Heat networks regulation: what do social landlords need to know?

The regulation of heat networks has undergone significant change this year, with Ofgem taking on its new role as regulator and a comprehensive set of authorisation conditions which came into force on 27 January 2026.

For social landlords operating communal or district heat networks, the new regulatory framework represents a major change in the way heating services must be managed. The requirements extend beyond the physical operation of a heat network and cover areas including consumer protection, billing, pricing, contracts, support for customers experiencing payment difficulties and demonstrable resilience.

The deadline for registration of existing heat networks is 26 January 2027, so landlords should now be considering whether their existing arrangements are capable of meeting the new requirements.

The issue of heat networks operated by social landlords has been brought into sharper focus by the publication in July 2026 of Citizens Advice’s report, Hidden debt, hidden risks: Fixing the two-tier system for heat network consumers with bundled charges. The report highlights a number of concerns arising where heating and hot water charges are incorporated within rent or service charges rather than being billed separately.

Ofgem’s new regulatory framework

The Energy Act 2023 established Ofgem as the regulator for heat networks in Great Britain. Following the introduction of the Heat Networks (Market Framework) (Great Britain) Regulations 2025, Ofgem’s Authorisation Conditions came into force on 27 January 2026.

The new framework is intended to provide heat network consumers with protections similar to those that have long existed in the gas and electricity markets. The Authorisation Conditions and associated guidance cover areas including standards of conduct, quality of service, billing and transparency, back-billing, heat supply contracts, protections for vulnerable consumers and security of supply. 

Heat network operators and suppliers with existing activity benefit from deemed authorisation during the initial regulatory period. However, this does not mean that they are outside the regulatory framework. The Authorisation Conditions already apply, and existing authorised activity must be registered with Ofgem by 26 January 2027. 

For landlords, this means that heat network arrangements should now be considered as part of the organisation’s wider regulatory and compliance framework, rather than simply as a repairs, maintenance or service charge issue.

What does this mean for landlords?

The new authorisation conditions introduce obligations across a number of areas that will be particularly relevant to housing providers.

These include requirements concerning:

• heat supply contracts and the information provided to tenants;
• billing (including transparency about what is being billed);
• restrictions on back-billing;
• fair pricing and cost allocation;
• support for tenants experiencing payment difficulties;
• protections for vulnerable tenants.

The framework is intended to ensure that prices are fair and not disproportionate and that costs are appropriately allocated. Landlords should therefore be reviewing not only the technical performance of their networks but also the contractual, financial and administrative arrangements supporting them.

Beyond operational compliance, landlords should consider the governance implications of the new regime. Ofgem has a range of enforcement powers and boards should ensure they have sufficient oversight of heat network activities, particularly where responsibility for heat networks is spread across housing, asset management, finance and service charge teams.

The particular challenge of bundled charges

The issue of bundled charging is particularly important for social landlords. Bundled charging occurs where heating and hot water costs are recovered through rent or service charges rather than through a separate heat supply arrangement.

The Citizens Advice report argues that this creates a “two-tier” system of consumer protection. While Ofgem’s new rules provide significant protections for consumers who receive separate heat bills, tenants whose heating costs are incorporated into rent or service charges can remain subject to different rules because of the interaction between Ofgem’s regulatory framework and existing housing legislation.

Social landlords may effectively occupy several roles at once: landlord, heat network operator or supplier, and party responsible for recovering the resulting debt. The distinction between those roles can be blurred, both within the organisation itself and from the point of view of tenants.

Billing and back-billing

One of the key concerns identified by Citizens Advice is the difference between the protections available to tenants receiving a separate heat bill and those whose heating costs form part of their service charge. 

The Authorisation Conditions include a 12-month limit on back-billing for relevant heat network consumers. However, section 20B of the Landlord and Tenant Act 1985 allows landlords to back-bill charges for up to 18 months, or even longer in some circumstances. 

There are also requirements in the Authorisation Conditions around the provision of accurate billing information and the frequency of billing which do not seem to map clearly onto bundled charges. 

For landlords, this creates an important operational question: are heating costs being identified, calculated, billed and recovered in a way that is transparent and consistent with the new regulatory framework?

The risk of heating debt

There is a further important issue for landlords to consider: the consequences of recovering heating debt through housing-related arrears.

Where heating costs are included within rent or service charges, a failure to pay the heating element can potentially contribute to rent or service charge arrears.

This raises important questions regarding billing practices, debt recovery strategies and the extent to which possession action may be linked, directly or indirectly, to heating-related arrears..
Landlords should consider whether their systems can identify the extent to which arrears relate to heating costs and whether staff dealing with rent arrears and possession action are able to distinguish between ordinary rent arrears and debt arising from the provision of heating and hot water.

Awaab’s Law and the importance of heat

The regulation of heat networks also sits alongside another significant development for social landlords: the expansion of Awaab’s Law.

From 30 November 2026, Phase 2 of Awaab’s Law will extend the statutory requirements to a wider range of hazards, including excess heat and excess cold, as well as electrical hazards, falls, fire and explosions, structural collapse and domestic hygiene. We have written a separate article on Phase 2 of Awaab’s Law.

The connection between heat networks and Awaab’s Law is therefore an important one. Landlords will need to distinguish between a general complaint about temperature and a report which may indicate a significant hazard requiring action under the statutory framework.

The Government’s Phase 2 guidance makes it clear that Awaab’s Law is concerned with hazards presenting a significant risk of harm, rather than making landlords automatically responsible for every instance of a high or low temperature. 

However, this becomes particularly relevant given the increasing focus on overheating in social housing (see for example Citizens Advice report about overheating). For landlords operating heat networks, the application of Awaab’s Law in a situation where the climate is changing suggests there is a need to consider heating and thermal comfort as part of a wider property safety strategy rather than treating the operation of the heat network and housing compliance as entirely separate functions.

What should landlords be doing now?

Both heat network regulation and Awaab’s Law are in force, with key deadlines for each approaching fast. Landlords operating heat networks should consider undertaking a structured review of their arrangements.

Areas to be considered include:

1. Registration and governance

   Landlords should confirm which heat network activities they undertake, whether they are the relevant operator, supplier, or both and whether they have all the necessary documentation to enable them to register with Ofgem by 26 January 2027.

2. Billing arrangements

   Landlords should review how heating costs are calculated, how frequently residents receive information and whether historic charges are being recovered through service charges. Particular attention should be paid to the interaction between Ofgem’s back-billing requirements and any existing service charge regime.

3. Arrears and enforcement

   Landlords should consider whether their arrears systems can identify heating-related debt and whether their debt recovery policies adequately account for the particular issues arising from bundled charges.

4. Awaab’s Law readiness

   For landlords in England, heat network arrangements should also be considered as part of their preparation for Phase 2 of Awaab’s Law. Complaints relating to heating, temperature and thermal comfort should be capable of being appropriately triaged where they may indicate an excess heat or excess cold hazard.

Looking ahead

While many landlords are focusing on the January 2027 registration deadline, registration should be viewed as only one part of compliance. The more significant challenge will be ensuring that governance arrangements, billing systems, debt recovery processes and tenant communications align with Ofgem's new consumer protection framework. Landlords that begin that work now will be better placed to manage both regulatory risk and resident expectations as the regime matures.

The forthcoming expansion of Awaab’s Law provides another reason for landlords to consider heat networks within their wider housing compliance framework. 

The combination of regulatory requirements around the cost and provision of heat and statutory obligations concerning the safety and habitability of properties means that effective governance will increasingly require housing, repairs, asset management, finance and legal teams to work together.

For landlords operating heat networks, the key message is therefore to prepare now. The regulatory framework is already in place, the registration deadline is approaching, and further scrutiny of how heat is provided, charged for and managed is likely to follow. 

If you need any help with any of the issues discussed in this article, then please do not hesitate to contact us. 

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