Heat Network (Metering and Billing) Regulations 2014 – update

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Landlords of multi-let buildings who supply heat, hot water or cooling via a communal system should be aware of The Heat Network (Metering and Billing) Regulations 2014, as amended by The Heat Network (Metering and Billing) Amendment Regulations 2015 (Heat Regulations).

The Heat Regulations impose three obligations:

  1. Notification: Landlords will be obliged to notify details of all qualifying heating systems to The National Measurement and Regulations Office (‘NMRO’) by 31 December 2015. This obligation affects “Heat Suppliers” who are often the landlord of a multi-let building with a communal heating or cooling system.
  2. Issue of bills: The bills issued by the landlord must be based on actual consumption rather than by reference to floor area or a fixed percentage.
  3. Installation: From 31 December 2016 the landlord must ensure that a suitable meter which measures the consumption of heating or cooling or hot water of each tenant is installed. The landlord will not be obliged to do this if it is not cost effective or technically feasible (the tests of which are set out in the Heat Regulations). However, a landlord may still have to install heat cost allocators and thermostatic radiator valves on each radiator which heats a room and a hot water meter measuring consumption of hot water.

Enforcement of the Heat Regulations will be carried out by the NMRO. There are four enforcement options available to the NMRO: service of a compliance notice, acceptance of an enforcement undertaking, penalty payment and criminal prosecution.

Landlords should check if they are obliged to notify NMRO and if so ensure this is done by 31 December 2015

Landlords should review their existing leases in buildings with a communal heating system where the Heat Regulations apply.  In future leases charges for heating should be by reference to consumption rather than a fixed percentage or linked to floor area.  In existing leases, it is not clear whether the lease terms or the Heat Regulations will prevail in the event of a conflict.  However tenants are likely to argue that the statutory provisions should prevail where costs will be less than under the service charge provisions of the lease.