Leaseholders at a Greenwich development have successfully challenged a £200,000 retrospective heating bill at a property tribunal, highlighting regulatory gaps in the UK’s heat network sector that affected up to 1 million households until new oversight began last month.
Residents at River Gardens in south-east London received notification in spring 2023 that they would be charged for a £198,986 debt accumulated on their heat network’s energy account over a 15-month period spanning 2022 and 2023. Individual bills ranged from £50 to £600, with residents who had already paid their energy bills in full required to pay additional charges.
Management company explains tariff delay
Managing agent Rendall & Rittner (R&R), which manages 90,000 homes, stated that the development’s energy supplier With Energy had ceased buying gas for the building in 2022. R&R’s procurement arm took over, but whilst gas prices nearly doubled, the company did not get With Energy to review resident tariffs quickly enough.
The delay resulted in a deficit between the cost of gas used to operate the heat network and the bills being paid. R&R attempted to distribute the debt among homeowners and tenants based on their usage during the period.
Resident Calum Matheson, a software developer who owns a leasehold flat, challenged the charge of £550 added to his account. He represented himself and 56 other leaseholders at a first-tier property tribunal, arguing there was no legal basis for charging historical tariff increases to residents.
Tribunal rules in favour of residents
The tribunal found in favour of the leaseholders last month. Matheson pointed to terms and conditions on energy bills stating that With Energy agreed to bear the risk of volatility in gas markets, and cited consumer protection law preventing additional charges based on energy already used and paid for at contracted prices.
Heat networks supply heat from a central source via pipes carrying hot water, with the supplier typically being the landlord or freeholder who buys energy on the commercial market. During recent years in London, nearly three-quarters of new homes have had heat networks installed.
New regulatory oversight begins
The sector remained unregulated until 27 January 2025, when Ofgem officially began overseeing heat networks to protect customers from unfair price hikes. An estimated 500,000 to 1 million households are connected to heat networks across the UK.
Prior to April 2024, heat network customers could not access the Energy Ombudsman service. The case demonstrates the challenges faced by property owners and tenants in developments with communal heating systems, where energy procurement sits outside standard consumer protections that apply to individual gas and electricity contracts.
For property investors and developers, the case highlights potential liabilities associated with heat network installations in multi-unit developments, particularly regarding tariff management and retrospective billing practices. The introduction of regulatory oversight may affect operational costs and contractual arrangements for properties with existing heat network infrastructure.
