressure we are facing will ease and queue times will begin to come down.”

The boss of the air travel regulator, the Civil Aviation Authority, Richard Moriarty, has written to airlines and airports demanding that disruption is kept to a minimum. 

He said: “We appreciate that it is not always possible to anticipate all the challenges that may arise on any particular day, but where capacity constraints can be predicted in advance, we would expect co-operation between all parties to determine the best outcomes for consumers.

“Where capacity is unavoidably restricted, we expect this co-operative planning to identify problems sufficiently in advance so as to allow pre-emptive cancellations. At a minimum, we would like to see passengers given notice so that they do not travel to airports unnecessarily and are able to make alternative arrangements where possible and appropriate.”

Mr Moriarty also reminded airlines of their legal obligations to provide passengers with information about their rights when flights are disrupted, to provide care and assistance during the disruption and to offer passengers a choice of refund or alternative travel, along with compensation as appropriate.

You can find out more here about your compensation and refund rights.

Cross-channel disruption

Easter holiday plans are also in jeopardy for ferry travellers. Following its shock summary dismissal of 800 staff last month, P&O Ferries services between Dover and Calais are suspended until Monday. Status updates can be found on its site.

The firm is telling customers to re-arrange travel for this weekend directly with other operators. This is a change to its earlier advice, which was for passengers to arrive at the port as booked when alternative arrangements would be made.

It says that all travellers with P&O Ferries bookings who have not been transferred to another operator by P&O will receive a full refund. Refund requests can be sent to help@poferries.com or you can call 01304 448888.

P&O’s Larne-Cairnryan route remains suspended. It is advising travellers not to go to their embarkation port and says it will provide refunds.

Reduced services are running for the firm’s Hull-Rotterdam route. It says it will contact affected customers and arrange an alternative provider for those needing travel on a return leg, or with urgent or essential needs. 

Dover District Council warns of a “challenging” weekend on the local road network as ferry disruption at the port causes tailbacks for people trying to get away for Easter. An estimated 4,500 HGV lorries are queuing on the M20 awaiting entry to the port.

7 April: Spain Backtracks On Border Opening Relaxation

UPDATE: Spanish Borders Remain Closed To Unvaccinated Travellers

The Spanish Tourist Office in the UK has issued an apology to clarify yesterday’s statement which suggested Spain was now open to all regardless of vaccination status (see story below). This is now understood not to be the case.

Pedro Medina, the office’s deputy director, said: “We apologise unreservedly for the miscommunication earlier today which was due to a misunderstanding of the new entry requirements.”

The office has updated its information, saying: “The Spanish Tourist Office in the UK issued a statement… which was incorrect. The statement said that from 6 April, non-vaccinated UK passengers can now enter Spain with proof of a negative PCR or antigen test, or proof of diagnostic recovery and without the need to be double vaccinated. This was misinterpreted and is not correct.

“UK travellers aged 12 and above are still required to show proof of being fully-vaccinated or a certificate of recovery. There is an exception for those aged 12 to 17 (inclusive) who can show a negative COVID test (PCR of similar) taken within 72 hours of arrival.”

New rules

From yesterday, 6 April, children under 12 and those travelling to Spain with an EU Covid passport or equivalent (including NHS Covid travel pass) no longer need to complete the Health Control Form (FCS in Spanish) before travelling to Spain.

Travellers without an EU Covid pass or equivalent must complete the Health Control Form as evidence of their vaccinations or certificate of recovery. 

UK travellers, aged 12 and above, will still need to provide one of the following:

• proof of being fully-vaccinated, either with both doses of a two-dose vaccine or one dose of a one-dose vaccine, at least 14 days prior to arriving in Spain. If more than 270 days (nine months) have passed since the final dose, certification of a booster vaccination will be required, except for teenagers aged 12 to 17 (inclusive)

• proof of recovery from Covid. Recovery certificates issued by the official authorities will be valid at least 11 days after the first positive PCR or rapid antigen test, carried out by qualified personnel. The certificate shall be valid for 180 days after the date of the first positive test result.

Children under 12 years old travelling with an adult are exempt.

More information about travelling to and around Spain is available here.

6 April: Spain Opens For Unvaccinated Travellers – see story above

Spain has opened its borders to unvaccinated UK travellers who are able to provide a negative PCR test (taken within 72 hours of departure) or rapid antigen test (taken within 24 hours of departure).

It joins other major countries, including France, in relaxing its coronavirus restrictions on international travel. The move will be seen as a boost – albeit a late one – for the holiday sector ahead of the Easter break.

But travellers heading to a range of destinations from the UK are facing serious disruption due to Covid-19 related staff shortages at airlines and airports (see story below).

Travellers to Spain who are vaccinated must provide certification, including evidence of a booster jab if it is more than 270 days since their initial vaccination. This applies to those aged 18 and above.

Those who have a certificate of recovery from Covid-19 that is no more than 180 days old will also be admitted.

More information on travel to Spain is available from the Spanish Tourist Office.

• Poland recently announced that is has dropped all entry requirements and restrictions, meaning travellers do not need to confirm their vaccination status, show proof of recovery or offer evidence of a negative Covid test of any kind.

6 April: Cancellations Spectre Looms Over Easter Travel Plans

Holiday plans are being thwarted for thousands of travellers in the run-up to Easter due to hundreds of flight cancellations caused by Covid-related sickness among airline and airport staff.

Last-minute cancellations have caused chaos in airports across the UK, as travellers taking advantage of the relaxing of Covid travel restrictions in Europe and beyond have been hit with delays and long security queues.

The high number of cancellations and prolonged delays has sharpened the focus on passenger rights in terms of alternative provision, ticket refunds, financial support and compensation.

You can find out more here about your compensation and refund rights.

British Airways and easyJet have cancelled dozens of flights today, with more disruption likely in the coming days. In total easyJet has cancelled over 300 flights in recent days, while British Airways has cancelled over 100 since Monday. 

If you’re due to fly, you should regularly check the status of your flight before leaving home.

Heathrow, Gatwick, Manchester, Birmingham and Dublin airports in particular are experiencing congestion, queues and delays.

Karen Smart, Manchester Airport’s managing director, resigned on Tuesday following criticism from local councillors for the prolonged disruption.

On the subject of passenger compensation, Anna Bowles, head of consumer enforcement at UK aviation regulator the Civil Aviation Authority (CAA), said: “We understand the impact it can have on customers when flights are delayed or cancelled. That is why there are rules in place to protect customers in these circumstances.

“If your flight is delayed, your airline has a duty of care to look after you. This can include providing food and drink, as well as accommodation if you are delayed overnight. If your flight is cancelled, you should be offered a choice of refund or offered alternative travel arrangements at the earliest opportunity. This can include flights on other airlines, or a new flight at a later date at your convenience.

“We also expect airlines to proactively provide passengers with information about their rights when flights are disrupted. We have guidance on cancellations and flight disruption published on our website and expect airlines to follow this. 

“Where we have evidence that airlines are not following these guidelines, we will not hesitate to take further action where required.”

5 April: Malta Opens To Unvaccinated Travellers

Malta has joined the growing number of countries allowing unvaccinated travellers to enter provided they have negative PCR test or a Covid recovery certificate. The change comes into effect from 11 April.

Previously, such travellers were required to enter quarantine for seven days (reduced last month from 14 days).

Chris Fearne, the country’s deputy prime minister and minister for health, says Malta is proceeding with its COVID-19 exit roadmap as planned. The European Centre for Disease Prevention and Control has confirmed that Malta has the lowest rate of COVID-related intensive therapy unit occupancy across the EU.

From Monday 11 April 2022, incoming tourists travelling to Malta from a country on its red list (including the UK) will be allowed in with a negative PCR test (taken up to 72 hours prior to arrival) or a recognised Covid recovery certificate which cannot be older than 180 days.

In addition, Mr Fearne announced that, as planned, from the 10 April 2022, a vaccine certificate is no longer needed for persons to attend standing outdoor events, or seated indoor events.

31 March: France Reopens To Unvaccinated Travellers

France has relaxed its border requirements today to allow unvaccinated travellers from the UK to enter the country without the need for a ‘compelling reason’.

The move will allow more people to travel to the country for the Easter holidays.

Announcing the change on twitter, Guillaume Bazard, the consul general for France in London said: “On 03/31 the United Kingdom will be placed on the green list. Removal of compelling reasons for non-vaccinated travellers, who will have to present a negative test.” 

Unvaccinated travellers who have had one or no jabs will be required to provide a negative PCR test taken within 72 hours before arrival in France or an antigen test taken within 48 hours before arrival.

They will no longer need to quarantine for seven days on arrival.

Vaccinated travellers will no longer need to submit a sworn declaration form to confirm a lack of Covid symptoms. They are now only required to show proof of vaccination.

Those who have been administered one dose of the Johnson & Johnson vaccine are being told to wait 28 days before travelling to France, while those who have had two or more jabs of the Oxford/Astrazeneca, Pfizer/BioNTech or Moderna vaccines should have had their second jab at least seven days prior to their departure.

Children under the age of 12 do not need to take any Covid tests or show proof of vaccination.

18 March: UK Travel Restrictions End, Travellers Urged To Check Destination Rules

Requirements that all travellers must complete passenger locator forms and that unvaccinated travellers must test for Covid-19 before and after arrival ended in the UK at 4am today.

The government has lifted the restrictions because of, it says, the success of the vaccination and booster roll-out.

However, while the rules have been lifted for inbound travellers to the UK, many popular destinations still have Covid-related requirements, including rules affecting children.

Families planning a foreign holiday this Easter are being urged to check the Covid rules and restrictions in place in the country they are intending to visit.

According to NHS figures, there are 1.5 million children aged 12 to 17 in England who have had two doses of Covid vaccine. There are an estimated 3.9 million in that age group, meaning 2.4 million would need a negative Covid test to enter countries such as Spain, Turkey and the US – these destinations have pre-departure testing regimes in place that affect children aged 12 and above who have not had two vaccination jabs.

Greece has even more restrictive rules, with children aged five and over who are not fully vaccinated to take a negative PCR test within 72 hours before their arrival, or a lateral flow test no more than 24 hours before arriving.

For Italy, unvaccinated children aged 6 and over must take a PCR test within 72 hours, or a lateral flow test within 48 hours. 

Spain insists that unvaccinated children aged 12 to 17 take a PCR test within 72 hours before their holiday starts. France allows this age group to take a lateral flow test within 48 hours before arriving.

For the US, all children aged two and over must take a Covid test within one day prior to arrival, with unvaccinated children required to take a second test three to five days after landing in the country.

Nick Markham at Cignpost ExpressTest, a Covid-testing provider, says the rules could trip up families heading abroad: “As international travel reopens and lockdown restrictions are being lifted, countries are implementing their own entry requirements for arrivals.

“We’re particularly concerned about the rules around children, which can vary by age, vaccination status, tests required, and whether they’ve had Covid before.”

Failure to comply with the regulations may result in the family not being permitted to travel or being denied entry to the destination country. 

Here’s a snapshot of the rules applying to children in popular Easter destinations:

17 March: P&O Ferries Crisis Strands Passengers, May Trigger Insurance Claims

The shock decision by P&O Ferries to suspend services and dismiss around 800 sea-faring staff has left many passengers stranded onboard vessels or at embarkation terminals, with others unsure whether to set off on their scheduled journeys.

A statement on the company’s website reads: “P&O Ferries have today announced a programme of work to become a more competitive and efficient operator, providing a better service to our customers across the tourism and freight industries. While we enact these changes, there will be significant disruption across P&O Ferries services over the next few days, however we are working to minimise the impact on your journey.”

Recent tweets from the firm say P&O Ferries services are unable to run “for the next few days” and that the firm is advising travellers of alternative arrangements.

Passengers on the Dover-Calais route are being told to arrive at their departure port as scheduled and report to the DFDS check-in facilities (DFDS is a rival operator), but travellers from other ports have been told that space with alternative operators is very limited, “so we would suggest if your journey is not essential, please do not travel today.”

P&O Ferries should provide alternative travel and, if necessary, meet the cost of overnight accommodation. But if passengers who are stranded or disrupted by the suspension of P&O Ferries’ services are not able to claim compensation directly from the firm, they may be able to claim on their travel insurance provided their policy includes End Supplier Failure. 

Some policies offer this as standard, while others require payment of an additional premium at the outset for the cover to be included.

This shouldn’t be confused with the more commonly-known ‘Scheduled Airline Failure’. End Supplier Failure covers airlines as well as ferries, trains, hotels, and coach operators, and only this cover would help someone affected by the P&O situation.

Stranded travellers should be able to claim for any out-of-pocket expenses incurred as a result of not being able to complete their journey as planned and paid for with P&O. They should keep receipts for any expenditure to support their claim, including sustenance and accommodation, as well as alternative travel arrangements if these are not provided by P&O.

Policies usually carry an excess charge which will be deducted from any payment made.

14 March: UK travel restrictions to end Friday as Heathrow, BA and Virgin drop mask mandate

All remaining international travel restrictions for travellers to the UK will be scrapped from this Friday (18 March) in time for the Easter holidays, the government announced today.

In a tweet, the Transport Secretary, Grant Shapps MP confirmed: “All remaining Covid travel measures, including the Passenger Locator Form and tests for all arrivals, will be stood down for travel to the UK from 4am on 18 March. These changes are possible due to our vaccine rollout and mean greater freedom in time for Easter.”

Lengthy Passenger Locator Forms, which all travellers must currently fill in when entering the UK, will be stood down from the end of this week, while unvaccinated travellers will no longer be required to test before departure or on Day 2 of their arrival in the UK.

The announcement marks an effective end to all Covid travel restrictions in the UK. Travellers leaving the UK may still be required to prove their vaccination status or provide evidence of a negative test according to the rules in place in their destination country.

Information on the rules in place in different countries can be found on the gov.uk website.

Separately, London’s Heathrow Airport is dropping its mask mandate from tomorrow (Wednesday 16 March).

Announcing the move, it said: “We still strongly encourage both colleagues and passengers to wear them (face coverings), particularly when they come into close contact with others, but this will no longer be mandatory.”

It remains the case that some airlines will require their passengers and crew to wear masks, so travellers are advised to check with their airline ahead of departure.

British Airways and Virgin Atlantic are among the airlines that will be partially lifting their mask mandates this week.

Masks will still be required for British Airways passengers if the destination country or airport requires their use, which Virgin will introduce the change gradually over the coming days.

Virgin Atlantic tweeted: “With the legal requirement to wear a face mask now removed in England, we believe our customers should have the personal choice whether to wear a mask onboard.

“The mask rules that apply will depend on the route you’re flying, because requirements differ by destination.”

9 March: Israel drops border vax mandate

Israel has re-opened its borders to all tourists, regardless of vaccination status or age.

Travellers, including those from the UK, can now enter the country without need of a vaccination certificate.

All travellers are now only required to show evidence of two negative PCR tests – one taken prior to departure, and a second on arrival in Israel.

Negative results from lab-based antigen tests, such as lateral flow tests, are not accepted. 

Arrivals who test positive for Covid must quarantine in their hotel until they receive a negative PCR test result or for 24 hours – whichever comes first.

The Israeli authorities decided to ease restrictions following the steady decline in Covid cases in the country.

According to figures from the World Health Organisation (WHO), the number of confirmed Covid cases fell each week in Israel in February. While over 240,000 cases were recorded in the first week of that month, this dropped to around 52,000 cases in fourth.

• Hungary scrapped its Covid border restrictions for arrivals of all nationalities on Monday 7 March.

Travellers arriving in the country by public road, railway, water or air only need follow the protocols in place before the pandemic, such as carrying a valid passport. 

They will not be required to prove vaccination status or show proof of a negative Covid test on arrival.

The requirement to wear a face mask in indoor spaces and on public transport was also dropped on 7 March, though still remains mandatory in hospitals and other medical environments.

Rules regulating the use of immunity certificates –  proof of recovery from Covid –  have been abolished.

23 February: EU Drops Travel Restrictions From 1 March

Restrictions on non-essential travel to European Union member countries will be dropped from 1 March for vaccinated and Covid-recovered travellers, the European Commission has announced.

In a move that will unify entry rules for EU countries, travellers from outside the bloc, including the UK, will be allowed entry for reasons including going on holiday.

However, arrivals will still need to adhere to travel requirements by either:

• showing proof they have been vaccinated with either an EU or World Health Organisation-approved vaccine 
• showing they have recovered from the virus within 180 days of arrival
• travelling from a country on the EU’s list of ‘third’ non-EU countries (of which the UK is one). For some of these travellers, additional measures such as PCR testing before travel could apply.

Vaccinated travellers should have had the last dose of their primary vaccination series at least 14 days and no more than 270 days before arrival, or have received a booster dose.

For those vaccinated with a WHO-approved vaccine, member states could also require a negative PCR test taken at the earliest 72 hours before departure and could apply additional measures such as quarantine or isolation. 

A negative PCR test before departure could also be required for persons who have recovered from COVID-19, as well as for persons who have been vaccinated with an EU-approved vaccine but do not hold an EU or equivalent certificate.

Non-vaccinated travellers will need to have an essential reason to travel, such as being an EU citizen or a long-term EU resident.

Children over 6 and under 18 who fulfill the conditions set out for adults will be allowed to travel. All other children over 6 and under 18 will be allowed to travel with a negative PCR test taken at the earliest 72 hours before departure. Member states will be able to require additional testing after arrival, as well as quarantine or isolation.

No test or additional requirements will be applied to children under the age of 6.

13 February: France Drops Pre-Departure Test For Vaxxed Brits

British travellers to France who are fully vaccinated now no longer need to show a negative result from a pre-departure test. The change in policy was announced by Guillaume Bazard, the French consul-general in London, last Friday, and took effect on 12 February.

Those whose second dose of the vaccine was more than 270 days preceding travel will need to have had a booster shot to be considered fully vaccinated.

Travellers will still need to complete a sworn statement regarding their status.

Unvaccinated travellers will not be admitted to France unless they can demonstrate a compelling reason, and the need for them to self-isolate for 10 days remains.

Children aged 12 and over will be deemed to have the same vaccination status as an accompanying adult. If they are travelling alone they will need to be fully vaccinated. Those aged 11 and under do not need to be vaccinated.

11 February: Spain To Admit 12 to 17-Year-Olds Without Vax

Spain has changed its entry requirements for UK travellers aged 12 to 17 to allow entry without proof of vaccination.

In a statement released today, the Spanish government announced that the change will take effect from midnight on Monday 14 February. Grant Shapps MP, the British transport secretary, has tweeted that the change will come into force at 11pm UK time on Sunday 13 February.

It will mean travellers aged between 12 and 17 from the UK may present a RT-PCR test or similar with a negative result as an alternative to presenting a valid Covid vaccination certificate, as currently required. The test must be carried out within 72 hours before arrival in Spain.

The change in the rules applies to countries outside the European Union or Schengen area “where access to a Covid vaccine for this age group is difficult or not yet possible” 

All children under 12, travelling with an adult, will continue to be treated as fully-vaccinated after 14 February.

All adult UK travellers must be fully vaccinated to visit Spain for non-essential reasons such as for holidaying.

11 February: UK Inbound Testing Measures Removed As Of Today

All testing measures for fully vaccinated travellers arriving in the UK were removed at 4am today (11 February).

Travellers arriving in the UK who are not fully vaccinated will, from today, only need to take a pre-departure test and a PCR test on or before day 2 after they arrive in the UK. This means the requirement to self-isolate and take a day 8 test has been removed.

All passengers, vaccinated or otherwise, will still need to complete a Passenger Locator Form.

For inward travel, all under-18s regardless of their individual vaccination status will continue to be considered as fully vaccinated.

Grant Shapps MP, transport secretary, described the move as a “landmark moment for international travel.”

He said: “After nearly two years of necessary but complex travel arrangements these changes will make it cheaper and easier for families to travel, taking advantage of the UK’s high levels of vaccination, and keeping us all safe.”

9 February: Skiers Urged To Check Covid Requirements

Ahead of the upcoming half-term break, Brits heading to the slopes for winter sports holidays are being urged to check the entry rules for their destination countries, as well as any restrictions governing access to services and facilities at their resort.

We’ve put together a country-by-country guide covering Europe and North America so you can check the rules that might affect your trip.

According to Cignpost Express Test, which offers Covid testing services, Italy has some of the toughest rules, with 12 to 16-year-olds able to enter the country with a negative lateral flow test, but barred from ski facilities unless they are fully vaccinated or recently recovered from Covid.

The firm says France, Austria and Switzerland also have confusing requirements, with children who are not fully vaccinated asked to prove their Covid status with additional tests during their holiday.

Nick Markham at Cignpost ExpressTest says the rules across Europe could catch families out: “The rules are changing regularly and every destination is a different. For children, the regulations for entering a country may not be the same as the requirements for full access to the facilities at the resort.”

Here’s a snapshot of the rules applying in popular destinations…

France

France is only an option for fully vaccinated skiers, as non-vaccinated travellers require an essential reason to visit the country.

Children aged 12+ mirror the vaccination status of the adults they are with, and younger children are exempt from restrictions.

Everyone aged 12 and over must present a negative PCR or lateral flow test taken within 24 hours before their departure from the UK.

Once in France, fully vaccinated travellers qualify for the Pass Vaccinal to get full access to leisure facilities across ski resorts including Courchevel, Chamonix and Val d’Isere.

Children aged 12 to 15 must have a Pass Sanitaire to use ski lifts and eat in cafes and restaurants, which they can get if they are fully vaccinated, have recently recovered from Covid, or they have taken a negative Covid test within the previous 24 hours.

The French Government has recently lifted the requirement to wear masks on ski lifts.

Switzerland

The home of famous resorts including Zermatt, St. Moritz and Verbier, Switzerland has lifted all testing requirements for fully vaccinated holidaymakers to enter the country, and under 18s have the same vaccination status as the adults they are with.

Once in resort, everyone aged 6 and over must wear face masks in queues and on ski lifts, and everyone over 16 must provide proof they are fully vaccinated or have recently recovered from Covid to access indoor venues and ski lifts.

Italy

For Italy, fully vaccinated skiers aged 6+ must take a lateral flow test within 24 hours before their departure from the UK, or a PCR test within 48 hours. Children up to 17 mirror the vaccination status of their parents.

In resort, everyone aged 6 and over must wear face masks in busy places, and everyone aged 12 and over must have a ‘Super Green Pass’ that proves they have been fully vaccinated or recently recovered from Covid.

Austria

If you’ve had your booster there is no testing requirement to enter Austria, but anyone who has had only two jabs, or children aged 12 to 16 who are not fully vaccinated, must produce a negative PCR test taken within 72 hours before leaving the UK. Under 12s mirror the vaccine status of their parents.

Once at your ski resort, everyone aged 12 and over must have ‘2G’ status, which means they are fully vaccinated or recovered from COVID.

12 to 16 year olds who are not fully vaccinated can obtain a Holiday Ninja Pass by producing two negative PCR tests, including the one taken on entry to Austria, plus a negative lateral flow test, over a seven-day period during their holiday.

Everyone who is 6 and over must wear a face mask in queues and on ski lifts.

Requirements in popular destinations

7 February: Australia to re-open borders

Fully-vaccinated non-Australian and non-resident holidaymakers and business travellers with eligible visas will be able to enter Australia from Monday 21 February.

Currently, entry to Australia is only allowed if you are exempt or have been granted an individual exemption. Exemptions include:

• Australian citizenship
• permanent residence in Australia 
• an immediate family member is an Australian citizen or permanent resident.

Details of exemptions, including how to apply, can be found on the Department of Home Affairs website.

Today’s announcement is designed to boost the tourism sector which, according to Australian government figures, generated more than $60 billion for the country’s economy in 2018-19, with 660,000 dependent jobs.

The statement issued says the change “will ensure we protect the health of Australians, while we continue to secure our economic recovery.”

Australia swiftly implemented strict Covid restrictions at the start of pandemic when it closed its borders to the rest of the world in March 2020.

From 1 November 2021, Australia started a staged reopening of its borders, including extending its ‘immediate family member’ exemption to include the parents of adult Australian citizens and permanent residents.

According to the Australian government, almost 600,000 people have been allowed entry to the country since this date. 

Entry requirements for unvaccinated travellers

From 21 February, travellers with valid visas who are unvaccinated or not fully vaccinated will still need a travel exemption to cross the Australian border. 

They will also need to abide by state and territory quarantine rules.

3 February: France toughens stance on vaccinations and boosters

France has changed its entry requirements for vaccinated travellers from the UK. 

According to Eurostar’s website, passengers over 18 will henceforth only be considered fully vaccinated if they have completed their primary approved course of full vaccination within the past nine months (received both jabs) OR if they have received a COVID-19 vaccine booster.

All those considered to be fully vaccinated are required to show proof of a negative PCR or antigen test taken within 24 hours before their departure from the UK.

Under 18s do not need a booster jab to be considered fully vaccinated.

Those who completed their vaccination course more than nine months ago and who have not been boosted will be treated as if they are unvaccinated, which will mean they will need:

• a ‘compelling reason’ to travel to France and to complete the Certificate of Travel to Metropolitan France
• to show proof of a negative PCR or antigen test taken within the 24 hours before their departure (NHS tests are not accepted)
• to complete a statement of honour
• to complete an online “éOS-Passager Form”  which should include their place of residence while in France
• to quarantine at that address for 10 days on arrival (this will be enforced by the police).

31 January: Govt proposes flight delay compensation overhaul

The government has opened a consultation process designed to overhaul the way airlines treat their customers, including the payment of compensation for delays.

Proposals include moving away from the current ‘set rate’ model, bought in when the UK was a member of the EU, which sees passengers compensated £220 if a flight under 1,500km is delayed more than three hours. 

The suggestion is that passengers should be compensated based on the length of their flight delay and the cost of their travel.

Delays under three hours would be eligible for compensation but, in a move that would benefit low-cost airlines in particular, the amounts paid could be less than at present. Under the current regime, it is possible for passengers to be “over compensated” by receiving a greater amount in compensation than they spent on their ticket.

The consultation runs until 27 March, with a response published within three months. A date for when the plans should come into force, if approved, has not yet been set.

Grant Shapps, transport secretary, said: “It’s a watershed moment for the industry that will ensure airlines treat their customers with fairness and respect.

“People deserve a service that puts passengers first when things go wrong, so today I’ve launched proposals that aim to bolster airline consumer protections and rights.”

Sanctions for airlines

Also under the proposals, all airlines would need to be a member of an aviation Alternative Dispute Resolution (ADR) scheme.

This would provide an alternative route to settle complaints that cannot be resolved between airlines and passengers, which currently have to go to court. At present, airlines can join ADR schemes voluntarily.

The UK aviation regulator, the Civil Aviation Authority, would also have more power to ensure consumers are treated fairly and consumer protection law is followed, including the ability to fine airlines directly for breaches, where appropriate.

Compensation for damaged wheelchairs and scooters

The plans also propose that wheelchair users and people with reduced mobility are fully compensated for any damage caused to their wheelchair or mobility scooter during a domestic UK flight.

Currently, airlines are not required to cover repair costs, even if the device was damaged while in their care.

Caroline Stickland,at disabled-led campaign group Transport for All, hopes the proposal is the start of wider change in the industry: “Having your wheelchair or mobility aid lost or damaged by an airline doesn’t just put a damper on a holiday. It can mean a total loss of independence and mobility. Much more needs to be done to safeguard against this, including fair recourse to compensation for disabled passengers.

“We welcome these proposals and hope they mark the start of further positive changes in this area so that disabled people, whatever their access requirements, can travel with security and confidence when using airlines.”

24 January: Govt to drop tests for vaccinated travellers

The government has announced that all testing measures for fully vaccinated travellers arriving in the UK will be removed from 4am on 11 February in time for the half-term holidays.

Arrivals who are not recognised as fully vaccinated will, from this date, only need to take a pre-departure test and a PCR test on or before day 2 after they arrive in the UK. This means the requirement to self-isolate and take a day 8 test will be removed.

All passengers, vaccinated or otherwise, will still need to complete a Passenger Locator Form.

For inward travel, all under-18s regardless of their individual vaccination status will continue to be considered as fully vaccinated.

From 3 February, children aged 12-15 in England who are departing from the UK will be able to prove their vaccination status or proof of prior infection via a digital NHS COVID Pass from 3 February for outbound travel. This is intended to make it easier for children and families to travel to countries which require proof of vaccination or prior infection to gain entry, avoid isolation, or access venues or services.

The government stated: “The framework set out today is intended to be one that will last. It aims to provide stability for travellers and the travel industry throughout 2022, ensuring the UK remains one of the best places in the world to do business.

“Meanwhile, friends and families can make the most of their global connections, while saving around £100 for the average family with the removal of testing.”

Also from 4am on 11 February, the UK will recognise vaccine certificates from 16 further countries and territories at the border, including China and Mexico. This will bring the total list to over 180 countries worldwide. You can access the full list of eligible countries and territories here.

20 January: UK ‘planning to drop tests for vaccinated travellers’

Press reports suggest the UK government could next week drop the requirement for fully-vaccinated travellers arriving in England to take a Covid test on or before Day 2 of their return. They would still need to complete a passenger locator form.

At present, the requirement is to take either a lateral flow or PCR test after arrival, and to take a confirmatory PCR test if the result is positive.

Fully vaccinated is likely to mean those who have had two shots. The definition could be extended to include those who have had a booster jab later in the spring.

It is thought the rules for vaccinated travellers will remain as they are, meaning they will be required to take a negative Covid test prior to setting off for England, and to self-isolate and take further tests on Day 2 and Day 8 of their return.

Yesterday the government announced that England would move from Plan B to Plan A from Thursday next week, meaning an end to mask mandates and Covid passes for certain venues.

The requirement to work from home where possible was suspended yesterday.

20 January: Switzerland scraps pre-departure tests for UK travellers

Switzerland will allow fully-vaccinated travellers from the UK to enter the country without proof of a negative PCR or antigen test from Saturday 22 January.

Travellers who can show recent recovery from the virus will also be able to enter without proof of a negative pre-travel test.

UK travellers who have been fully vaccinated or have recovered from Covid-19 will only need to:

• show proof of vaccination or recovery
• complete a passenger locator form (SwissPLF) within 48 hours before entry if they travel by plane or on a long-distance bus service.

An entry ban will still exist for UK travellers who are unvaccinated or who have not recovered from the virus, unless they meet the requirements for exemption.

Travellers who are unvaccinated or who have not recovered from Covid-19 but who can enter Switzerland must continue to take a pre-travel PCR or antigen test and obtain a negative result. However, they will no longer need to take a Covid test four to seven days after arrival.

They should:

• complete a passenger locator form (SwissPLF) within 48 hours before entry if they travel by plane or on a long-distance bus service
• present proof of a negative pre-departure test (rapid antigen test completed within 24 hours or PCR test completed within 72 hours before entry).

Children under the age of 16 do not have to take any tests.

14 January: France opens border to fully-vaccinated travellers

Travel to France is now permissible to fully-vaccinated British travellers, opening the prospect of skiing trips and visits to Disneyland Paris in the coming weeks and during February half-term. Around 17 million UK citizens visit France in a normal year.

Travel firms have reported a surge in bookings since the announcement of the change in restrictions was announced earlier this week. The head of Britanny Ferries, Christophe Mathieu, told the BBC’s Today programme that bookings on Thursday were double that of Wednesday.

The new rules are:

• upon departure from the UK, all travellers aged 12 and above, whether vaccinated or not, must present proof of a negative PCR or antigen test taken within 24 hours. The UK government says: “You should not use the NHS testing service to get a test in order to facilitate your travel to another country. You should arrange to take a private test from a private coronavirus testing provider. Test results must be certified by a laboratory to be accepted.”
• for vaccinated travellers, a compelling reason for travel will no longer be required to enter France, nor will it be necessary to self-isolate upon arrival. Vaccinated travellers will therefore no longer be required to complete the online “éOS-Passager” form. Screening may take place upon arrival
• for non-vaccinated travellers, travel to or from the UK will only be permitted if proof of a compelling reason for travel to “red list countries” is presented
• prior to departure, non-vaccinated travellers arriving from the UK are still required to complete the online “éOS-Passager Form” on which they must include the address where they will be staying in France
• upon arrival in France, they will be strictly required to quarantine at that address for 10 days (this will be enforced by the police).

All passengers travelling to France may be asked to take a Covid test on arrival. Those testing positive will be required to self-isolate for 10 days.

What about children?

Anyone aged 12 and over entering France must present a negative PCR or antigen test that is less than 24 hours old, including those who are fully vaccinated.

For unvaccinated children under 12, the vaccine status of their parents or accompanying guardian applies.

13 January: French travel rules relaxed ‘from tomorrow’

French officials have taken to twitter this morning to announce changes to the rules for those wishing to travel to France.

Alexandre Holroyd, the French Assembly member for Northern Europe, said the entry rules will be relaxed from Friday 14 January for people who are fully vaccinated.

The requirement for there to be a compelling reason for travel to France from the UK will be removed, and there will be no need to self-isolate on arrival in France.

However, travellers will need to take a Covid test (and produce a negative result) within 24 hours of starting their journey to France.

Those who are unvaccinated will still need a ‘compelling reason’ to travel to France along with a negative test. They will also need to register on France’s digital platform before departure, and quarantine for 10 days on arrival.

More on travel to France can be found here.

12 January: France to reduce border restrictions “very soon”

France looks set to relax its border restrictions, which currently ban travel between the country and the UK unless for compelling reasons.

UK tourists have missed out on ski holidays in the French mountains over Christmas as the ban came into force on 17 December, in response to the wave of Omicron cases in the UK.

However, it looks as if trips to the French slopes may still be possible this winter, including the half-term break in February, which is traditionally popular with families. 

Alexandre Holroyd, the French Assembly member for Northern Europe, who is responsible for French expats living in the UK, informed of upcoming changes to travel rules on his Twitter page on 11 January, saying “considerable reductions” in border restrictions will be announced “very soon”.

11 January: Tenerife raises alert level to ‘Very high risk’ 

Tenerife upgraded its alert level to ‘very high risk’ on Monday after a surge in coronavirus cases. Travellers visiting the largest of the Canary Isles will now be subject to the following ‘level 4’ restrictions:

• Rule of six: you can only meet in groups of up to six indoors and outdoors unless you are from the same household.
• Tables of six: you can only sit with a maximum of five other people at a table.
• Covid passes for entry to establishments: you are required to present either a paper or electronic copy of your Covid pass – NHS COVID Passes are accepted –  at restaurants, hospitality venues, night venues, cinemas and theatres with a capacity of more than 30, events and celebrations with a capacity of more than 500 and at all gyms or similar venues.
• Midnight closing: you are required to leave restaurants and hospitality venues at 0:00am.

The measures are expected to last until at least 20 January.

Entry requirements to Tenerife for UK travellers

Tenerife has the same entry rules as mainland Spain. Currently, only fully-vaccinated travellers are permitted entry.

To travel to Tenerife you must:

• fill in and sign a Health Control Form (online or in paper format) before departure
• on arrival show the QR Code from your Health Control Form
• show proof that you received your full course of your Covid-19 vaccine at least 14 days prior to arrival unless exempt due to your EU citizenship or for another qualifying reason.

Note that you may be subject to additional checks on arrival, from a temperature check to a visual health assessment.

You may also be required to take a Covid test up to 48 hours after arrival. More information can be found on the Spanish government’s website.
Everyone (excluding children under the age of 12 years old) arriving in Tenerife who has visited a ‘risk country’ in the previous 14 days must meet the requirements on the Spanish Ministry of Health Travel and COVID-19 page.

10 January: France allows travel to and from UK for essential work

France has relaxed its border restrictions to allow travel to and from the UK for work purposes that require an on-site presence and which cannot be postponed.

This is the second move made by the French government to make travel between the UK and France easier, after it imposed an entry ban on most UK travellers, including those travelling for work and leisure, on 17 December 2021.

On 30 December, France announced that British citizens living elsewhere in the EU may travel through France to return to their homes from the UK, though only as a temporary measure (see story below).

All other travel restrictions instated on 17 December still apply. More information can be found on the French Interior Ministry website, which has an English language option.

7 January: Pre-Departure Tests No Longer Required To Enter UK If Vaccinated

From today, fully vaccinated travellers heading to the UK no longer need to take a Covid-19 ‘pre-departure’ test before setting off.

Previously, a negative test was required, with those testing positive not being allowed to travel.

The change has triggered a surge in international travel bookings by holidaymakers who no longer have to worry about the prospect of testing positive and thus being marooned abroad and forced into quarantine at their own expense.

First announced on Tuesday for travellers to England, the change has now been adopted by Scotland, Wales and Northern Ireland.

In addition, inbound travellers to the UK will no longer need to self-isolate on their return. They will still be required to take a Covid test on or before day 2 of their arrival in the UK, but from Sunday morning, it will be permissible to take a lateral flow test rather than a more expensive PCR test, again reducing expenditure.

The lateral flow tests must be booked with a private supplier – free NHS tests will not be accepted to reduce strain on domestic supplies.

If the test is positive, a free NHS confirmatory PCR test is required.

The rules for non-vaccinated travellers have not changed, meaning they will be required to take the pre-departure test while still abroad, and on their return enter self-isolation for 10 days, with PCR tests on days 2 and 8.

All travellers, regardless of vaccination status, must continue to complete a Passenger Locator Form ahead of setting off to the UK.

5/6 January: Vaccinated Travellers To UK Escape Pre-Departure Tests From Friday

The UK government announced, on 5 January, a series of changes to the requirements for travellers arriving in England.

These changes have since been adopted by the devolved authorities in Scotland, Wales and Northern Ireland.

Grant Shapps, transport secretary, said: “We’re removing the temporary extra testing measures we introduced last year at the border to slow cases of Omicron coming to the UK. 

“Now that Omicron is the dominant variant and is widespread in the UK, these measures are no longer proportionate.”

From 4am on Friday 7 January, fully vaccinated passengers and under-18s will no longer need to take a pre-departure test before returning to the UK or self-isolate on arrival but must continue to take their post-arrival tests.

Previously, those who returned a positive pre-departure test would not be permitted to travel.

Additionally, from 4am Sunday 9 January, fully vaccinated passengers and over-5s arriving in the UK will now only need to take a lateral flow test, not a PCR test. The lateral flow test must be booked before before travel and taken on or before day 2 of arrival in England.

Lateral flow tests for travel can be booked from Friday 7 January.

Free NHS lateral flow tests cannot be used for international travel to protect NHS capacity. Lateral flow tests for international travel must be purchased from a private provider. Passengers who have already bought a PCR to use for travel do not need to buy another test as PCRs can still be used.

It will not be permissible to use a lateral flow test until after 4am, Sunday 9 January. Before 4am Sunday 9 January, travellers must use a PCR test after arrival.

Mr Shapps said: “If your post-arrival lateral flow test comes out positive, you must self-isolate and take a free NHS PCR test to confirm the result.

“By reducing testing requirements for fully vaccinated passengers to just a lateral flow test post-arrival, we’re supporting the safe reopening of international travel.”

He promised a full review of travel measures by the end of January “to ensure a stable system is in place for 2022”.

Mr Shapps did not mention any change to the rules that apply to those who are not fully vaccinated, so they will still be required to take a pre departure test (and not travel if it is positive), enter quarantine for 10 days on their return and take PCR tests on Day 2 and Day 8.

Germany relaxes entry restrictions for UK travellers

Following changes made earlier this week, Germany is open once again to UK travellers.

This comes little more than two weeks after the UK was classed by Germany as ‘an area of variants of concern’. This resulted in an entry ban on UK travellers due to fears about the rapid spread of the Omicron variant.

The UK’s Covid status has now been downgraded and it is now classed as ‘high risk’, which brings fewer restrictions for fully vaccinated and Covid-recovered travellers. They can travel to Germany for any purpose, without the need to quarantine on arrival.

Travellers who are not fully vaccinated are subject to a 10-day quarantine. However, they have the option for test and release on day five of their arrival to potentially end quarantine early.

All travellers should complete a pre-departure digital registration form. Fully-vaccinated travellers are required to upload proof of their vaccination status to this system.

Anyone over the age of six, fully vaccinated or unvaccinated should provide proof of a negative PCR test taken within 48 hours before departing the UK, whether travelling to Germany via plane, train, bus or ferry.

Children five years of age and under are allowed to enter Germany from the UK without a negative test as long as they are with at least one fully-vaccinated parent. 

However, they will need to quarantine for five days on arrival unless they are visiting a parent or full sibling in Germany and have spent less than 72 hours in a high risk area such as the UK or will spend less than 72 hours in Germany.

France rescinds temporary transit ban for EU-based Brits

The French Interior Ministry has confirmed that British citizens living in the EU are allowed to travel through France to return to their homes from the UK, after much confusion over the Christmas period.

British nationals with residency in EU countries beyond France, including those who took a festive break in the UK, were left unsure whether they could return home after France tightened its entry restrictions in December 2021.

The change, implemented on Friday 17 December, banned most UK travellers from entering France, including those travelling for leisure or work, and prompted the UK Foreign Office to state: “The French government have indicated that UK nationals travelling from the UK who are not resident in France will not be permitted to transit France to return to their country of residence unless they are travelling by air.” 

However, the French Interior Ministry tweeted on 30 December: “Instructions of tolerance have been put in place in order to allow these nationals to transit through France to reach their residence in a country of the European Union, during this Christmas and New Year period.”

Eurotunnel has also updated its site, stating: “Passengers travelling from the UK, with residency permits for other EU countries under the Withdrawal Agreement, can now transit through France to return to their homes. This is subject to their journey to the UK having been completed before 28 December 2021.”

While the Ministry says this new measure will be temporary, it has not yet stated when it will come to an end.

Germany Follows France In Banning Most UK Travellers

From 00.00am local time on Monday 20 December (11pm Sunday 19 December in the UK), Germany will restrict entry from the UK so that only German citizens, those with residency rights and a limited number of exempt individuals will be admitted.

The change follows the imposition of a similar set of restrictions on UK travellers by France on Saturday (see below).

All those travelling to Germany, regardless of vaccination status, will need to show proof of a negative PCR test and all will be required to quarantine for 14 days on arrival.

The move comes after the UK was designated an ‘area of variants of concern’ – a reference to the Omicron variant, which is now established in the UK.

In a statement, the German government said: “Before departure, please be prepared for your carrier (e.g. airline) to require from you an up-to-date PCR test if you spent time in an area of variants of concern at any time in the ten days prior to entry. After your arrival, further PCR testing may be ordered by the health authorities at the airport or at the place of isolation/quarantine.

“Please be aware of the 14-day quarantine requirement, which also applies to vaccinated and recovered individuals. The duration of the 14-day quarantine may not be shortened.”

The current list of designated areas will remain in force until 3 January 2022 but may be extended, and the list can change at any time with minimal notice.

France To Tighten Restrictions On UK Travellers

The French government is tightening the restrictions and requirements for people travelling to France from the UK from Saturday morning at 00.00am local time (11pm, Friday 17 December in the UK). The action is being taken because of the rapid spread of the Omicron variant in the UK.

The French government is reintroducing the need for travellers to have an extenuating reason to travel between the UK and France. The authorities have listed acceptable reasons for travel here. Travelling for leisure or work purposes will be banned.

French citizens, their partners and children and UK citizens with French residency will be permitted to travel, as will EU citizens travelling to their home country through France.

Anyone from the UK who is travelling to another country via transiting in France will only be allowed to stay within the international area of an airport for a maximum of 24 hours.

Those who are able to travel to France from the UK will need to show evidence of a negative test (PCR or lateral flow) at their point of departure, taken within the past 24 hours. This already applies to non-vaccinated travellers.

Additionally, all UK travellers must register where they will be staying online. They will have to quarantine for 48 hours at a place of their choice. They can end quarantine after 48 hours with a negative test (PCR or lateral flow).

This applies to the vaccinated and non-vaccinated.

UK transport secretary Grant Shapps has tweeted that hauliers will be exempt from the requirements.

The rules change has been greeted with dismay by the travel industry. Mark Tanzer, chief executive of the Association of British Travel Agents, said: “This will come as a hammer blow to the winter travel industry, which is already under extreme pressure following the new Omicron restrictions. The winter sports and school travel markets are particularly exposed, and the government must now bring forward a support package if we are not to see company failures and job losses. 

“The travel and tourism sector has had little chance to generate income since early 2020 and is now faced with another wave of cancellations.

“Travel businesses have reported turnover at just 22% of pre-pandemic levels following two years of government-imposed restrictions, and consumer confidence in overseas travel has been hit hard. Any government review of business support to address the impacts of Omicron must include as a priority travel agents and tour operators.”

15 December: All Countries Removed From Red List

The government removed all 11 countries from its travel Red List from 4am today, Wednesday 15 December. Anyone arriving in England from these countries will no longer be required to book and stay in a government-managed quarantine facility at their own expense.

The devolved nations generally adopt the same procedures at the UK government.

The 11 countries concerned are Nigeria, South Africa, Botswana, Lesotho, Eswatini, Zimbabwe, Namibia, Malawi, Mozambique, Zambia, and Angola.

The UK government has concluded that, now there is community transmission of the Omicron variant in the UK and Omicron has spread so widely across the world, the travel Red List is now less effective in slowing the incursion of Omicron from abroad.

The government is to retain its temporary testing measures for international travel, meaning all travellers must present a negative test before travelling to the UK, complete a Passenger Locator Form and take a PCR test on or before day 2 after they arrive.

Non-vaccinated travellers must additionally take a PCR test on or before day 8 and self isolate for 10 days at home or another address,

Grant Shapps, transport secretary, has stressed that the Red list, although empty from tomorrow, will remain in place: “We keep all our travel measures under review and we may impose new restrictions should there be a need to do so to protect public health.”

On the question about what happens to those already in a government quarantine facility, the government has said anyone who has tested positive will need to continue to stay in managed quarantine.

It is “working urgently” to make arrangements for individuals to be released early release from managed quarantine. It said: “We will set out further guidance for the affected individuals imminently.

“Passengers who booked a hotel room in managed quarantine for after 4am Wednesday 15 December are entitled for a full refund and should contact their hotel operator or booking operator.”

14 December: UK Extends Covid Pass To 12-15 Year-Olds “To Give Parents Confidence To Book Holidays”

Children in England aged 12 to 15 are now able to demonstrate their coronavirus vaccination status for international travel purposes using the NHS Covid Pass. 

Speaking in the House of Commons on 13 December, Sajid Javid, health secretary, said: “From today, I can confirm the NHS Covid pass is being rolled out to 12-15 year olds for international travel, allowing even more people to be able to prove their vaccine status for travel where it’s needed.”

He later added: “This will give parents confidence in booking holidays in the future thanks to our fantastic vaccination programme. Parents can be reassured they will be able to evidence their child’s vaccination status once they have had both doses of the vaccine.”

Children remain exempt from certification in domestic settings in England and at the UK border.

The Pass will allow those children who have had both doses of an approved vaccine to travel to countries, including Spain and Canada, which require 12-15 year olds to be fully vaccinated to gain entry, avoid isolation, or access venues or services.

Proof of vaccination will initially be provided via a letter that will include an internationally-recognised barcode. A digital service via NHS.uk is promised for early next year. The letter service can be accessed by calling 119 or via NHS.uk, with applicants told to expect a delivery period of seven days.

England’s vaccination programme is being extended to offer all children aged 12-15 a second dose of an approved vaccine no sooner than 12 weeks after the first dose. The government decided in November to accept advice from the Joint Committee on Vaccination and Immunisation to extend the vaccination programme to those aged 12 and above.

Accelerated roll-out

Mr Javid also provided details of the expanded and accelerated booster roll-out in England first announced by the Prime Minister, Boris Johnson, on Sunday evening. Over the weekend, the UK’s Covid Alert was raised to 4, its second-highest level, and NHS England has announced it will return to Level 4 National Incident, its highest level of emergency preparedness.

According to Mr Javid, no variant of COVID-19 has spread as fast as the Omicron variant. He said there are 4,713 confirmed cases of Omicron in the UK, with the UK Health Security Agency estimating that the current number of daily infections are around 200,000.

He added: “We can expect those numbers to dramatically increase in the days and weeks that lie ahead.”

The booster programme in England will see every adult who has had a second dose of the vaccine at least three months ago offered the chance to get their booster before the end of December, either at a walk-in centre or via a booking on the NHS website.

Anyone over 18 can walk in to a vaccination centre and from Wednesday, they can book online via the NHS website.

Mr Javid said the UK government will provide whatever support is needed to accelerate vaccinations in Scotland, Wales and Northern Ireland. The Welsh government has pledged to offer the booster to all citizens in Wales by the year end.

Plan B vote

On Tuesday, Parliament will vote on the introduction of Plan B in England. This would mean that, in addition to working from home where possible and wearing face-masks in shops, hairdressers, beauty salons, cinemas and theatres, it would be mandatory to show a negative lateral flow test to get into nightclubs and large events, with an exemption for the double vaccinated.

Mr Javid said: “Once all adults have had a reasonable chance to get their booster jab, we intend to change this exemption to require a booster dose.”

This change would come into effect on Wednesday if the government succeeds in winning the vote. It is expected to do so despite a rebellion among as many as 70 of its own MPs because opposition parties have vowed to back the new laws.

There have also been suggestions that the government will in the coming days relax rules affecting those travelling into the UK so that, for example, they would not be required to quarantine in a government-approved facility for 10 days on return from a Red list country.

Speculation also surrounds the future of the Red list itself given that omicron is prevalent around the world.

10 December: Heathrow Boss Pleads For Removal Of Restrictions

The boss of London Heathrow airport is calling on the government to remove international travel requirements and restrictions to encourage people to fly.

John Holland-Kaye, Heathrow’s CEO, said the requirement for those travelling to the UK to take a Covid test before departure, introduced on Tuesday, has already affected traffic levels: “We’re seeing a high level of cancellations by business travellers concerned about being trapped overseas because of pre-departure testing. This shows the potential harm to the economy of travel restrictions.”

Travellers must present proof of a negative PCR or lateral flow test taken in the 48 hours before departure before being allowed to board their flight to the UK. This applies to all aged 12 or above, regardless of vaccination status.

Mr Holland-Kaye said the new travel restrictions have further dampened passenger confidence, with demand for flights out of the airport down by 60% on pre-pandemic levels. This is despite the boost provided by the reopening of routes to the US on 8 November.

He also wants to see the government allow UK nationals from red list countries to isolate at home, rather than in a government-approved quarantine facility: “By allowing Brits to isolate at home, ministers can make sure they are reunited with their loved ones this Christmas.

“It would send a strong signal that restrictions on travel will be removed as soon as safely possible to give passengers the confidence to book for 2022. Let’s reunite families for Christmas.”

At a press conference on Wednesday, Prime Minister Boris Johnson said the way the Red list operates would be reviewed in the coming days, but he did not say when (see story below). At present there are 11 countries in southern Africa on the list, with Nigeria the latest to be added on Monday.

Heathrow is forecasting a slow start to 2022 and says it expects to see 45 million passengers in the year as a whole – just over half of the airport’s pre-pandemic levels. The Civil Aviation Authority and the airlines’ international trade body, IATA, have predicted that global passenger numbers in 2022 will be about 60% of 2019 levels.

Mr Holland-Kaye said: “We do not expect that international travel will recover to 2019 levels until at least all travel restrictions, including testing, are removed from all the markets that we serve, at both ends of the route, and there is no risk of new restrictions, such as quarantine, being imposed. This is likely to be several years away.”

8 December: PM Johnson Suggests Review Of Red List Protocols

At a press conference on Wednesday evening, Prime Minister Boris Johnson said the UK government may review its Red list procedures because of concerns about the costs borne by fully-vaccinated travellers coming to the UK of obligatory quarantine in government-approved hotels at their own expense.

Rachel, a member of the public from Essex, asked Mr Johnson: “Why can’t fully-vaccinated British travellers stuck in Red list countries self-isolate at home when they return instead of a hotel? Quarantine hotels are too expensive, especially as (recent changes to the Red list) were implemented at short notice, not giving travellers a chance to get home.”

At the moment, only UK and Irish citizens and residents are allowed to enter the UK from a Red list country. The cost of a mandatory stay at a government-sanctioned facility for the required period is:

• 10 days (11 nights) for one adult: £2,285
• Additional adult (or child over 11): £1,430
• Children aged five to 11 £325.

The Prime Minister responded by saying this was a fair challenge, especially given the spread of the Omicron variant worldwide, not just in Red list countries: “We will be looking at the Red list and the way we do it. But it’s been important in our response to Omicron to have very tough border measures to slow the arrival of the variant in this country. That is the objective of the (Red list) measures.”

The current Red list has 11 countries: Nigeria, South Africa, Botswana, Lesotho, Eswatini, Zimbabwe, Namibia, Malawi, Mozambique, Zambia, and Angola.

Also at the press conference, Mr Johnson announced that, from Monday 13 December, people in England will be encouraged to work from home if at all possible.

He also said masks will be required in England in indoor public venues such as theatres and cinemas from Friday 10 December, while nightclubs and other venues with large numbers of attendees in England will only be open to those able to show proof of vaccination via their NHS Covid pass, or evidence of a negative test result, as of Wednesday next week.

7 December: Negative UK Entry Tests Needed From Today

All travellers entering the UK aged 12 and above are now required to show a negative PCR or lateral flow test before setting off on their journey. This applies regardless of the individual’s vaccination status, with tests having to be taken within 48 hours of departure.

Airlines, ferry operators and train companies have been told not to allow anyone to travel without a test or with a positive result. 

Sajid Javid, health and social care secretary, told the House of Commons last night that the government is concerned about the spread of the Omicron variant in the UK and around the world: “We don’t yet have a complete picture of whether Omicron causes more severe disease or how it interacts with the vaccine, and so we can’t say for certain whether Omicron has the potential to knock us off our road to recovery.

“We’re leaving nothing to chance. Our strategy is to buy ourselves time and strengthen our defences while our scientists assess this new variant and what it means for our fight against COVID-19.”

In addition to the tougher pre-departure testing rules in place from 04.00am this morning, the government added Nigeria to the travel Red list from yesterday (Monday). This means UK and Irish citizens/residents from there and 10 other countries in southern Africa will need to enter quarantine in a managed government facility for 10 days/11 nights on entering the UK, at their own expense.

Anyone who’s not a UK or Irish citizen or resident who’s been in Nigeria for the previous 10 days, will be refused entry.

Mr Javid said the government is “ramping up capacity as quickly as possible” to provide the required accommodation: “We’ve already brought several new hotels on board in the past few days and we expect to double the number of rooms that are available this week.”

Talking about the new pre-departure test requirement, Mr Javid acknowledged that they would bring disruption and affect people’s plans to spend time with their loved ones over the festive period: “But we’re taking early action now so we don’t have to take tougher action later on and so we can take every opportunity to prevent more cases from arriving in our country.”

He stressed the new measures are temporary and said he would provide further updates next week.

5 December: UK To Require Tests Before Inbound Travel, Adds Nigeria To Red List

From 4am on Tuesday 7 December, anyone wishing to travel/return to the UK from countries and territories not on the Government’s Red list must show proof of a negative PCR or lateral flow (LFD) pre-departure test, taken up to 48 hours before departure.

This new rule, brought in because of concerns about the spread of the Omicron variant, applies to all travellers aged 12 and above, regardless of their vaccination status.

Passengers will not be allowed to board a flight without providing evidence of a negative test result. Airlines will be required to check for pre-departure tests alongside a completed passenger locator form.

Scientists have told the government that Omicron has a reduced incubation period, meaning anyone who is infected will become infectious sooner. Passengers are advised to take the pre-departure test as close as possible to their scheduled departure to the UK and no earlier than 48 hours before travelling.

These are described as temporary measures to be reviewed on 20 December.

Those arriving from Red list countries are required to enter managed quarantine for 10 days/11 nights and undergo testing on days two and eight.

Nigeria has been added to the Red list, meaning that, from Monday 6 December at 4am, UK and Irish citizens and residents arriving from Nigeria must isolate in a government-approved facility for 10 days.

Non-UK and non-Irish citizens and residents who have been in Nigeria in the last 10 days will be refused entry into the UK. This does not apply to those who have stayed airside and only transited through Nigeria while changing flights.

Last weekend, 10 countries in southern Africa were added to the Red list (see below) and it was announced that all vaccinated passengers arriving in the UK must take a day two PCR test and self-isolate until they receive a negative result.

4 December: Switzerland Removes All Countries From Covid Watch-List

The Swiss authorities have announced that, from 4 December, there are no countries on its list of countries with a variant of concern. This means the quarantine requirement for people arriving in Switzerland from countries on the list no longer applies.

All those travelling to Switzerland must complete an entry form.

Those wishing to enter Switzerland will need to produce a negative PCR test result obtained within 72 hours of travel before they depart – travel will not be permitted otherwise. A negative test result will also be required on entry to the country, with a further PCR test or rapid antigen test to be taken between the 4th and 7th day after entry.

The test result, either positive or negative, and the number of the entry form or a copy of the contact card must be notified to the relevant canton.

These testing rules apply to all travellers, whatever their vaccination status, and regardless of whether they have recovered from coronavirus.

Travellers are also liable for all the costs associated with testing.

US To Require Negative Tests From Monday

The US Centers for Disease Control and Prevention has announced the following:

“All air passengers 2 years or older with a flight departing to the US from a foreign country at or after 12:01am EST (5:01am GMT) on December 6, 2021, are required show a negative COVID-19 viral test result taken no more than 1 day before travel, or documentation of having recovered from COVID-19 in the past 90 days, before they board their flight.”

Air passengers will also be required to confirm in the form of an attestation that the information they present is true.

If your test is positive, you will not be allowed to travel to the US. The CDC says that, if you return a positive test result: “You should self-isolate and delay your travel if you develop symptoms or your pre-departure test result is positive until you have recovered from COVID-19. Airlines must refuse to board anyone who does not present a negative test result for COVID-19 or documentation of recovery.”

See entry below for 8 November for additional information about travel to the US from the UK.

France To Require Negative Tests From Saturday

The French authorities have announced that, from Saturday 4 of December, fully vaccinated travellers from the UK (12 years or older), and whatever their nationality, will have to provide the result of a negative PCR or antigen test (in paper or digital format) carried out less than 48h hours prior to departure. 

Self-administered tests, including NHS tests, are not considered valid for travel, so a private contractor must be used.

Prior to departure, fully vaccinated travellers entering France from the UK will need to present to their transport company:

• the result of a negative PCR or antigen test (in paper or digital format) carried out less than 48h hours prior to departure. This extends to those aged 12 and above.
• A sworn statement certifying the absence of COVID-19 symptoms and of any contact with a confirmed case of COVID-19 in the 14 days prior to their crossing.
• Proof of vaccination.

If you are travelling with a printed PDF proof of vaccination status, it must date from 1 November to ensure the certificate can be scanned successfully. NHS appointment cards from vaccination centres are not intended to be used as proof of vaccination and should not be used to demonstrate vaccine status in this circumstance.

People vaccinated in the UK can import their NHS QR code into the TousAntiCovid app. You can also present a digital or paper NHS certificate showing your full vaccine status.

Travellers who are not vaccinated, must give a compelling reason to be allowed to enter France (such as being a French resident. Those with second homes in France will not be admitted).

Unvaccinated travellers must also provide:

• If they are 12 years old or more, and whatever their nationality, the result of a negative PCR or antigen test (in paper or digital format) carried out less than 24 hours prior to departure. Self-administered tests are not considered valid for travel.
• A sworn statement certifying the absence of COVID-19 symptoms and of any contact with a confirmed case of COVID-19 in the 14 days prior to their crossing.
• A sworn undertaking to take an antigen test or biological examination on arrival in France.
• A sworn undertaking to self-isolate for seven days on arrival in France, and then to take a second PCR test at the end of that self-isolation period.

Travellers from Northern Ireland (whatever their nationality) entering France via the Republic of Ireland must abide by the rules applicable to the UK.

Norway Testing All Travellers At Border

Norway has introduced stricter test requirements at its border in a bid to delay and limit the spread of the new Omicron virus variant. 

From today, 3 December, any person who arrives in Norway must take a test, regardless of their vaccination status.

Ingvild Kjerkol, health minister, said: “The infection rate in Norway is serious. We need to implement stricter measures to delay the spread of the Omicron variant. We are doing this to keep control, obtain more knowledge about the new virus variant, and to prevent the health service from becoming overwhelmed.”

Where there is a test centre at the border crossing point, the test must be taken there or at a place indicated by the authorities for testing. If there is no test centre at the border crossing point when the traveller crosses the border, the test must be taken within 24 hours of arrival.

When this is the case, the traveller will be free to choose between taking a rapid antigen test at a public test centre or a rapid antigen test as a self-test. If the rapid antigen test returns a positive result, regardless of whether it was taken at a test centre or as a self-test, the person will have a statutory duty to take a PCR test as soon as possible, and no later than within 24 hours. 

The requirement also applies to people who are fully vaccinated and people who have recovered from COVID-19. 

Those testing positive will need to self-isolate for 10 days.

Arriving travellers over the age of 12 must wear a face covering in public areas where it is not possible to avoid close contact until they have received a negative test result.

The prior special exemption from the requirement to take a test upon arrival in Norway for cross-border commuters, aeronautical personnel and hauliers, among others, will be kept.

The tightened measures will be reviewed in 2 weeks. You can find out more on the Norwegian government website.

Portugal Tightens Entry Rules, Requires Negative Test 

The Portuguese authorities have responded to the emergence of the Omnicron coronavirus variant by declaring a State of Calamity on the Portuguese mainland from 1 December 2021. There is now a requirement for a negative COVID-19 test to enter Portugal.

Travellers to mainland Portugal are required to complete an online passenger locator card and be prepared to show a negative COVID-19 test result certificate (except children aged 11 or under).

Your test certificate should meet the following criteria:

• an antigen test taken within 48 hours of departure, or a RT-PCR test taken within 72 hours of departure. If you have an antigen test, make sure it meets the standards set out in the EU common list of Rapid Antigen Tests
• check your test result identifies the type of test taken and gives your name, date of birth, the date and time the sample was collected and the date of the result
• you should not use the NHS testing service to get a test in order to facilitate your travel to another country. You should arrange to take a private test. 
• Here is a government list of approved PCR test providers. Prices start at around £40 – £50 per test.

Your airline may deny boarding if you cannot show one of these documents when you check-in for your flight. Check with your airline before you travel.

On arrival in mainland Portugal

You will be subject to health screening on arrival. If your temperature is 38ºC or over or you show signs of being unwell, you may be required to take a COVID-19 test and remain at the airport until you receive your test result.

You should be ready to show your COVID-19 vaccination certificate or negative COVID-19 test at border control, if requested.

Those who have travelled from or transited through any of the following countries in the 14 days prior to arrival in Portugal will have to self-isolate for 14 days: South Africa, Botswana, Eswatini (former Swaziland), Lesotho, Namibia, Zimbabwe or Mozambique.

If you attempt to enter mainland Portugal and you do not have a negative COVID test result, you may be made to pay for a test at your own expense at the airport, and additionally pay a fine of between €300-800 (£250 – £680). 

If the result is positive, you may be returned to your country of origin or made to quarantine for 14 days at your own accommodation or at a place indicated by the Portuguese health authority.

The rules on quarantining apply to passengers arriving by air, road, rail or sea.

1 December: Ireland To Introduce Negative Test Requirement For All Travellers

The Irish government has announced that, from Sunday 5 December 2021, all arrivals aged 12 and over who are fully vaccinated or recovered from COVID-19 must provide either of the following:

• A negative or not detected antigen test (taken within 48 hours before arrival)
• A negative or not detected RT-PCR test (taken within 72 hours before arrival).

The test result must be certified and not self-administered.

Those who are not fully vaccinated or recovered must show a negative or not detected RT-PCR test taken within 72 hours before their arrival.

Previously, Ireland did not require travellers with documentary evidence of full vaccination or recovery from infection to produce negative test results. The new requirement extends to UK citizens.

Everyone arriving in Ireland must complete a Passenger Locator Form before boarding a flight or taking a boat to Ireland. Travellers must also have one of the following when they arrive in Ireland:

• An EU Digital COVID Certificate that shows you are fully vaccinated with an EMA approved vaccine, or have recovered from COVID-19 in the past 180 days
• Other acceptable proof that you have been fully vaccinated with an approved vaccine, or you have recovered from COVID-19
• Proof of a negative RT-PCR test taken no more than 72 hours before your arrival.

1 December: Red List Now 10 Countries, Day 2 PCR Tests For All, Spain Bars Unvaxed

The UK government’s coronavirus Red list now has 10 countries: South Africa, Botswana, Lesotho, Eswatini, Zimbabwe and Namibia, which were added to the list on Thursday 25 November, and Malawi, Mozambique, Zambia and Angola – which were added on Saturday 27 November.

The Foreign & Commonwealth Development Office is advising against all but essential travel to the countries on the Red list. Anyone who travels against such advice is likely to invalidate their travel insurance.

Non-UK residents will not be allowed to enter the country if they have previously been in the listed countries in the past 10 days.

UK and Irish residents returning to the UK from Red list countries are required to stay in government-approved quarantine accommodation at their own expense for 10 days/11 nights.

The cost of stays in a quarantine ‘hotel’ is:

• 10 days (11 nights) for one adult: £2,285
• Additional adult (or child over 11): £1,430
• Children aged five to 11 £325.

Other measures are in force from 4am on Tuesday 30 November:

• all international arrivals must self-isolate until they receive a negative result from a PCR test taken before or on Day 2 of their return, regardless of their vaccination status. A negative result brings the requirement to self-isolate to an end. A positive results brings a requirement to self-isolate for 10 days. Tests should be booked prior to return to the UK, with the confirmation code included on your Passenger Locator For. you can go here for a list of approved providers.
• all contacts of suspected Omicron cases must self-isolate, regardless of their vaccination status. They will be contacted by NHS Test and Trace.
• face coverings are compulsory in England in shops, banks, post offices and other premises such as hairdressers and salons, as well as on public transport, bringing England nearer to the rules already in force in Wales and to those in Scotland and Northern Ireland, where it is a requirement to wear a mask in pubs and restaurants unless seated. Hospitality settings in England and Wales are exempt from the requirement.

• The Spanish government has announced that, from 1 December, tourist arrivals to Spain from the UK (excluding children under the age of 12 years old) must present proof of vaccination. Previously, all that was required was proof of a negative test and the completion of a passenger locator form. The move does not affect UK citizens with residency rights in Spain, of whom there are an estimated 300,000.
• Switzerland has also said that UK citizens must have proof of vaccination and proof of a negative COVID-19 test result, which can be a PCR or antigen test, to enter the country. On entry, you must also self-quarantine for 10 days. Those arriving from UK who wish to transit to another country will need to self-quarantine in Switzerland for 10 days.
• Israel has introduced a ban foreign travellers from entering the country from midnight on Sunday 28 November due to Omicron fears. The ban is due to last 14 days.
• Japan has announced that, from 30 November 2021, foreign nationals (including British nationals) who do not have existing resident status are not permitted to enter Japan for any purpose, other than in exceptional circumstances, even if they hold a visa. The ‘exceptional circumstances’ are when someone is deemed to be contributing to the public good or has humanitarian reasons for visiting the country. More information is available on Japan’s Ministry of Foreign Affairs website.

You can visit the government travel advice website for further information.

25 November: Red List Back In Spotlight As Six Countries Added

The UK government’s red list of countries deemed high risk because of Covid-19 has risen from zero to six with the addition of South Africa, Botswana, Lesotho, Eswatini, Zimbabwe and Namibia from noon on Friday 26 November.

The emergence of the recently identified Omicron variant of the coronavirus has prompted drastic action.

British nationals arriving from the six named countries between mid-day today, Friday 26 November and 4am on Sunday 28 November who have been in these countries within the last 10 days must quarantine at home for 10 days and take NHS PCR tests on Day 2 and Day 8, even if they already have a lateral flow test booking.

Passengers arriving from these countries in England from 4am on Sunday 28 November who have been in these countries within the last 10 days will be required to book and pay for a government-approved hotel quarantine facility for 10 days (see stories below for costs).

They must also take NHS PCR tests on Day 2 and Day 8 of their return, even if they already have a lateral flow test booking.

Direct flights from the six countries will be banned from mid-day on Friday 26 November until sufficient hotel quarantine accommodation is available from 4am Sunday 28 November. The number of quarantine hotel places was reduced earlier this month when the number of countries on the red list of countries was reduced to zero.

From mid-day on Friday 26 November, non-UK and Irish residents who have been in these countries in the previous 10 days will be refused entry into England. This does not apply to those who have stayed airside and only transited through any of these countries while changing flights.

A temporary ban on commercial and private planes travelling from the six countries will also come into force at mid-day on Friday until 4am on Sunday to reduce the risk of importing the new variant under investigation while hotel quarantine is brought up to the required capacity. This excludes cargo and freight without passengers.

The UK government says the additions to the red list are a precautionary move following the designation of a new coronavirus variant which is under investigation by the UK Health Security Agency (UKHSA).

In a tweet on Thursday 25 November, British Airways said: “We are aware of news from the Government about a ban on UK flights to South Africa. We will be contacting affected customers and colleagues in and will update our website with the latest information.”

Anyone with flights booked to or from the Red list countries should contact their airline or tour operator for information on what will happen to their arrangements. You should wait for the airline to cancel the flight rather than cancel it yourself.

If the airline cancels a flight it is required to refund the purchase price or offer you are replacement flight. You do not have to accept vouchers. If the flight goes ahead as scheduled but you do not wish to travel, you will have to discuss your options with the airline.

If you have travel insurance you should check the policy document to see what cover is provided in relation to claims arising out of Covid-19. If you are already in one of the countries listed, you may be able to claim for out-of-pocket expenses incurred because you are obliged to stay for longer than planned.

However, because the Foreign & Commonwealth Development Office (FCDO) is warning against all but essential travel to these six nations, you are unlikely to be able to claim for the cost of cancellation of future arrangements as most policies specifically exclude this scenario.

Additionally, if you travel to a country against FCDO advice, your policy will likely be rendered invalid and you will not be able to claim for any other reason.

If you have bookings for accommodation or other services, such as hire car, you will need to contact them for information about their cancellation policies.

25 November: New Zealand To Open Borders In Stages Next Year

New Zealand has given details of its next steps for reopening its borders to fully Covid-19 vaccinated tourists and more of its citizens abroad next year.

From 11.59pm on 30 April 2022, New Zealand will open its borders to fully-vaccinated foreign nationals, including Brits. The exact date Brits will be able to enter the country is yet to be confirmed as the re-opening will be phased, possibly by visa category.

The current requirement to enter managed isolation and quarantine will be removed in stages for most travellers but even after 30 April, they will still be required to:

• take a pre-departure test before travelling to New Zealand
• show proof of being fully vaccinated
• make a passenger declaration about travel history
• take a test on arrival
• self-isolate for seven days
• take a final negative test before entering the community.

The move to allow entry to vaccinated tourists will follow:

• the reopening of the borders to fully-vaccinated New Zealand citizens and eligible travellers who have been in either Australia or New Zealand in the previous 14 days from 11.59pm on 16 January 2022
• the reopening of the borders to fully-vaccinated New Zealand citizens and eligible travellers from territories except those classified as ‘very high risk’ from 11.59pm on 16 January 2022.

New Zealand will remove the ‘very high risk’ category from Brazil, Fiji, India, Indonesia and Pakistan in December 2021. Papua New Guinea will remain on the ‘very high risk’ list.

Eligible travellers include:

• New Zealand permanent residents or resident visa holders
• Australian citizens or permanent residence visa holders where New Zealand is your primary place of established residence
• holders of a critical purpose visa.

New Zealand citizens will not need to enter managed isolation and quarantine (MIQ) but will be required to self-isolate for seven days.

Critical purpose reasons to travel include if a traveller is the partner of a New Zealand citizen or resident and is an Australian citizen or permanent resident.

Currently, travellers are not allowed into the country, except under exceptional circumstances.

The stringent entry restrictions on New Zealand’s borders were put in place in March 2020 to curb the spread of Covid-19. It has reported relatively few cases of Covid-19 since the start of the pandemic. According to the World Health Organisation (WHO), there have been 10,241 cases of Covid-19 in the country and 40 deaths due to the virus.

You can visit the New Zealand government website for more information.

22 November: Australia To Ease Travel Restrictions From December

Restrictions on travel to Australia will be eased next month, meaning some Brits will be able to visit the country for the first time since March 2020.

From Wednesday 1 December, Australia will relax the restrictions on its borders, allowing eligible visa-holders who are skilled workers, students, humanitarians, those on working holidays and provisional visa holders to enter the country.

Can I travel to Australia?

From next week, travellers in the above categories will be able to enter Australia if they:

• are fully-vaccinated with a vaccine approved or recognised by Australia’s Therapeutic Goods Administration (TGA)
• hold a valid visa for one of the eligible subclasses
• provide  proof of their vaccination status
• take a Covid-19 Polymerase Chain Reaction (PCR) test within 72 hours of their departure.

Travellers will also need to ensure they comply with the quarantine requirements in their destination state or territory.

Quarantine-free travel

Australia will also relax its quarantine restrictions for more travellers on 1 December.

Fully-vaccinated tourists from Japan and the Republic of Korea who hold a valid Australian visa will be able to travel to the country, without the need to seek a travel exemption or quarantine.

They will join tourists from New Zealand and Singapore, who have been travelling quarantine-free to Australia since 1 November and 21 November respectively.

Next month’s changes also follow moves on 1 November, which saw fully-vaccinated Australians, permanent residents and their family members allowed to re-enter the country.

19 November: New Destinations Unlocked For Triple-Jabbed

Triple-jabbed travellers will be able to visit more countries following an update to the NHS app today, 19 November.

The NHS COVID Pass can now be used to demonstrate that you’ve had your third ‘booster’ dose of the Covid-19 vaccine, opening up the possibility of travel to countries such as Israel, Croatia and Austria that insist visitors are more recently vaccinated.

Croatia, for example, asks visitors for proof of vaccination within the last 365 days. For UK travellers fully vaccinated more than a year ago, this made travel to the country impossible. With the addition of booster jab records to the NHS app, however, travellers will now be able to meet Croatia and other countries’ requirements.

Booster jabs will show in the digital COVID Pass automatically from midday today for people in England and from 29 November for people in Wales.

The UK has delivered more than 13 million booster jabs to eligible, double-jabbed people so far, and the government is now moving forward with booster jabs for those aged 40-49-years-old.

Sajid Javid, health and social care secretary, said: “This update to the NHS COVID Pass will mean people can have their complete medical picture at their fingertips if they are going on holiday or seeing loved ones overseas.”
Many countries also ask for recent negative PCR tests along with proof of vaccination status. You can check specific countries’ requirements on the government’s travel advice pages.

You can find out more about the NHS app here, including how to download it.

18 November: Red List Review – No Countries Added, List Remains Empty

In a tweet posted today, Grant Shapps MP, secretary of state for transport, said that the government has reviewed its Red List of locations deemed at high risk of Covid-19 transmission and decided not to add any countries or territories to the list.

On 1 November, the number of countries on the Red List fell to zero, but the list is reviewed regularly, and the government says countries will be added if necessary.

Mr Shapps’ tweet added: “We will continue to keep all measures under review.”

Travellers arriving in the UK from a red list country face the severest restrictions, including the requirement to stay in a government-approved quarantine hotel, at their own expense, for 10 nights (see stories below for details). This applies even to those who are vaccinated against coronavirus.

As of Monday 22 November, over 30 countries will be added to the government’s inbound vaccination policy, meaning travellers with approved vaccines from those countries will be on the same footing at those with domestic NHS vaccinations.

9 November: Vaccines list to widen, under-18s travel rules to ease

The UK government has announced that, from 4am on Monday 22 November, it will recognise vaccines on the World Health Organization’s Emergency Use Listing (WHO EUL). 

The move means the Sinovac, Sinopharm Beijing and Covaxin vaccines will be added to its list of approved vaccines for inbound travel to the UK. The government says this will be of particular benefit to people travelling from countries such as the United Arab Emirates, Malaysia and India. 

The approved vaccines list currently includes Pfizer BioNTech, Oxford AstraZeneca (including Covishield), Moderna and Janssen (J&J).

The US, which reopened its borders to fully-vaccinated, negative-tested air passengers yesterday (see story below) also recognises the vaccines on the WHO EU listing for inbound travel, as do other countries such as Spain, Sweden, Switzerland and Iceland.

Passengers arriving in the UK who have been fully vaccinated and have received their vaccine certificate from one of over 135 approved countries and territories are no longer required to take a pre-departure test, a day 8 test or self-isolate upon arrival. 

The only remaining requirement is that they will need to take a pre-booked lateral flow test from an approved provider before the end of Day 2 of their arrival. Standard NHS tests are not accepted for this purpose. If this test is positive, they will be offered a free confirmatory PCR test.

Additionally, the UK government has said that, from 22 November, all under-18s travelling to England will be treated as fully vaccinated at the border and will be exempt from self-isolation requirements on arrival, day 8 testing and pre-departure testing. They will only be required to take a post-arrival test and a confirmatory free PCR test if they test positive.

Public health across the UK is a devolved matter, but the UK government works closely with the devolved administrations in Scotland, Wales and Northern Ireland on any changes to international travel and aims to ensure a whole UK approach.

For details of any different rules in the other UK nations, see the links below:

• if you’re travelling to Scotland
• if you’re travelling to Wales
• if you’re travelling to Northern Ireland.

8 November: US welcomes fully-vaxed UK fliers from today

Air travel to the United States from the UK and over 30 other countries is permissible from today following the lifting of the 600-day ban on the majority of international arrivals, imposed by former President Trump in a bid to reduce the impact of coronavirus.

Travellers aged 18 and over must, with only limited exceptions, be fully vaccinated and must have evidence either of a negative Covid-19 test taken in the days before their flight or of recovery from Covid-19.

Evidence of vaccination includes the NHS COVID Pass and the EU Digital COVID Certificate.

A period of 14 days must have passed since the last dose of vaccine was administered. For example, if your last dose was any time on 1 November, then 15 November. would be the first day that you meet the 14-day requirement.

Travellers are also being urged to take a further test after they arrive in the US, between days three and five of their arrival.

In addition, travellers must wear a mask over their nose and mouth while on a plane and inside US airports.

In terms of testing, the US Centers for Disease Control & Prevention said: “Effective November 8, 2021 at 12:01am EST (5:01am GMT), before boarding a flight to the US from a foreign country, all air passengers – 2 years or older – are required to present a negative COVID-19 viral test result, within a time period based on their vaccination status (see table below), or present documentation of having recovered from COVID-19 in the last 90 days.”

Fully-vaccinated travellers can submit a negative test taken within three days of their flight, while unvaccinated travellers must take their test within one day of travelling.

Lateral flow viral tests and PCR tests are both deemed acceptable.

Airlines must refuse to board anyone who does not present a negative test result for COVID-19 or documentation of recovery.

1 November: UK government suspends red list from today

The remaining seven countries on the UK government’s red list of high-risk coronavirus nations and territories – Colombia, Dominican Republic, Ecuador, Haiti, Panama, Peru and Venezuela – were removed from the list today, Monday 1 November, at 4am.

However, the red list system itself has not been abolished. Grant Shapps, transport secretary, confirmed on Friday that it can be reinstated at any point if a country’s Covid situation warrants it: “We will keep the red list category in place as a precautionary measure to protect public health and we are prepared to add countries and territories back if needed, as the UK’s first line of defence (against coronavirus).”

The red list will now be reviewed every three weeks.

The suspension of the list means at least some of the government’s network of approved quarantine hotels will remain on standby in case travellers are required to enter strict isolation at some point.

When a country is on the red list, returning travellers are required to stay in such a facility, at their own expense, for 10 days/11 nights (see story below for costs).

Also from Monday 1 November, over 30 new countries and territories, including Argentina, Tanzania, Cambodia, Peru and Uganda, have been added to the UK government’s inbound vaccination policy, which means travellers with approved vaccines from those countries are now on the same footing at those with domestic NHS vaccinations.

This move brings the total number of countries on this list to over 135. You can find the full list here, along with examples of the proof you can provide to show you have been fully-vaccinated with an approved vaccine.

Fully-vaccinated travellers arriving in the UK are not required to self-isolate and must only take a Covid test on or before Day 2 of their arrival. From yesterday, travellers arriving into Scotland, Wales and Northern Ireland are able to use a pre-booked lateral flow test on Day 2 – this became possible for travellers to England on 24 October.

Lateral flow tests cost upwards of around £20, with PCR tests costing up to three times that amount. Anyone testing positive on Day 2 will be offered a free confirmatory NHS PCR test.

Non-vaccinated travellers aged 18 and over must take a PCR test in the 72 hours before travelling to the UK and must self-isolate on arrival for 10 days, taking further PCR tests on Day 2 and Day 8.

29 October: Rumours suggest UK government will suspend red list

Several news outlets including the BBC are suggesting the UK government will remove the final seven countries from its red list of destinations later today, probably to take effect from Monday 1 November.

Earlier this month, 47 countries were removed from the list, leaving only Colombia, Dominican Republic, Ecuador, Haiti, Panama, Peru and Venezuela still deemed to be unsafe because of rates of coronavirus (see stories below).

The current rules means that anyone returning from a red list country must stay in a government-approved quarantine facility for 10 days/11 nights at a cost of £2,285 for an adult, with each additional adult (or child over 11) paying £1,430 and children aged 5 – 11 costing £325.

The bill includes two Covid-19 tests on Day 2 and Day 8.

It remains unclear whether the government will maintain the red list and the associated quarantine hotel system in case the Covid situation in any country deteriorates in the future.

The UK government sets the rules on international travel for England. The authorities in Scotland, Wales and Northern Ireland will decide their approaches separately.

27 October: Budget cuts domestic Air Passenger Duty but previews ‘ultra long-haul’ rate

Chancellor Rishi Sunak MP used his Budget speech today to announce changes to the UK’s Air Passenger Duty regime from 2023.

The government is aiming to boost air travel within the UK through a 50% cut in domestic Air Passenger Duty (APD), from £13 to £6.50. The rate will apply to all flights between airports in England, Scotland, Wales and Northern Ireland (excluding private jets). 

The government says around nine million passengers will pay less APD as a result when the reductions take effect in April 2023.

The government is also introducing a new higher band of APD for ultra-long-haul distance travellers. The international distance bands will from April 2023 be set at 0-2,000 miles, 2,000-5,500 miles and 5,500 miles plus. The rates will be £13, £87 and £91 respectively for economy passengers.

27 October: Thailand extends quarantine-free travel from 1 November

From next Monday (1 November), fully-vaccinated travellers from the UK will be able to enter Thailand without having to quarantine. The move coincides with the country’s peak tourist season, which runs from November to April.

At present, Thailand operates a ‘sandbox’ scheme whereby fully-vaccinated travellers do not have to quarantine after arriving in popular tourist hot-spots such as Phuket, Surat Thani, Phang-Nga and Krabi. But they are then required to stay in these destinations for seven days before being able to travel elsewhere in the country.

As of next week, travellers must show proof of vaccination and produce a negative PCR result obtained within 72 hours prior to departure from the UK. 

They must also take a pre-booked Covid-19 PCR test between day 0 and day 1 of their arrival into Thailand. If this result is negative, there are no restrictions on travel within the country. 

Travellers must satisfy the following conditions to qualify for quarantine-free entry:

• travel from one of 46 approved countries (including the UK), having been resident there for 21 days or more
• obtain a Certificate of Entry from the Thai government
• provide proof of a negative PCR result taken within 72 hours of departure
• possess a travel insurance policy providing a minimum US $50,000 of cover for the potential treatment of Covid-19 and other medical expenses 
• show proof of payment for no less than a one-night stay at approved quarantine facilities (this should cover accommodation, the required PCR test and an Antigen Test Kit for use if you show symptoms of coronavirus)
• show proof of vaccination
• have undergone exit screening
• have the Mor Chana tracking app and wait in your accommodation for your day 0-1 PCR test result. This should be available within the day.

Travellers aged under 12 who are travelling with parents/guardians are exempt from the vaccination requirement, but they must provide proof of a negative PCR result.

You can find more information about travel to Thailand on the UK government website, including advice on all but essential travel to regions because of concerns about security and terrorism.

26 October: US confirms requirements for inbound travellers from 8 November

President Joe Biden has confirmed his country’s approach to restrictions on international travel into the United States from 8 November.

Mr Biden said: “It is in the interests of the United States to move away from the country-by-country restrictions previously applied during the COVID-19 pandemic and to adopt an air travel policy that relies primarily on vaccination to advance the safe resumption of international air travel to the United States.”

Airlines will be required to check the vaccination status of travellers before they board their flight to the US. The entry of unvaccinated non-citizen non-immigrants – those who are visiting the US or otherwise being admitted temporarily – is to be suspended.

This means that, in the majority of cases, unvaccinated travellers will not be allowed to board a plane to the US.

US visitor requirements

Starting on 8 November, non-citizen, non-immigrant air travellers (visitors) to the United States will be required to be fully vaccinated and to provide proof of COVID-19 vaccination status prior to boarding a plane to fly to the US, with only limited exceptions. If satisfactory proof is not forthcoming, they will not be permitted to fly.

Vaccinated travellers will also need to produce a negative Covid test taken within 72 hours prior to departure.

Unvaccinated travellers – limited to US citizens, lawful permanent residents of the US, or exempt unvaccinated foreign nationals – will need to produce a negative Covid test within one day of departure.

Fully vaccinated foreign nationals will also be able to travel across the Canadian and Mexican land borders for non-essential reasons, such as tourism, starting on 8 November.

What about children?

Children under 18 are exempt from the US vaccination requirement for foreign national travellers. This is because of the ineligibility of some younger children for vaccination and the global variability in access to vaccination for eligible older children.

However, children between the ages of 2 and 17 are required to take a pre-departure test.

If traveling with a fully-vaccinated adult, an unvaccinated child can test three days prior to departure (consistent with the timeline for fully vaccinated adults).

If an unvaccinated child is traveling alone or with unvaccinated adults, they will have to test within one day of departure.

What are the exemptions for those travelling to the US?

The main exemptions from the vaccination requirements are:

• those who have a medical reason for not taking a vaccine
• those who need to travel for emergency or humanitarian reasons (with a US government-issued letter affirming the urgent need to travel)
• those who are traveling on non-tourist visas from countries with low-vaccine availability/

Those who receive an exception will generally be required to comply with applicable public health requirements, including a requirement that they be vaccinated in the US if they intend to stay for more than 60 days.

Anyone unsure of their standing in relation to the new requirements should contact the US embassy for more information.

24 October: Lateral flow option available in England from today

From today, Sunday 24 October, fully-vaccinated travellers arriving in England from a non-red list country are able to submit a lateral flow test to satisfy their Day 2 testing requirement.

The tests – which are significantly cheaper than the previously mandated PCR tests – must be booked online with a government approved supplier.

Lateral flow tests must be taken as soon as possible on the day of arrival in England or at the latest before the end of a passenger’s second day, They can be purchased from as little as £19 via the government website. PCR tests can cost upwards of £60.

Travellers must send a photo of their test result to the private provider. Failure to do so could result in a £1,000 fine. Anyone with a positive result will need to take a free NHS confirmatory PCR test and isolate.

Children under 18 can take a lateral flow test regardless of their vaccine status.

Non vaccinated travellers must continue to take PCR tests on Day 2 and Day 8 while in self-isolation for 10 days.

The changes apply in England. Wales will adopt the same procedures from 31 October. Scotland and Northern Ireland are likely to follow suit but no dates have yet been given for when this will happen.

23 October: Wales Follows England With Lateral Flow Test Option From 31 October

The devolved administration in Wales has announced that, from 31 October, all fully-vaccinated travellers arriving in Wales will be able to take a lateral flow test instead of the current requirement to take a PCR test. The change to make lateral flow tests permissible in England takes effect on 24 October (see below).

With prices starting at around £30, lateral flow tests are roughly half the price of PCR tests. The lateral flow tests must be booked in advance through approved providers. NHS kit tests will not be accepted in either nation.

No announcement has yet been made by the authorities in Scotland and Northern Ireland.

Eluned Morgan, Wales’ health minister, said: “From Sunday 31 October all adults in Wales, who have completed their two-dose course of the Covid-19 vaccine, and the majority of under 18s, who have travelled from countries which are not on the red list, will be able to take a lateral flow test, on or before day two of their arrival into the UK.

“If people have a positive lateral flow test on their return from travelling overseas, they will be required to isolate for 10 days and take a follow-up PCR test. People will continue to have the option of booking and taking a PCR test as the required day two test.

“The UK Government will introduce these changes for England on Sunday 24 October. We are unable to introduce the changes at the same time as we have not received sufficient or timely information from the UK Government on how these changes will operate in practice.   

“This is not ideal. However, despite the differences for a short period, Welsh residents wishing to travel will be able to do so. The only difference from English residents will be that up until the 31 October Welsh residents will need to continue to book a day 2 PCR test.”

Mr Morgan expressed concern about the UK government’s approach to testing, which dictates the rules in England: “We have consistently urged the UK Government to take a precautionary approach towards reopening international travel. However, it is difficult for us to adopt a different testing regime to that required by the UK Government, as the majority of Welsh travellers enter the UK through ports and airports in England.

“Having different testing requirements would cause significant practical problems, confusion among the travelling public, logistical issues, enforcement at our borders and disadvantages for Welsh businesses.”

He added that decisions about international travel should be taken on a “true four-nation basis. These are decisions which affect people living in all parts of the UK and we cannot make them in isolation of each other.”

22 October: Lateral Flow Tests For Fully-Vaxed Bookable From Today For England

From today, 22 October, fully-vaccinated travellers heading to England from non red list countries can book a lateral flow test to take on or before Day 2 of their arrival. Such tests may be taken from 24 October onwards.

The PCR tests required at present will still be accepted from Sunday, but as they can cost £60 or more and lateral flow tests can cost half that amount, the latter are expected to prove more popular.

List of countries and territories with approved proof of vaccination.

Those who are not fully vaccinated, and all those returning from red list countries, must continue to take PCR tests and adhere to other requirements.

Here’s what you need to do when returning to England (note that the requirements for inbound travellers to Scotland, Wales and Northern Ireland may differ).

If you are fully-vaccinated, you must – before returning to England – book and pay for a COVID-19 test to be taken before the end of Day 2. You must also complete a passenger locator form in the 48 hours before you arrive in England. You will need to enter your COVID-19 test booking reference number on your passenger locator form.

If your lateral flow test is positive, you must take a PCR test to confirm the result, and you must self-isolate until you get the result. If this is positive, you must self-isolate for 10 full days.

If you booked a PCR test and get a positive result, you will need to self-isolate for 10 days.

If you are not fully-vaccinated, you must, before you travel to England:

• take a COVID-19 test in the 3 days before you travel to England. If this is positive you should not travel but should follow local Covid protocols
• book and pay for day 2 and day 8 COVID-19 PCR tests to be taken after arrival in England
• complete a passenger locator form in the 48 hours before you arrive in England.

After you arrive in England you must:

• quarantine at home or in the place you are staying for 10 full days
• take your COVID-19 PCR tests as outlined above.

If you test positive on your Day 2 or Day 8 test, you must self-isolate for 10 full days.

If you need to quarantine, you may be able to end quarantine early if you pay for a private COVID-19 test through the Test to Release scheme.

Travelling with children

Children of all ages who are resident in the UK, or in a country with an approved proof of vaccination, do not have to quarantine on arrival in England. This applies whether the child is vaccinated or not.

If they are aged 4 and under they do not have to take any COVID-19 travel tests. Those aged 5 to 17 do not have to take a COVID-19 test before travel to England. They must take a test on or before Day 2 and follow the procedures outlined above if this returns a positive result.

20 October: India Opens Doors To Foreign Tourists As Morocco Bans UK Flights

The Indian Ministry of Home Affairs (MHA) is now granting tourist visas to foreign tourists planning to travel chartered flights organised by tour operators. India closed its borders for foreign nationals in March 2020 at the onset of the Covid-19 pandemic.

The MHA has also announced that, from 15 November, tourists entering India by flights other than chartered flights – that is, independent travellers on commercial airlines – will be allowed to enter with new tourist visas. It says visas issued before 6 October 2021, will no longer be valid.

Meanwhile, Morocco has announced as ban on direct flights between the UK and Morocco (as well as Germany and the Netherlands), effective from midnight tonight (20 October) for an unspecified period. More details below.

Travellers to India must submit a self-declaration form on the online Air Suvidha portal and upload an authenticated private (not NHS) negative Covid-19 PCR test result, with the test having been taken up to 72 hours before departure to India.

On arrival in India, travellers will need to complete a PCR test in a designated area of the airport. Those returning negative results will be required to remain in quarantine in a private residence for seven days, after which time another test will be administer.

If this result is negative, the visitor will be released from quarantine but will be required to monitor their health for a further seven days.

Anyone returned a positive result will be accommodated in an institutional isolation facility for treatment.

The same rules apply regardless of the individual’s vaccine status.

Travellers returning to the UK from India will need to follow the rules applicable in their home nation. India is not on the UK’s travel red list, so fully vaccinated returning travellers will need to:

• complete a passenger locator form in the 48 hours before arrival
• book and pay for a Covid-19 test to be taken before the end of Day 2 (from this Friday, 22 October, you’ll be able to book a lateral follow test instead of a more expensive PCR test. Such tests will be permitted from 24 October).

Those not fully-vaccinated must quarantine at home or in the place they are staying for 10 days and take PCR tests on Day 2 and Day 8. See stories below for further information.

Note that special visa rules apply to Pakistani nationals or those with dual British-Pakistani nationality. Details are available from the Indian High Commission.

No-go Morocco

The Moroccan government is suspending direct flights between the UK and Morocco with effect from midnight tonight (20 October). The ban does not currently have an end-date. Flights from Germany and the Netherlands are similarly affected.

The UK government says travellers affected by flight cancellations should contact their airline or tour operator for advice on alternative routes via third countries such as France and Spain, where flights are operating as normal.

Anyone travelling to Morocco via a third country will need to provide:

• proof they have been fully vaccinated against COVID-19, with the second dose administered at least two weeks prior to travel, or
• a negative PCR test result before boarding their flight or ferry to Morocco. The result must show that the PCR test itself was undertaken no more than 48 hours before boarding.
• for travel by ferry, travellers will also need to take a COVID-19 test during the journey. Children under the age of 11 are exempt from the PCR testing requirement for entry into Morocco.

On arrival to Morocco, travellers will be asked to present a completed Public Health Passenger form. You can print a copy in advance of travelling.

Travellers transiting through third countries should consult FCDO Travel Advice for that country.

Several thousand UK holidaymakers are thought to be in Morocco. Airlines and tour operators say they will contact customers to discuss whether they want to return immediately or finish their holiday.

It is likely that those with bookings for holidays in Morocco in the coming days and weeks will be offered alternative destinations or refunds.

19 October: Heathrow Passengers Face Steep Climb In Ticket Prices

Travellers flying from London Heathrow airport are facing higher ticket prices after the Civil Aviation Authority (CAA) proposed allowing the airport to sharply increase the amount it charges airlines for each passenger they carry.

Currently, the charge is £22 per customer, but the CAA says this should rise to between £24.50 and £34.40 for a five-year period starting in summer 2022. It is running a consultation to determine the precise figure.

But it has agreed an interim charge of £30 per passenger from 1 January, which could see a short-term increase of £8 per ticket if carriers pass on the full increase in their ticket prices.

Heathrow Airport Limited asked the CAA to increase the cap on its charges per passenger to between £32 and £43. It also wanted the interim charge to be set at £38 a head. It wants to increase its revenue-raising capability to make up for losses sustained over the past 18 months, when the number of flights plummeted due to travel bans and other restrictions.

Consultations on the interim price cap and the CAA’s wider proposals for the regulation of Heathrow and its longer-term passenger charging structure will run until 17 November and 17 December 2021 respectively.

Richard Moriarty, head of the CAA, said a balance had to be struck between protecting consumers from unfair charges and allowing Heathrow to generate revenuet: “Our principal objective is to further the interests of consumers while recognising the challenges the industry has faced throughout the Covid-19 pandemic. 

“These initial proposals seek to protect consumers against unfair charges, and will allow Heathrow to continue to appropriately invest in keeping the airport resilient, efficient and one that provides a good experience for passengers.”

15 October: US To Open Borders To Fully Vaccinated UK Travellers From 8 November

A spokesperson for the United States government has confirmed that UK nationals will be able to fly to the US from Monday 8 November 2021.

In a tweet on Friday, the assistant press secretary said:

“The US’ new travel policy that requires vaccination for foreign national travelers to the United States will begin on Nov 8. This announcement and date applies to both international air travel and land travel. This policy is guided by public health, stringent, and consistent.”

The current US ban on UK travellers also applies to EU countries and several other nations including China, India and Brazil.

In addition to being fully vaccinated, UK travellers to the US will need to have evidence of a negative test taken in the 72 hours prior to departure, and they will be required to provide contact details in case they need to be traced while in the country.

Tough rules on the wearing of masks during the flight will also be imposed.

It is expected that exemptions may be made to allow unvaccinated children to enter the US with their families.

15 October: Govt Gives Green Light To Cheaper Lateral Flow Tests In Time For Half-Term

The government has announced that, from 24 October 2021, fully vaccinated passengers and most under-18s arriving in England from countries not on the international travel red list can take a lateral flow test, instead of a more expensive PCR test, on or before Day 2 of their arrival into the UK. 

The timings mean families returning from school half-term breaks will be able to take advantage of cheaper tests. The tests must be booked through private providers listed on gov.uk – the use of free NHS lateral flow tests will not be accepted for international travellers.

Bookings can be made from 22 October. We’ll update any changes applicable to the rest of the UK when details are announced.

PCR tests can cost upwards of £60-£70 per person, adding significantly to a family’s travel expenses. The bookable lateral flow tests are expected to be priced at nearer £25-£30 each.

Passengers will need to upload a photograph of their test to verify results as soon as possible. If any tests are returned positive, the individual will be offered a free confirmatory NHS PCR test.

It will also be possible to book a test to be taken on arrival into the UK at testing centres located in some airports.

All travellers must complete a Passenger Locator Form prior to travel back to the UK, including a test booking reference number supplied by a testing provider. Travellers will be able to upload their test booking reference to the Passenger Locator Form from 22 October for arrival in the UK from 24 October.

Passengers who are not fully vaccinated with an authorised vaccine returning from a non-red list destination will still need to take a pre-departure test, a PCR test on day 2 and day 8 and complete 10 days self-isolation (with the option of Test to Release on day 5).

Fraud concerns

Nick Markham of Cignpost Diagnostics says Day 2 lateral flow tests should be carried out in the most robust and secure way possible: “Now that the government has moved to validate results through a photo identification process, we must ensure these are not open to fraudulent submissions. People travelling from abroad must take their test and report their result if positive or negative so we can ensure that every positive lateral flow result is captured and sequenced to any new variants using a follow-up PCR test. 

“Our data shows 4 in every 1,000 fully-vaccinated people are testing positive after they arrive in the UK. With no pre-departure tests now required, the number of positive cases among arrivals is set to rise. That’s why it is essential that these (Day 2) tests are undertaken correctly, so individuals who are positive are tracked and asked to isolate. Only this will help to mitigate spread and prevent new variants coming into the country.”

Holidaymakers urged to check destination testing regimes

The reduction in the number of countries on the UK government’s Covid-19 travel red list to seven, which became effective on Monday 11 October (see story below) has opened up the international travel market for UK holidaymakers.

But would-be travellers are being urged to check the Covid testing requirements for their destinations as mistakes and omissions could lead to problems when they try to fly.

Testing requirements for fully-vaccinated travellers to popular destinations

• Abu Dhabi negative PCR test taken within 48 hours prior to travel, plus a PCR test on arrival
• Barbados negative PCR test taken within three days prior to travel
• Brazil negative PCR test taken within 72 hours prior to travel, or negative lateral flow test within 24 hours of travel
• Canary Islands no restrictions
• Cape Verde no restrictions
• Costa Rica no restrictions
• Cuba negative PCR test taken within 72 hours prior to travel, followed by a PCR test on arrival
• Dubai negative PCR test taken within 72 hours prior to travel
• Egypt no restrictions
• Goa regular scheduled flights are currently suspended
• Indonesia no restrictions
• Maldives negative PCR test taken within 96 hours prior to arrival
• Mexico no restrictions
• Morocco no restrictions
• St Lucia negative PCR test taken five days or less before travel
• Seychelles negative PCR test taken 72 hours or less before travel
• South Africa negative PCR test taken within 72 hours prior to travel
• Thailand negative PCR test taken within 72 hours prior to travel
• Trinidad & Tobago negative PCR test taken within 72 hours prior to travel.

Source: Cignpost ExpressTest

Christian Corney of Cignpost ExpressTest, which runs testing sites at airports and city centre locations in the UK, says winter sun travellers need to book the right tests at the right time: “With COVID testing requirements being lifted for travellers coming into the UK, it’s easy to think that the same process is happening across the world.

“But many countries, especially long-haul destinations, have their own testing requirements, and holidaymakers need to plan carefully to make sure they have booked the correct tests and can get results back before they fly. Without proof of the right negative test taken at the right time, travellers will not be allowed to board the plane.”

Mr Corney cites the example of double-jabbed passengers heading to the Maldives needing to take a negative PCR within 96 hours of embarking on their outbound flight, but travellers to Thailand, South Africa and the Seychelles having to complete the same test within 72 hours prior to departure.

Similarly, entry requirements vary within Latin America. Mexico and Costa Rica do not ask for any test results, but Brazil requires a negative PCR taken within 72 hours of arrival, or a lateral flow test taken no more than 24 hours before travel.

In the Caribbean, St Lucia requires arrivals to have a negative PCR test taken within five days of their outbound flight, while Barbados sets the time limit at three days.

And fully-vaccinated travellers heading to Dubai must produce a negative PCR test taken within 72 hours of their flight, but travellers choosing Abu Dhabi must complete their test up to 48 hours before their departure.

Red List Falls To Seven, Vax Recognition Extended

The UK government’s Covid-19 red list has been cut to seven destinations from today (Monday 11 October). All other countries and territories will fall into the ‘rest of the world’ classification.

The seven locations remaining on the red list are:

• Panama
• Colombia
• Venezuela
• Peru
• Ecuador
• Haiti
• Dominican Republic.

Travellers returning to England from red list countries are required to spend 10 days/11 nights in a government-sanctioned quarantine hotel. For details of the costs and associated testing requirements, see story below.

The UK government rules apply to England. However, the new red list has also been adopted for use by the devolved authorities in Scotland, Wales and Northern Ireland.

Announcing the change, Grant Shapps MP, transport secretary, added: “I’m making changes so travellers visiting England have fewer entry requirements, by recognising those with fully-vax status from 37 new countries and territories including India, Turkey and Ghana, treating them the same as UK fully-vax passengers.”

You can find a full list of countries with approved vaccines and proof of vaccination here.

Last week, the Foreign & Commonwealth Development Office announced that it has lifted its advice against all but essential travel for 32 countries and territories.

The FCDO says it will no longer advise against travel to non-red list countries on COVID-19 grounds, except in exceptional circumstances such as if the local healthcare system is overwhelmed.

This is being viewed as another positive step because most travel insurance policies are invalid in countries where FCDO advice against travel is in place. It will also eliminate any conflicts between the red list and the FCDO advice list. For example, when the Maldives was removed from the red list last month, it temporarily remained on the FCDO list.

New UK Travel Regime Takes Effect

From 4am today (Monday 4 October 2021), the UK’s new travel system comes into force, with countries and territories categorised as either ‘red’ or ‘rest of the world’.

The previous traffic light system of red, amber and green as been removed. At present there are over 50 countries on the UK government red list, but this number is expected to fall sharply later this week when a revised list is published.

There has been speculation in the media that the number could fall below 10 when an announcement is made, possibly on Thursday.

Travel restrictions and requirements on those entering the UK from non red list countries will now largely be determined by the individual’s vaccination status.

Vaccinated travellers

For travellers to England, the new regime enables eligible fully vaccinated passengers (those with NHS vaccines and vaccines from countries with approved vaccination programmes) and eligible under-18s to return from non red list countries without needing to complete a pre-departure test (PDT) or a Day 8 test, or to enter a 10-day self-isolation period.

From later in October, eligible fully vaccinated passengers with an approved vaccine and recognised certificate from a country not on the red list will also be able to replace their Day 2 test with a cheaper lateral flow test, reducing the cost of tests on arrival into England.

The government says it wants to have this in place for when people return from school half-term breaks.

Anyone testing positive will need to isolate and take a confirmatory PCR test, at no additional cost, which would be genomically sequenced to help identify new variants.

Non-vaccinated travellers

Travellers returning from a non red list country who are not fully vaccinated must take a pre-departure Covid-19 test in the three days before travelling to England.

They must also self isolate for 10 days (with the option to Test to Release on Day 5) and take Covid-19 tests on Day 2 and Day 8.

Red list country requirements

As far as red list countries are concerned, only UK or Irish nationals, or those with residency rights in the UK, will be able to enter the UK. They will be required, regardless of vaccination status, to:

• take a pre-departure Covid-19 test – to be taken in the three days before travel
• after arrival, quarantine in a managed hotel and take the required two Covid-19 tests on Day 2 and Day 8.

All arrivals from any overseas destination will still need to fill in a passenger locator form ahead of travel to the UK.

You can find any variations to the above rules issued by the UK government here, for Scotland, Wales and Northern Ireland.

Grant Shapps MP, transport secretary, said the UK is expanding its recognised vaccination policy to a further 18 countries, including the United Arab Emirates, Japan and Canada. The recognised vaccines are Pfizer BioNTech, Oxford AstraZeneca (including Covidshield), Moderna and Janssen (J&J).

This brings the total number of countries in scope of the policy to over 50. The government says more countries and territories will be added in the coming weeks.

Fully vaccinated residents in other countries not yet part of the inbound policy, as well as those partially vaccinated, will still have to take a pre-departure test, PCR tests for day 2 and day 8 after arrival, and self-isolate for 10 days, with the option to test to release after 5 days.

22 September: Eight Countries Come Off Red List Of High-Risk Nations

Today (Weds 22 September) sees eight countries removed from the UK’s red list of destinations deemed high risk because of their Covid-19 status. These countries will now be on the amber list.

The move, announced last Friday by Grant Shapps MP, transport secretary, means travellers returning to England from Turkey, Pakistan, the Maldives, Egypt, Sri Lanka, Oman, Bangladesh and Kenya will no longer need to stay in a managed quarantine hotel for 10 days (11 nights).

The change took effect this morning at 4am.

Previously, returning travellers from these countries faced huge bills for a hotel package, which includes two Covid-19 tests on Day 2 and Day 8. The cost for an adult is £2,285 with additional adult (or child over 11) paying £1,430 and children aged 5 – 11 costing £325.

This was an effective deterrent for travel to popular holiday destinations such as Egypt and Turkey, and the change may result in an increase in trips this autumn, particular during half-term in October.

Travellers returning from amber list countries do not need to self-isolate at home if they have been fully vaccinated, although they must take a Covid test prior to departure and on day two of their return.

In addition to self-isolating for 10 days non-vaccinated travellers returning from an amber list country must take the above tests and a test on Day 8 of their return.

Anyone booking a foreign holiday should arrange their travel insurance as soon as possible to benefit from the cancellation element of their policy.

There are still over 50 countries on the UK government red list, and the requirement for quarantine in a managed facility remains in force for those returning to the UK from these destinations.

The Foreign & Commonwealth Development Office (FCDO) maintains a separate list of countries where it advises against travel to particular destinations. As of 22 September, it is still advising against travel to the Maldives. This is significant because travelling against FCDO advice will usually invalidate travel insurance – even if the country concerned is not on the Department of Transport’s red list.

We await any further clarification on this apparent contradiction in the positions of the two departments.

Mr Shapps has also announced an overhaul of the government’s traffic light system, due to take effect on 4 October. See story below.

Additionally, he has tweeted today that the UK will be accepting UAE vaccination certificates from 4 October following updates to its vaccination app. He said: “As a major transport hub which is home to many British expats, this is great news for reopening international travel, boosting business & reuniting families.”

20 September 2011: Families Give Thanks As US Reopens For International Travel In November

The United States will welcome UK and other foreign nationals who fly into the country from ‘early November’ – provided they have been fully vaccinated.

Restrictions will remain across the country’s land borders with Mexico and Canada.

The US has restricted entry to most foreign travellers since early 2020, but the latest move opens the prospect of family reunions in time for Thanksgiving on 25 November, as well as the holiday season in December.

Speaking in the House of Commons earlier today, Grants Shapps MP, transport secretary, said: “I can announce to the House today that vaccinated Brits will be allowed into the US from early November, reciprocating the policy we introduced this summer”

This included a pilot scheme whereby passengers who were fully vaccinated in the UK, in Europe and the US were allowed to travel to the UK from amber list countries (including the US) without the need to self-isolate or take a day 8 test after entry to the UK.

Mr Shapps added: “This is a testament to the hard work and progress made by the Expert Working Group, set up after the G7 summit, to restart transatlantic travel, the flagship route of international aviation.”

Anyone planning a trip to the US can get prices for travel insurance here.

The US Centers for Disease Control is expected to confirm shortly which vaccines will be recognised, as well as the precise date on which foreign visitors who have been satisfactorily vaccinated will be able to travel to the US. More details to follow when we have them.

20 September 2021: Govt Travel Rules Overhaul Sees Traffic Light System End On 4 October

In a series of tweets on Friday, Grant Shapps MP, transport secretary, announced changes to the rules governing international travel into the England for British citizens. These will see an end to pre-departure tests for fully-vaccinated travellers.

Those arriving in other UK nations will need to follow the rules issued by the respective devolved authorities (details will follow when we have them).

From 4 October, the government will maintain a red list of high-risk countries and move the rest of the world onto a single footing.

Mr Shapps tweeted: “From Monday 4 October, if you’re fully vaccinated, you won’t need a pre-departure test before arrival into England from a non-red country and, from later in October, you will be able to replace the PCR test taken on Day 2 of your return with a cheaper lateral flow test.”

PCR tests can cost upwards of £70, while lateral flow tests cost around £30 per person – a still-significant amount, especially for families.

The government wants to have this system in place in time for holidaymakers returning after the upcoming school half-term break.

All passengers will still need to fill in a passenger locator form ahead of travel. Visit here to see the current requirements for vaccinated and unvaccinated travellers from green, amber and red countries.

Unvaccinated passengers returning from non-red countries from 4 October will still need to take pre-departure tests, Day 2 and Day 8 PCR tests during a 10-day period of self-isolation. Test to release on Day 5 remains an option to reduce the self-isolation period.

Mr Shapps also announced changes to the current red list, removing eight countries (Turkey, Pakistan, the Maldives, Egypt, Sri Lanka, Oman, Bangladesh and Kenya). The changes will take effect on Wednesday (22 September) at 4am.

A greater number of countries had been expected by some to come off the red list, but the removal from it of popular holiday destinations such as Turkey, the Maldives and Egypt will be welcomed ahead of school half-term.

Anyone with plans to travel in the coming weeks should make sure they have appropriate travel insurance for their chosen destination.

Signalling the dismantling of the often-controversial traffic light system of grading countries according to their perceived Covid risk, Mr Shapps tweeted: “We’ll also be introducing a new simplified system for international travel from Monday 4 October, replacing the current approach with a single red list and simplified measures for the rest of the world – striking the right balance to manage the public health risk as No.1 priority.”

From 4 October, the government is also extending the list of countries whose vaccination programmes will be seen as being on a par with that of the UK, meaning vaccinated travellers will not need a pre-departure test or a Day 8 test once in England, and they will not be required to self-isolate.

The 17 countries and territories include Japan and Singapore. See here for the full list of countries.

Wales to introduce vaccine passports in October

People in Wales will have to prove they’re either double vaccinated or don’t have Covid-19 in order to visit nightclubs and events from next month.

Mark Drakeford, Wales’ First Minister, made the announcement today, 17 September, citing rising Covid-19 case numbers over the summer. The new measures come into force from 1 October 1.

From that point, admission to the following events will require either a negative lateral flow test result from a test taken 48 hours prior to the event, or an NHS Covid Pass to prove you’ve had two doses of the vaccine:

• Nightclubs
• Indoor standing events for more than 500 people
• Outdoor standing events for more than 4,000 people
• Any event with more than 10,000 people

Double-vaccinated people can get an NHS Covid Pass via its dedicated app, or by visiting the Covid status website.

Govt to announce travel rules changes today

The government will set out changes to the coronavirus travel regime later today, it has been confirmed.

Grants Shapps MP, transport secretary, has tweeted: “I’ll set out measures to simplify international travel later today in order to reduce costs, take advantage of higher levels of vaccination, and keep us all safe.”

There is speculation that the amber level of the traffic light traffic regime might be removed, with countries designated either green or red. This may mean we see an end to the need for fully vaccinated travellers to take Covid-19 tests before departure for the UK and after arrival from a wider range of countries.

We’ll update with more information when we get it.

UPDATE 10 SEPTEMBER 2021 – Speculation mounts over future of traffic light scheme

According to media reports, the government may announce structural changes to its travel traffic light system as early as the middle of next week.

The system, which ranks countries as green, amber or red based on their incidence of Covid-19, has always been scheduled for review by 1 October. Assessing its continued merits ahead of this date would hopefully provide clarity about international travel opportunities, particularly testing and quarantine requirements.

Under the current regime, travellers returning to the UK from green list countries, and fully vaccinated travellers returning from amber list countries, are not required to enter quarantine, although they are required to take Covid-19 tests before setting off for the UK and on day two of their return. If a test returns a positive result, self-isolation is required.

Travel industry leaders say the cost of tests is deterring many people from booking holidays abroad. They hope any overhaul of the traffic light system would remove the need for testing if the destination country had a vaccination record on a par with that of the UK.

According to the BBC, the red list of countries where the government advises against travel in all but the most extreme circumstances, will be retained.

The government has commented to the effect that the system will be reviewed by 1 October, as planned.

UPDATE 26 AUGUST 2021 – Canada Among Seven Countries To Join Green List, Thailand to Red

At 4am on Monday 30 August 2021, Canada, Denmark, Finland, Liechtenstein, Lithuania, Switzerland and the Azores were added to the UK government’s green traffic-light travel list.

This means travellers returning to the UK from these locations will not need to quarantine, regardless of their vaccination status, unless they return a positive coronavirus test result on day 2 of their return. They will also need to take a test before their return flight and complete a passenger locater form.

If they test positive while still abroad, the government says they should not travel and should instead follow local protocols.

As of the same time and date, Thailand and Montenegro were added to the official red list. Passengers arriving in the UK from red list destinations need to isolate for 10 days in a managed quarantine facility and follow the necessary testing requirements.

The costs of staying in a quarantine ‘hotel’ can be found below, along with details of other requirements for traveller from various destinations.

UPDATE 8 AUGUST 2021 – Quarantine Rules Eased For France, European Countries Move to Green List

At-a-glance

• Changes open up France for summer holidays
• Cost of quarantine hotels hiked from 12 August

France has moved from amber plus to amber status on the government’s traffic light list for international travel, following changes that came into force at 4am. This means travellers who have received both doses of the NHS Covid vaccine returning to England, Scotland and Northern Ireland from France will no longer need to self-isolate for 10 days.

The authorities in Wales have yet to announce their decision on the matter.

Related: Travel Insurance For Amber Countries: What You Need To Know

Austria, Germany, Slovenia, Slovakia, Latvia, Romania and Norway have also moved from amber to the green list.

India, Bahrain, Qatar and the United Arab Emirates (UAE) have moved from the red to the amber list, removing the need for double NHS-jabbed travellers to enter a government quarantine hotel for 10 days. Georgia, Mexico, La Reunion and Mayotte have been added to the red list.

Travellers from the UK to all destinations across the traffic light list are being urged to check the conditions and restrictions that may apply to those entering the country they are planning to visit.

The government is advising travellers returning from Spain, which is on the amber list, to use a PCR test as their pre-departure test wherever possible. At the moment, the requirement allows returning travellers to take a lateral flow test, which is less expensive and returns faster results.

Hotel quarantine costs to increase

The government has also announced steep increases to the cost of staying in a quarantine hotel from 12 August onwards. This will affect those returning from red list countries.

UPDATE 28 July 2021 – EU & US Double-Jabbed Travellers Get Green Light To Visit England

At-a-glance

• Government eases restrictions to remove self-isolation requirement
• UK residents still face restrictions on entering US
• Travellers to certain European countries from UK may need to quarantine on arrival

The government has announced that travellers arriving in England from amber countries who have been fully vaccinated in the USA and Europe (EU Member States except France*, European Free Trade Association countries** and the European microstate countries of Andorra, Monaco and Vatican City) will not have to quarantine when entering England.

* Travellers who have been in France in the 10 days before arrival in England must still quarantine for 10 days after they arrive and take a COVID-19 test on or before day 2 and on or after day 8, even if you are fully vaccinated.

** Iceland, Liechtenstein, Norway and Switzerland

The change will take effect from 4am on Monday 2 August.

Travellers will still be required to take PCR Covid tests before setting off and on the second day after they arrive – the requirement to take a test on day 8 has been removed.

Those vaccinated in the US will also need to provide proof of US residency. Passengers from all countries travelling to the UK will be denied entry unless they have completed a passenger locator form.

We are awaiting announcements from the devolved administrations in Scotland, Wales and Northern Ireland regarding their rules for inbound travellers from the EU and US.

Earlier this month, the US State Department and the Centers for Disease Control and Prevention both advised against travel to the UK and said that those who insisted on travelling should only do so if double-vaccinated. The stated reason for this guidance was the rising number of cases in the UK.

With the number of cases in the UK now falling, it remains unclear whether the advice to US travellers will change.

At the moment, the US border is closed to travellers from the UK except for US citizens. Again, there is no indication that this is going to change in the immediate future, although the two governments are thought to be mulling the introduction of a travel corridor across the Atlantic.

Cruise controls lifted

The government has also confirmed that international cruise sailings are to restart from England from 2 August 2021, in line with Public Health England guidance. International cruise travel advice will be amended to encourage travellers to understand the risks associated with cruise travel and take personal responsibility for their own safety abroad.

The move follows the close monitoring of epidemiological evidence, gained through the restart of the domestic cruise industry earlier this year.

Some operators are insisting that passengers will only be able to take a cruise if they have received both doses of the NHS Covid-19 vaccination. For example, Saga says: “Our guidance is that all guests should be fully inoculated, which means you must have received both doses and waited for full immunity to take effect. Therefore, we will require all of our guests to have received both doses of the vaccine no later than 14 days prior to departure.”

Find out more about specialist cruise travel insurance.