What the heat network regulations require, and how communal heating works

In England, Wales, Scotland and Northern Ireland, communal heating is treated as a heat network, but the regulatory split now matters: Great Britain has Ofgem authorisation, while Northern Ireland keeps the older metering-and-billing regime.

How does a communal heating system work?

A communal heating system works by producing heat or hot water from one central plant and distributing it through pipes to more than one flat, room or occupier in the same building. The legal definition is “the distribution of thermal energy in the form of steam, hot water, or chilled liquids from a central source in a building which is occupied by more than one final customer”, and in everyday terms that is what people mean by a heat network. A flat on a modern communal system usually has no individual gas boiler; it often has a heat interface unit, or HIU, which controls heating and hot water and may record consumption. The practical drawback is supplier choice: Citizens Advice says, “You can't switch heat network supplier because the supplier usually owns the heating equipment.” That makes communal heating closer to a shared building service than a normal gas or electricity account.

What do the Heat Network (Metering and Billing) Regulations require?

The Heat Network (Metering and Billing) Regulations still require metering in all four nations, but regulation 9 billing duties were revoked in full in England, Wales and Scotland from 27 January 2026 and now bind Northern Ireland only. The core metering rule says that where heating, cooling or hot water is supplied from a district heat network to a multi-customer building, “the heat supplier must ensure that meters are installed to measure that heating, cooling or hot water to that building.” In Northern Ireland, the old billing rule remains: where meters or heat cost allocators are installed, the heat supplier must ensure bills and billing information are given for consumption. In England and Wales, failure to install required meters is not a flat “up to £5,000” civil fine; the offence carries, on summary conviction, “a fine”, which means an unlimited fine. For Great Britain, the billing regime has moved into Ofgem authorisation conditions.

What does Ofgem's regulation of heat networks mean for a landlord?

Ofgem’s regulation of heat networks means a landlord who operates or supplies a communal or district heat network in Great Britain must be authorised, deemed authorised, or outside scope before carrying on that activity lawfully. The authorisation rule says, “A person must not carry on a regulated activity, except as permitted by virtue of a heat network authorisation,” and Ofgem guidance says existing operators before 1 April 2025 are automatically “deemed authorisation” and may continue while they register. A heat network serving only a single house in multiple occupation is carved out of the regulated-activity regime. Northern Ireland is different: DESNZ says the 2014 and 2020 Heat Network (Metering & Billing) obligations “will remain in force in Northern Ireland,” so Ofgem’s heat-network authorisation does not regulate NI landlords. There is also no domestic energy price cap for heat networks, because suppliers buy fuel commercially.

How are communal heating charges worked out and billed?

Communal heating charges are worked out from metered consumption where meters or heat cost allocators are used, and from an apportioned or pooled cost where individual metering is not used. In Great Britain, Ofgem’s authorisation rules now require at least one bill a year based on actual rather than estimated consumption; in Northern Ireland, regulation 9 of the 2014 Regulations still applies where meters or heat cost allocators are installed. If there is no individual meter, Citizens Advice describes the usual arrangement as a “pooled supply”, meaning the total cost of the network is split between connected homes. No UK-wide statutory formula fixes that split. In England and Wales, leaseholder recovery through a service charge is controlled by Landlord and Tenant Act 1985 section 19, so only reasonably incurred costs are recoverable. In Scotland, a property factor’s written statement must state each homeowner’s percentage or fraction share of common charges.

What are the pros and cons of a communal heating system?

The main pros of a communal heating system are shared equipment, economies of scale and easier future decarbonisation; the main cons are weak supplier choice, monopoly risk and disputes over charges or performance. Which? puts the attraction plainly: “a single large heating system can have economies of scale compared with every home having an individual heating system,” and heat networks can later be connected to low-carbon sources without replacing every flat’s boiler. The trade-off is control. Ofgem describes heat networks as “natural monopolies, where one entity is the supplier for all homes and businesses on the network,” and the CMA found customers have “no or limited ability to switch to an alternative heating system.” Older warnings that heat networks are not tightly regulated are now stale for Great Britain, because Ofgem’s statutory objective is “to protect the interests of heat network consumers”; Northern Ireland remains on the older metering-and-billing framework.

Last reviewed August 2026.

Sources

• Heat Network (Metering and Billing) Regulations 2014 — “"communal heating" means the distribution of thermal energy in the form of steam, hot water, or chilled liquids from a central source in a building which is occupied by more than one final customer, for the use of space or process heating, cooling or hot water;” Source
• LEASE, heat networks billing and disputes — “If your home is connected to a heat network, you do not need a boiler, but with most modern systems you will have a heat interface unit (HIU), which can look very similar to a boiler.” Source
• Citizens Advice, if your home is on a heat network — “You can't switch heat network supplier because the supplier usually owns the heating equipment.” Source
• Heat Network (Metering and Billing) Regulations 2014 — “Where heating, cooling or hot water is supplied from a district heat network to a building occupied by more than one final customer, the heat supplier must ensure that meters are installed to measure that heating, cooling or hot water to that building.” Source
• Heat Network (Metering and Billing) Regulations 2014 — “Subject to paragraphs (2) and (4), where meters or heat cost allocators are installed, the heat supplier must ensure that bills and billing information for the consumption of heating, cooling or hot water by a final customer are—” Source
• DESNZ revocation guidance — “Regulation 9 (Billing) and Schedule 2 (Billing information) was revoked in full in England, Wales and Scotland.” Source
• Heat Network (Metering and Billing) Regulations 2014 — “(aa)on summary conviction in England and Wales to a fine;” Source
• Heat Network Regulations 2025 — “A person must not carry on a regulated activity, except as permitted by virtue of a heat network authorisation (but see regulation 27 which provides for deemed heat network authorisations).” Source
• Ofgem heat networks registration guidance — “Authorised persons that began operating or supplying a heat network before 1 April 2025 are automatically authorised under the regulations, referred to as 'deemed authorisation', and may continue these activities.” Source
• Heat Network Regulations 2025 — “(a)the heat network only serves a single house in multiple occupation; or” Source
• DESNZ heat networks guidance — “Heat Network (Metering & Billing) Regulations 2014 and 2020 obligations are unaffected, and will remain in force in Northern Ireland.” Source
• DESNZ parliamentary answer — “Heat network suppliers commercially contract for the fuel that powers heat networks and so they are not subject to the domestic energy price cap.” Source
• Landlord and Tenant Act 1985 section 19 — “Relevant costs shall be taken into account in determining the amount of a service charge payable for a period—” Source
• Property Factors Code of Conduct 2021 — “(7) what proportion, expressed as a percentage or fraction, of the management fees and charges for common works and services that each homeowner is responsible for.” Source
• Which?, heat networks and boiler choices — “Connecting more homes to heat networks also helps heat homes more efficiently, as a single large heating system can have economies of scale compared with every home having an individual heating system.” Source
• Ofgem heat networks consumer protection guidance — “Heat networks are natural monopolies, where one entity is the supplier for all homes and businesses on the network.” Source
• CMA heat networks market study summary — “Customers have no or limited ability to switch to an alternative heating system.” Source
• Heat Network Regulations 2025 — “The principal objective of the Regulator in carrying out its functions under these Regulations is to protect the interests of heat network consumers.” Source