Around half a million Post Office customers are facing steep home phone and broadband price hikes next month, with the cost of some packages set to increase by up to £36/year. But if you're affected it's possible to leave your contract penalty-free or haggle a better deal.

From 5 September, Post Office customers can expect to pay £16.99/month for line rental (up from £16/mth), while the cost of home phone and broadband packages and broadband-only packages will rise by around £3/mth, and some call costs are set to increase 13-fold.

The latest hike will be the third time in just 20 months that the Post Office has cranked up its prices – the cost of line rental was £13/mth until the start of 2015. For how to choose the cheapest deal and our current top picks, see our Cheap Home Phones and Cheap Broadband guides.

How much are prices going up by?

Here's how prices will change from 5 September...

  • Line rental. Rising from £16/mth to £16.99/mth. The cost of its 'line rental saver' (where you pay for a year upfront) is going up by £11.88, to £179.88.
  • Call costs. The biggest rise is for UK national and local evening calls, which are going up from 1p/min to 10p/min. UK mobile calls are going up 1p/min to 13p/min; premium rate mobile calls are rising from between 13.28p/min and 19.20p/min to a flat rate of 20p/min; the access charge (for calls to certain numbers not included in your package) is increasing to 10p/min from 9.5p/min; and the call connection charge is rising to 16p/call from 15.5p/call. Other call costs will remain the same.
  • Broadband and home phone packages. The cost of the Post Office's 'Broadband Essential with Home Phone' package will rise from £21/mth to £23.99/mth, while the price of the 'Broadband Premium with Home Phone' package (which comes with unlimited usage) will go from £24/mth to £26.99/mth.
  • Broadband-only packages. The 'Broadband Essential' offering is rising to £25/mth from £22/mth, while the 'Broadband Premium' offering is going up to £28/mth from £25/mth.
Martin Lewis
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How to beat the hikes 1 – escape your contract penalty-free

The good news is the Post Office has confirmed all customers affected by the hikes CAN escape their contract penalty-free.

Under regulator Ofcom's rules, if you've taken out a line rental, broadband or mobile contract from 23 January 2014 onwards you can cancel your contract penalty-free if a provider ups its monthly prices mid-term and didn't warn you about the rise when you bought the contract.

To leave penalty-free, you must let the Post Office know within 30 days of it giving you official notification of the price rises. As it started sending letters to affected customers from 18 July, you haven't got long.

The Post Office told us that if you paid upfront for a package, eg, if you've bought the 'line rental saver', you'll be able to get a refund for the rest of the year if you quit your contract in light of the upcoming price rises.

If you're looking to switch from the Post Office, see our Cheap Home Phones and Cheap Broadband guides for best buys. Current top-pick phone and broadband deals include:

How to beat the hikes 2 – haggle, haggle, haggle

Alternatively, if you're willing to stick with the Post Office, this is a great opportunity to haggle a much better deal – especially as you'll have the right to leave penalty-free if they don't give you one.

See our How to Haggle guide for more info, but in the meantime here are a few tips to get you started...

  • Benchmark the best deal elsewhere so you ask for a realistic discount.
  • Get through to the retentions (sometimes called disconnections) department. They have the most power to slash costs, as their job is to keep you.
  • Use charm and be friendly. Aggression or anger will just put their back up.
  • Don't panic if they call your bluff and say they'll disconnect you.
  • Problems mean discounts, so if you've had issues with the Post Office in the past – eg, slow broadband – politely tell them when you haggle.
  • You may find that your Post Office customer service rep will only offer a small discount at first, but if you don't agree with the price use phrases like: "I've worked out my budget, and my absolute max is £[insert price here]/month"; "[TalkTalk/Sky/Virgin] can do it for less"; "I need to think about it".
  • You should never go with the first offer. Chances are it's not the best deal they can do. Remember, be firm.
  • The salesperson may push you to agree because it's a 'limited-time offer' – don't feel pressured into agreeing to the new price or deal unless you're certain.
  • Vote with your feet. If you don't get what you want you should seriously consider leaving.

Post Office delivers price rises of up to £36/year to phone and broadband customers – act NOW to beat the hikes
If you're affected by these price rises you can leave your contract without paying a fee

I recently took out a Post Office promotion – what does this mean for me?

Unfortunately even if you recently took out a Post Office promo deal, you won't escape unscathed – though you do have the right to escape your contract penalty-free (see above for more on this).

If you're on its '12 months' free broadband' promotion:

  • Your monthly line rental charge will increase from £16/mth to £16.99/mth.
  • Your broadband monthly charge will increase from £8/mth to £10/mth, but your monthly discount will increase from £8 to £10 to offset this.

If you're on the '18 months' half-price broadband' promotion:

  • Your monthly line rental charge will increase from £16/mth to £16.99/mth.
  • Your broadband monthly charge will increase from £8/mth to £10/mth, but your monthly discount will increase from £4 to £5 to partially offset this.

The Post Office says all its promos are subject to price and terms potentially changing during your contract. More info can be found in its T&Cs.

What does the Post Office say?

A spokesperson says: "These changes will allow us to continue to offer customers all the great benefits that are included within our packages in an increasingly competitive market.

"We have written to our customers to let them know about these changes and to highlight a number of money saving tips. We've done everything to keep our prices as low as possible so that we are offering customers the best value for money.

"Whilst we have increased some of our telecoms prices we are still one of the best value providers in the market."

Haven't other providers hiked prices recently too?

To be fair, the Post Office is far from alone in raising prices:

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