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Will Ofgem’s new proposals to refund credit balances save you money or will bills go up?

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Proposals that could see energy credit balances of around £1.4billion automatically returned to households has been criticised by an industry insider who says the move is simply addressing the symptom but not the root cause.

Under new plans from Ofgem, suppliers could be limited to the amount of customer credit balances they can hold, which the regulator says could result in as £65 per household on average being returned.

However, an industry insider said the plans have only been put in place due to direct debits being far too high for customers in the first place.

They believe the regulator has made the decision to return credit balances as it suspects some suppliers are holding excessive credit balances to fund their tariffs or cover debt.

Whilst Ofgem's proposals look to return money to customers, it could result in bills going up

Whilst Ofgem’s proposals look to return money to customers, it could result in bills going up

Ofgem’s proposals will mean suppliers can retain credit balances that are enough to cover their customers consumption through the winter but no more.

This can be achieved if customer’s direct debits are at the correct level – however, many aren’t and suppliers that currently need higher direct debits to fund their cheap tariffs would be deemed non-compliant if the suggested changes go through.

Under the new rules, they will then have to increase the price of their tariffs to cover their debt, which reduces credit balances, or be forced to refund the money by the regulator.

It is thought the latter is unlikely to happen as some suppliers simply won’t have the cash to do so and will therefore likely go bust.

As such, the remaining suppliers pick up the cost of credit balances and, ultimately, will have to increase prices meaning bills go up.

Refunding thousands, if not millions, of pounds will be difficult for a number of suppliers after many faced a difficult financial year as they had to help support customers who could no longer pay their bills. 

At present, the average profit margin for suppliers is -1.4 per cent, highlighting the struggle many face, especially after the pandemic. 

The insider said: ‘Suppliers are actually loss making and not sitting on lots of cash and so the reality is likely that zero will be returned to customers and the cheapest tariffs will disappear.’

They added Ofgem did not consult providers about these plans before announcing them, leaving many providers wondering how they would stump up the money the regulator is asking for. 

Suppliers could be limited to the amount of credit balances they can hold, Ofgem's plans say

Suppliers could be limited to the amount of credit balances they can hold, Ofgem’s plans say

This is Money asked Ofgem how it calculated that £1.4billion would be returned to customers. 

It said its research found as much as £1.4billion was held in surplus credit balances in October 2018, a figure based on suppliers holding £2.4billion in fixed direct debit credit balances in total. 

To calculate what was and was not surplus, it requested information from suppliers on what their fixed direct debit customers’ consumption was in each month of the year as a proportion of the entire year.

From this, it modelled what credit balances were required in each month and compared this to what suppliers were actually holding.

A spokesperson for Ofgem said: ‘For suppliers doing the right thing and only collecting the credit balances they need, our proposals will not affect them.

‘Where suppliers are currently relying on surplus credit balances – and let’s be clear that is consumer overpayment – to sustain their business, they will face the cost of the risk they are putting onto the rest of the market.

‘This will mean they have less access to working capital and our proposals will bite on them.’ 

It said its consultation also includes a credit balance threshold to limit the total amount of credit balances suppliers can hold at set points during the year, again to stop over collection.

Suppliers would be required to protect any credit balances they collect above the threshold, such as through an escrow account or some form of financial guarantee.

This is Money also asked whether it would be more beneficial for energy suppliers to ensure they set direct debits at the correct level to begin with to avoid a massive debit.

Many are on estimated bills that mean they are either underpaying or overpaying.  

Ofgem said suppliers must currently set fixed direct debits based on the volume of energy they expect the customer to use over the year.

They must base this estimate on the best and most accurate information available to them including the most recent meter reading.

Ultimately, if the proposals are confirmed and go ahead, the regulator said it will work with suppliers during the implementation period adding it has ongoing conversations with all suppliers to ensure they are compliant with regulations.

If suppliers fail to abide by the regulation, it says it can step in and take formal action. This can start with a fine and if non-compliance continues, ultimately it could lead to the regulator revoking their licence.

Again, this could lead to less providers in the market meaning less competition and higher prices. 

The insider said: ‘The new plans are addressing the symptom and not the root cause. It is a vicious cycle that is getting worse.’

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How a Dublin house sold for €13.25m but stayed under the radar

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It is often said that things get lost in translation. That’s the beauty of language, that it isn’t linear; but when it comes to illustrating the housing market, a data picture paints a thousand words.

Surveying the property price register, or PPR, is a national pasttime for many. While the Property Services Regulatory Authority has always pointed out that it isn’t a price index, most pedestrian users use it to see what certain homes sold for. Such curiosity gets the better of most of us. Neighbours will always want to know what Mary down the road got for her place. What Mary’s place sold for is in the public domain, if you can find it. And the amount it made might even prompt her neighbours to consider doing likewise.

The register isn’t perfect. Senior economist Siobhán Corcoran, associate director at Sherry FitzGerald, leads a team that spends days per quarter cleaning its data, eliminating the multiple private rental sector and social housing sales to get a clearer picture of the market. She downloads the listings, by either county or city, and has her team go through it to get a clearer picture.

The lists give the address of the property, what it sold for and the property type: a new dwelling house/apartment; second-hand dwelling house/apartment; or the lesser-spotted teach/árasán cónaithe atháimhe. Because the data is entered manually there is the risk of human error, meaning some are logged incorrectly.

It is every citizen’s personal choice to register the sale of their home in either Irish or English. Irish is our first language and has dual status.

And yet while it is our right to log the property in the Irish language, very few sales are actually are registered as Gaeilge.

“While many of the housing estates in Ireland have Irish names, the proportion of PPR entries logged with an Irish address in its entirety, including county in the address field is minute, zero point zero zero per cent over the last number of years,” Corcoran explains. “Properties on the register listed as the proportion of PPR entries logged as a ‘teach/árasán cónaithe atháimhe’ have been in single digits over the past number of years.”

When you download the CCV text file for the Dublin listings so far this year, just one abode – in Diswellstown, Baile Átha Cliath 15 – is described thus.

A sale that garnered a lot of attention was Lissadell, number 9 Shrewsbury Road in Dublin 4, which was described in this newspaper as having been purchased by Marlet chief Pat Crean last June, and yet to appear on the register but believed to have sold for in excess of €11 million.

In a letter to the editor of this newspaper on September 20th, Simon Twist helpfully pointed out that the transaction was listed as Uimhi [sic] a Naoi, Botha [sic] Sriusbaire, Dublin 4, and that it sold for €13.25 million on May 19th. The difference is some 17 per cent. (This is the highest price achieved in Dublin, according to the register; in June, Stripe co-founder John Collison paid about €20 million for the Abbey Leix estate, in Co Laois.)

As it is written, the address of Lissadell is near-impossible to find unless you know this exact spelling. It doesn’t come up when you simply search for properties listed in Ballsbridge, for example.

The classifications are often a confusing hybrid of English and Irish. Corcoran says that most of these properties with “full” Irish addresses have not been classified as a “teach/árasán cónaithe atháimhe” in the description field. While the Shrewsbury address “Uimhi a Naoi, Bótha Sriúsbaire” is logged in Irish, it is not classified as a “teach/árasán cónaithe atháimhe”.

Galway-city based conveyancying solicitor Mark Killilea has a suggestion for solving this difficulty. Just go to landdirect.ie, find the relevant folio where the property will be listed as registered. “It’s just another hurdle, but not an insurmountable one,” he says.

But should we have to jump through these hurdles at all? Cork-based software engineer Eddie Long believes it shouldn’t be up to the inputter to decide on what way the address is entered. “At present the freeform index allows whatever they like. Instead the inputter should have to choose from a dropdown menu of addresses, like that used to determine Eircode listings.”

Should these listings be in English or Irish? “Irish is an officially appointed language, so it should in both.”

Citizens are entitled just to list the address in Irish. But the process should be transparent. Ba mhaith linn trédhearcacht.

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Robbie Williams lists sprawling 72-acre country estate for £6.75 million

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Robbie WIlliams has listed his sprawling 72-acre country estate for £6.75 million.

The Take That crooner, 47, used the home as a rural retreat for his wife Ayda Field and their children, having purchased it in 2009 for £8.1 million.

The property is located close to the quaint village of Compton Bassett in Wiltshire about 85 miles from London

Take that! Robbie WIlliams has listed his sprawling 72-acre country estate for £6.75 million

Take that! Robbie WIlliams has listed his sprawling 72-acre country estate for £6.75 million

Ready to move on: The Take That crooner, 47, used the home as a rural retreat for his wife Ayda Field and their children, having purchased it in 2009 for £8.1 million

Big family: Robbie and Ayda, 42, share Theodora, eight, Charlton, six, two-year-old Colette and youngest son Beau, one

Ready to move on: The Take That crooner, 47, used the home as a rural retreat for his wife Ayda Field and their children, having purchased it in 2009 for £8.1 million. Robbie and Ayda, 42, share Theodora, eight, Charlton, six, two-year-old Colette and youngest son Beau, one

Robbie said, via the listing agent Knight Frank: ‘Compton Bassett House has been the perfect escape for our family. The gardens and trees have enchanted us with their magic, and on rainy days – of which there are many in England – we have played and splashed around the indoor pool, much to our delight.’ 

Robbie and Ayda, 42, share Theodora, eight, Charlton, six, two-year-old Colette and youngest son Beau, one.

The property boasts its own parkland and woods, as well as a football pitch, on which soccer-mad Robbie will have no doubt enjoyed honing his ball skills.

Also outside in the grounds is a helicopter hangar, a walled garden with a pavilion, a tennis court, and paddocks for horses. 

Robbie said, via the listing agent: 'On rainy days - of which there are many in England - we have played and splashed around the indoor pool, much to our delight'

Robbie said, via the listing agent: ‘On rainy days – of which there are many in England – we have played and splashed around the indoor pool, much to our delight’

Sprawling: The floorplan shows the layout of the impressive three-storey mansion

Sprawling: The floorplan shows the layout of the impressive three-storey mansion

Serene: The property boasts a walled garden with a pavilion, a tennis court, and paddocks for horses

Serene: The property boasts a walled garden with a pavilion, a tennis court, and paddocks for horses

Chopper-ready: Also outside in the grounds is a helicopter hangar

Chopper-ready: Also outside in the grounds is a helicopter hangar

The mansion itself is spread across 19,913 square feet, boasting seven bedrooms, and eight bathrooms.

There are five reception rooms and an indoor pool, a gym, a steam room, and a billiards room.

The gourmet chef’s kitchen is an impressive feature of the home with a stunning blue wooden island and a sprawling dining space for large gatherings.

Robbie and American actress Ayda’s quirky tastes are evident throughout – with giant dog sculptures lined around the hardwood floored cooking space. 

Music mogul: Robbie shot to fame as one fifth of 90s boyband Take That [pictured in the early 1990s with Jason Orange, Howard Donald, Gary Barlow and Mark Owen]

At it alone: Robbie has become the only one of the band to carve out a particularly successful solo career, since going on to collaborate with stars such as Nicole Kidman [pictured  in 2001]

Music mogul: Having shot to fame as one fifth of 90s boyband Take That [pictured L in the early 1990s with Jason Orange, Howard Donald, Gary Barlow and Mark Owen] Robbie has become the only one of the band to carve out a particularly successful solo career, since going on to collaborate with stars such as Nicole Kidman [pictured R in 2001] 

Rural retreat: 'Compton Bassett House has been the perfect escape for our family. The gardens and trees have enchanted us with their magic,' Robbie said of the estate

Rural retreat: ‘Compton Bassett House has been the perfect escape for our family. The gardens and trees have enchanted us with their magic,’ Robbie said of the estate

Sweeping: The property is located close to the quaint village of Compton Bassett in Wiltshire

Sweeping: The property is located close to the quaint village of Compton Bassett in Wiltshire

Quirky: The gourmet chef's kitchen is an impressive feature of the home with a stunning blue wooden island and a sprawling dining space for large gatherings

Quirky: The gourmet chef’s kitchen is an impressive feature of the home with a stunning blue wooden island and a sprawling dining space for large gatherings

Extra space: There is also a detached cottage which joins two staff flats to provide extra accommodation for staff or guests

Extra space: There is also a detached cottage which joins two staff flats to provide extra accommodation for staff or guests

The property features modern classical architecture and several stone fireplaces.

There is also a detached cottage which joins two staff flats to provide extra accommodation for staff or guests.

The home features a long stony driveway, rolling up to the impressive 1929 home – previously owned by the famous architect Sir Norman Foster.

Other features include stone mullioned windows, a study and a hidden staircase to the floor above. 

Part-timer: Robbie still dips in and out of performing with Take That [pictured in 2018]

Part-timer: Robbie still dips in and out of performing with Take That [pictured in 2018]

Master suite: The mansion itself is spread across 19,913 square feet, boasting seven bedrooms

Master suite: The mansion itself is spread across 19,913 square feet, boasting seven bedrooms

Modern meets regal: The property features modern classical architecture and several stone fireplaces

Modern meets regal: The property features modern classical architecture and several stone fireplaces

Niche: The décor and accents are a clear nod to their eccentric owners

Niche: The décor and accents are a clear nod to their eccentric owners

‘Although our clients are sad to be leaving, they’re certain that the next owners will love it as much as they have,’ the listing agent said. ‘The house has the benefit of being on the edge of the village but also has beautiful gardens, and grounds surrounding it providing complete privacy and protection.’

Having shot to fame as one fifth of 90s boyband Take That, Robbie has become the only one of the band to carve out a particularly successful solo career.

Despite his wild child younger years, he has recently established himself firmly as a family man, marrying Los Angeles native Ayda in 2010. 

Style secrets: Robbie and American actress Ayda's quirky tastes are evident throughout - with giant dog sculptures lined around the hardwood floored home [pictured in 2018]

Style secrets: Robbie and American actress Ayda’s quirky tastes are evident throughout – with giant dog sculptures lined around the hardwood floored home [pictured in 2018]

Decadent: The home features a whopping eight bathrooms, some with freestanding tubs

Decadent: The home features a whopping eight bathrooms, some with freestanding tubs

Quirky: Robbie and American actress Ayda's quirky tastes are evident throughout - with one poster featuring a play on words from his Let Me Entertain You song - 'Let Me Excavate You'

Quirky: Robbie and American actress Ayda’s quirky tastes are evident throughout – with one poster featuring a play on words from his Let Me Entertain You song – ‘Let Me Excavate You’

60s meets modern: There are five reception rooms and an indoor pool, a gym, a steam room, and a billiards room

60s meets modern: There are five reception rooms and an indoor pool, a gym, a steam room, and a billiards room

Tranquil: The property boasts its own parkland and woods, as well as a football pitch, on which soccer-mad Robbie will have no doubt enjoyed honing his ball skills

Tranquil: The property boasts its own parkland and woods, as well as a football pitch, on which soccer-mad Robbie will have no doubt enjoyed honing his ball skills

Robbie quit Take That in 1995 but returned to the band between 2006-2011, on and off.

He still occasionally performs with them; the group continue on as a three-piece, with Gary Barlow, Howard Donald and Mark Owen. Fifth member Jason Orange quit in 2014.

Robbie’s solo career has seen him collaborate with the likes of Nicole Kidman and Kylie Minogue on tracks, and he has released 12 studio albums to date.

He is said to be worth £195 million, as reported by The Sunday Times in May 2021. 

Out in the sticks: The location is 85 miles away from London

Out in the sticks: The location is 85 miles away from London

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Property investors offended by ‘vulture funds’ label, conference hears

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People in Ireland need to stop calling property investment firms “vulture funds” and development and building rules need to stop changing if the housing crisis is to be solved, property and banking sector representatives have said.

Marie Hunt, executive director of research at real estate firm CBRE, told an Irish Council for Social Housing conference that the “fundamental problem” in the Irish housing market “is a lack of supply”.

She said bureaucracy and regularly changing public policy were also issues, noting the political discussion this week about potentially changing the link between rent and inflation because prices were rising.

Ms Hunt said investors were not going to come into a market where the rules kept changing halfway through the game.

She said that calling investors “vulture funds” was unhelpful and that name calling “in the media” should stop.

“We need that capital and we need that investment.”

She said investors who bought a nursing home or an office block were welcomed but that those who bought housing received very negative publicity “and they don’t need that”.

Take interest elsewhere

Pat O’Sullivan, head of real estate research at AIB, said policy changes were problematic and that the term “vulture fund” was offensive to investors, who could take their interest elsewhere.

He said Ireland isn’t the only economy that requires funding and “we have got to be very careful about the amount of changes we make to policy, how we describe the investment”.

Ms Hunt said that from a developer’s perspective, many housing schemes were not viable due to high construction and “input” costs and “because we have raised the bar so high in terms of the planning regime and design requirements”.

She instanced the judicial review process, which has been used to bring challenges to fast-track strategic planning developments, as another problem. Ms Hunt said “anecdotally” developers were hiring senior counsel and barristers ahead of planners and architects, such was the level of challenges.

The conference continues on Thursday.

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