Some UK property developers are bypassing the mains gas network, opting instead for estate-wide, liquefied petroleum gas (LPG). The move is forcing homeowners to pay twice as much, with many unable to switch to an alternative supplier. They bear the financial burden while developers bypass the costs associated with connecting to the mains network.

Why LPG?

LPG can be a useful alternative to houses that are off-grid and unable to connect to the mains gas network.

However, the use of LPG in estate-wide systems can be extremely problematic — at double the price of standard mains gas.

Firstly, LPG is  not subject to the energy price cap. This means suppliers can increase the cost as much as they like. By 2024, the price of LPG had increased by around 40 percent since 2020.

In contrast, standard gas central heating costs around 7p per kilowatt-hour. This equates to a rough cost of £1.68 per hour to run the boiler. Running a LPG boiler for the same amount of time would cost you £3.36 at a rate of 14p per kilowatt-hour.

Another problem with estate-wide LPG is it creates a supplier monopoly, making it almost impossible to switch providers. For that to happen, every house on the estate has to agree to switch. Additionally, the energy provider owns the hardware and LPG tanks, meaning a new supplier must agree to purchase that equipment before any change over.

Of course, all of this can impact the property’s potential resale value.

Calor, which supplies some of the UK’s metered estates, claim that:

energy costs for new build rural homes fuelled by LPG are significantly less than properties running on electric boilers and comparable with other off-grid alternatives.

But of course, they would say that, as Calor is the one supplying the LPG.

One flyer, published by Calor and Bloor Homes, states that:

Having investigated the cost of piping mains gas to the homes – which would be around a million pounds for every half-mile – Bloor Homes soon discounted this as a financially-viable option, so had to go in search of an alternative fuel solution.

So clearly, this is not about saving money for households. What it’s really about property developers making even more money.

New developments using LPG

One of the new home developments using these estate-wide LPG systems is the Brockeridge Paddocks development in Twyning, Gloucestershire. It was built by Charles Church development, which is part of Persimmon Homes.

Twyning Parish Council does note that:

Twyning Parish is off the mains gas network and most homes are heated by fuel oil or LPG gas

But in total, Persimmon chose estate-wide LPG systems for six of its new housing developments.

The houses on that estate were all scored with an EPC rating C. Whilst this is above average for UK homes, it falls below the average for new homes.

According to government statistics:

85% of new homes in England and Wales are in the highest energy efficient bands with an energy rating of A or B.

Of course, this means that whether the house is bought outright, put up for social rent, or sold through shared ownership, the running costs of the home will be significantly lower.

Basically, the use of LPG massively reduces the energy efficiency of a house.  Additionally, it means a lifetime of extra costs for the person living in that house.

This is all as Persimmon makes £359.1m in annual profit, and its CEO, Dean Finch, takes home a £746,000 salary.

However, Simply Wall Street reported that his gross annual compensation was £2.2m at the end of 2023, including shares and bonuses.

A country-wide problem

But it’s not just persimmon using communal LPG systems instead of connecting to the mains gas network.

Another housing estate, completed between 2018 and 2019, is located in Green Hammerton, near York, and features an estate-wide, communal LGP system. It is unclear which developer built it.

From looking at Rightmove listings of the area, we can presume that the village does not have a mains gas supply. The Canary reached out to Northern Gas for comment, but they did not respond.

The bigger issue here is that cost-cutting property developers’ are making buyers vulnerable to future price hikes, with no cap from Ofgem, the energy regulator.

According to Calor’s promotional video, Taylor Wimpey, Bloor Homes, Barratt Homes, and David Wilson Homes have also adopted the state-wide LPG systems.

Importantly, housing developers are required to designate around 10% of houses in each new development as social housing. While the number can vary by local area, it means that social housing tenants — who cannot afford to purchase a home — are denied the choice of energy supplier and will bear the brunt of rising energy bills.

Greener options

If housing developers are unwilling to pay to connect new housing estates to the mains gas network, they should explore cheaper, more environmentally friendly options that give customers the freedom to choose  their supplier.

One potential solution would be to install heat pumps. While they have a higher installation cost, they are far more energy-efficient, have lower running costs, lower carbon emissions, and are compatible with solar panels.

Britain is sinking deeper into the cost-of-living crisis, a climate crisis and a housing crisis. Developers could be alleviating all three by sacrificing profit and those hefty CEO salaries. They should be investing that money in greener fuel options, which would then save customers money on their energy bills.

As important is the role Ofgem which should regulate the price of LPG like it does with mains gas and electricity, so that customers aren’t paying for housing developers’ crappy choices.

Feature image via Calor/ YouTube

By HG

This post was originally published on Canary.