UK broadband loyalty penalty costs households up to £108 a year

A new BroadbandSwitch.uk report says millions of UK households are paying more for broadband by staying out of contract, with the gap reaching up to £108 a year. The study also says £824 million in broadband social tariff support goes unclaimed each year, highlighting a missed saving for low-income households.

Why it matters: - Millions of UK households are paying more for the same broadband service simply because they stayed with their provider. - The report says out-of-contract customers face a loyalty penalty that can add up to £108 a year. - The findings also point to a major missed saving for low-income households, with £824 million in social tariff support going unclaimed each year.

What happened: - BroadbandSwitch.uk published The Loyalty Penalty on July 22, 2026. - The independent report draws on data from Ofcom, Citizens Advice, INCA, Point Topic, and the audited results of BT and Virgin Media O2. - It finds that customers out of contract pay £7 a month more for standalone broadband. - The report says out-of-contract customers pay £8 more a month for a broadband and landline bundle. - The report says out-of-contract customers pay £9 more a month for a broadband bundle that includes TV. - At the end of June 2025, 28% of UK broadband customers were out of contract for at least one service in their bundle. - Ofcom says most, but not all, of those customers could save by switching or re-contracting.

The details: - The penalty is larger on faster broadband packages. - On broadband and landline bundles, the gap ranges from £4.17 a month on a standard package to £7.94 a month on an ultrafast package. - That translates to roughly £50, £82, and £95 a year by tier. - In the year to July 2025, average standalone broadband prices fell 6% in real terms across the five speed tiers. - The slowest sub-30 Mbit/s packages rose 17% in real terms and 22% in cash. - The report says those slower packages are often the oldest copper lines and are held disproportionately by older households. - Broadband social tariffs are discounted packages, typically priced at £12.50 to £20 a month. - Eligible households can save around £200 a year by taking a social tariff. - In June 2025, 532,000 households were on a social tariff. - That was 8.6% of the roughly 6.2 million households eligible. - Ofcom found that 70% of eligible households did not know the tariffs existed. - Citizens Advice estimated that £824 million in support goes unclaimed every year. - The report says just 19% of over-64s switched a communications service last year, compared with 29% of people aged 25 to 44. - By social grade, 21% of DE households switched, compared with 27% of AB households. - Low-income households already pay a poverty premium averaging £217 a year across essential markets.

Between the lines: - The report argues the loyalty penalty is easing, even as it still hits customers who do nothing wrong. - The out-of-contract pool has fallen from 40% in 2019 to 28%. - Switching rose from 14% to 18%. - BT's consumer broadband average revenue fell 1% to £41.80. - Challenger fibre networks are gaining customers faster than incumbent networks because they have emphasized price certainty. - The challengers added around 850,000 customers in 2025, while Openreach lost about 860,000 lines. - Since Jan. 17, 2025, Ofcom has banned inflation-linked mid-contract price rises in new contracts. - Providers must now state any increase in pounds and pence before a customer signs. - April 2026 brought the last round of the old inflation-linked increases on legacy contracts.

What's next: - The report says households should check when their contract ends, because providers are required to tell customers. - Households receiving Universal Credit or Pension Credit should check broadband social tariffs first. - Customers on old, slow packages should compare broadband deals at their address. - Full fibre reached 82% of UK homes by January 2026 and often costs the same or less for much faster speeds. - BroadbandSwitch.uk says the report is free to read, runs 27 pages, cites 35 named primary sources, and grades each figure by how firmly it is evidenced.

The bottom line: - Staying put can still be expensive, but the easiest savings now come from checking contract end dates, social tariffs, and faster fibre offers.