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By Elizabeth Turner

Oct 26th, 2015

Heat Network Regulations

Are you a Commercial Landlord? Do you have multiple tenants in the same building? Or does your building receive its heat supply from a District Heat Network? Or are you a tenant and have underlet to a subtenant?  If so, you are likely to be affected by the Heat Network Regulations. Failure to adhere to these regulations by the end of 2015 may result legal proceedings so please read our fact sheet below.

Introduction

The Heat Network Regulations apply the EU Energy Efficiency Directive to UK law. The Regulations affect both buildings in multiple occupation with a communal heating system (CHS), and buildings connected to a District Heat Network (DNH) where energy is distributed to multiple buildings or sites occupied by more than one customer.   

Who is affected? 

The Regulations apply to all “heat suppliers”, i.e. the person (both private and public sector) who controls the hot water, heating or cooling supply in the building for the final consumer. This is normally the landlord, but it may be the tenant if they control the energy supply to undertenants. If you are responsible for a property with CHS or DHN, contracts should be reviewed to determine who the “heat supplier” is and that the regulation is complied with.  

Which buildings are affected? 

All buildings in multiple occupation with a communal heating system or buildings connected to a District Heat Network (DNH) are affected.

 For the purposes of domestic heat supply, such as a building containing individual apartments, a dwelling must meet the following criteria:

  • It has a living and sleeping space
  • It has sanitary facilities (including washing and toilet)
  • It has cooking and food preparation facilities

For non-domestic heat supply, users must have access to a partitioned private space for the purposes of carrying out their activity. However, some services such as sanitary or reception may be shared. Government guidance[1] suggests this includes, among others:

  • Sub-let spaces such as fitness centres in hotels or third party dry cleaners in supermarkets
  • Industrial sites where a contract exists for the supply of heat through a network, for example from an adjoining plant
  • Sheltered and social housing
  • Residential care homes
  • Offices used by multiple organisations

What are the billing standards?

The Heat Network Regulations also impose billing standards on “heat suppliers”.

The minimum requirements are:

  • At least one bill a year is based on actual consumption
  • Billing information must be supplied to tenants with every bill
  • Landlords (“heat suppliers”) must not charge for the provision of bills or billing information. N.B. NMRO guidance states that statutory obligations will prevail over any terms within a lease. Therefore leases which provide for tenants to fund the provision of their bills may not be enforceable for this particular element. Leases may also be overridden where the service charge clause of a lease makes reference to payments calculated by floor area or by a fixed percentage. Going forward leases should refer to payments being based on consumption.

What are the installation requirements?

Landlords are required to install meters and measurement equipment to specific standards (unless technically impossible or cost is unreasonable):

From 18/12/14:

  • Existing meters must be replaced with new meters that measure individual consumption

From 31/12/16:

  • Meters measuring individual consumption must be installed
  • If criteria not met, other types of measuring equipment must be installed, this may include heat cost allocators, thermostatic radiator valves and hot water meters. Assessments of meters and/or equipment must be made every four years.

What are the notification requirements?

The “heat supplier” will need to notify the National Measurement and Regulation Office of the details of their CHS or DHN systems by the 31 December 2015. The NMRO requires specified details including the annual estimated installed heating capacity, heat generated and heat supplied. From 2016 the NMRO must be notified of any new or updated CHS or DHN systems every four years.

What are the penalties for non-compliance?

“Heat-suppliers” must be aware of these obligations as the National Measurement and Regulation Office has several enforcement measures available to it. There include criminal prosecution, with a fine of up to £5000 per offence and other civil sanctions such as a penalty payment for non-compliance.

What is the impact for Landlords and tenants?

When replacing any existing meters or dealing with new developments landlords will need to be aware of the new standards imposed by the Regulations. Both landlords and tenants may wish to review existing leases to determine whether they can recover any costs in relation to heating, cooling and hot water supply.

Access the statutory guidance here: https://www.gov.uk/guidance/heat-networks

This is intended to provide general information about the Heat Network Regulations.  It is not intended to be comprehensive or provide specific legal or technical advice. If specific technical advice is required, we would be happy to recommend a specialist.


[1] Heat Network Scope Guidance NMRO October 2015 (gov.uk)

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