Landlords of multi-let commercial and residential properties need to be aware of the implications of the Heat Network (Metering and Billing) Regulations 2014, which are mandatory upon all landlords who own buildings where the landlords supply heat to the final customer.
For example, a landlord with a multi-let offence building which runs from a communal heating system where a central boiler serves several different offence suites was required to register the heating system with the governing body before the 31st December 2015.
The notification should include the location of the communal heating system, the estimated heating capacity of the system, the heat generated and the heat supplied, the number of meters or heat cost allocators installed, and the number of final customers supplied. This should also include the name and business address to which the heat is supplied.
Once a building has been registered, the landlord then has a duty to install meters to measure the consumption of heating, cooling and hot water to each final customer. Alternatively, the landlord must install heat cost allocators and thermostatic radiator valves on each radiator to enable customers to control consumption and a hot water meter. The landlord must carry out a review of the cost effectiveness and technical feasibility every four years.
The Regulations are quite complex and there are exceptions to the requirement to install, but these are based on the cost effectiveness of installing the meters over the projected energy savings. Expert advice should be sought from specialists in this regard.
The landlord also has a duty to ensure that any bills that he is issuing to his tenant are accurate and based on actual consumption, and should be produced at least six monthly. The bill should contain specific information, including details of the energy prices charged, comparison of energy with previous years consumption, and contact information for organisations, from which information may be obtained on the available energy efficiency improvement measurements.
The landlord can make a charge for producing these bills, but may not make a profit.
There are wide-reaching implications for landlords who try to recover the costs of these installations, through service charge or tenant contribution, as the works may be regarded as improvements which may not be recoverable through service charges. Commercial landlords should take professional advice on the drafting of service charge clauses to ensure that they are able to recover these costs wherever possible.