‘Massive hardship’: Tenants in Poplar charged four times national average for their heating
PUBLISHED: 07:00 03 March 2020
Families in new homes a stone’s throw from Canary Wharf are being forced out by heating charges that are four times the national average.
The first private tenants moved into Phoenix Works, a 143-home, five-block development on a former chemical factory site in Upper North Street, in 2018.
Ex-council tenants and formerly homeless families began moving into the "affordable" homes in Hawkshaw Court last September.
But, they say, they were not warned about the additional charges.
The relevant section of the tenancy agreements they signed with Peabody housing association was missing.
A copy seen by the Advertiser simply reads: "[include here details of any heating/hot water charges and how they may vary]".
Families on low incomes and housing benefit, who moved in via the Tower Hamlets Council bidding system, were throughout the winter being charged up to £250 a month via pre-payment meters for heating and hot water.
They were charged at a rate of 13.7p/kWh, compared to a national average of 3.8p/kwH for gas, without an explanation as to why.
The Mayor of Tower Hamlets, John Biggs, said: "This is one of the worst examples of where tied into a housing development is a requirement to get your services through an agreement whether you are a private or social tenant.
"Social landlords such as Peabody buy a chunk of the social homes and in this scheme, it has locked tenants into an agreement they can't afford and created massive hardship.
"I'm disappointed they have not got on top of this. I will take it up urgently with Peabody as we have with other providers."
Tenants in affordable homes at Phoenix Works told the Advertiser they were having to choose between heating and food.
Some brought in electric heaters, slept in their sitting rooms or resorted to pushing towels under their doors to keep the warm air in over winter.
Hamida Rahman, a single mother paying £865.19 a month for a two-bedroom flat in Hawkshaw Court, was charged £8 in the first three hours she was in the property.
The 24-year-old had previously been homeless for 12 months, and bid "religiously" every Friday on properties in the borough.
She has now had to move back in with her mother in Chrisp Street as the property is too cold to stay in with her three-year-old.
"From the very first day I was shocked," she said. "Even when I don't top up it goes into the minus figures. We've had to borrow money to top up."
Shapla Ali, 37, whose rent is £931 a month for a three-bed flat, has not topped up since January 17. Despite this, her meter on February 25 was showing -£126.
"What's the charge?" she said. "I don't understand this at all."
The group reported their concerns to the Housing Ombudsman after struggling to get answers from Peabody, managing agents KfH or the billing agent, Ista, which owns the meters.
They have also been told the rent will increase by 2.7 per cent in April.
Mechelle Lewis, 40, who used to pay £50 a month to heat her council home and is now paying £200, said: "It's very stressful. We are being passed from pillar to post and want an explanation as to why the charges are so high."
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Phoenix Works is run by a limited company, Phoenix Broomfield Street Management Company Limited, set up by the developer - which set the charges - and now led by private residents.
A review took place in January and the directors have agreed a new tariff with Ista. The charges will now be reduced to 6.57p/wKh.
Richard Benson, a managing director at KfH, said: "Any refunds are currently being assessed and will be applied. The method will be agreed with the relevant parties shortly."
Tenants in affordable homes say they have not been involved in these discussions and have not been given a breakdown of costs.
A spokesperson for Peabody said the firm had not been involved in negotiating the tariff. They added: "We agree that the charges have been too high.
"Our team has asked for any arrears to be frozen and for our residents to be reimbursed for any charges billed at an incorrect and inflated rate."
Pre-payment meters: How it works
Phoenix Works uses a district heating system, in which heat is produced at a central point and distributed across an entire building.
Up to 210,000 households in the UK are connected to district heat networks and the figure is set to rise to eight million by 2030.
Tenants are billed individually for the amount of energy they use. There is no price cap and no control on prices.
But the bills may not only take into account the price per unit, but the cost of maintaining the whole system.
National campaign Fuel Poverty Action has warned district heating can leave tenants "locked into decades-long contracts with a monopoly heat supplier".
Spokeswoman Ruth London said: "It is scandalous that residents have no breakdown of costs, were not informed about these high costs when they took on tenancies, and have not been included in negotiations since.
"It shouldn't be up to residents to fight for a fair price, or bring down the initial 13.7p/kWh tariff that, frankly, looks like trying it on.
"A social housing provider like Peabody should be making sure from the outset that their residents are not forced into fuel poverty."
Mr Biggs said similar problems had surfaced at Genesis in the Isle of Dogs and Aberfeldy Village, other new developments in Tower Hamlets.
At The Clocktower at St Clements, where Ista is also the billing agent, the management company contacted Ofgem and secured a 25 per cent reduction on their tariff.
Ista serves 15-16,000 households in the UK and reported a £1.4million loss in its latest accounts. Its German parent company was bought for $4.5bn by a Chinese private equity firm in 2017.
Managing director David Lewis said as the billing agent, Ista had no responsibility or control over the tariff but only advised on it based on metered data.
"The meters are a standard piece of equipment, and it very rarely goes wrong," he said.
He added that the management company could have folded other charges into the bill.
"The heating regulations are quite weak in terms of what's permissible," he said. "You can allocate something like repairs and maintenance of the boilers into a heating tariff - as long as it's done transparently."