‘If I could move, I would – to a place without a heat network. But I can’t while this debt is hanging over me,” says Anja Georgiou.

The mother lives with her family in a rented flat in the River Gardens development in Greenwich in south-east London where, three years ago, residents were shocked to be presented with a surprise £200,000 bill for heating and hot water.

With views of the Thames, and historic Greenwich Park nearby, it is a “very nice” place to live, says Georgiou. The development has a gym and swimming pool and, like many new-builds in the capital, the residents are hooked up to a communal boiler – one of the most common forms of heat network.

Also known as district heating systems, these have been installed in many developments and supply heat from a central source via a network of pipes carrying hot water. The supplier is usually the landlord or freeholder, which buys energy on the commercial market for residents.

Despite their growing use – during the past few years in London, almost three-quarters of new homes have had heat networks installed – the industry was, until a few days ago, unregulated. But on 27 January the regulator Ofgem officially started overseeing the sector in order to make sure customers are properly protected and “shielded from unfair price hikes”. That is good news for the 500,000 to 1 million households connected to a heat network.

In the spring of 2023, River Gardens residents were told their energy tariff would change that summer – from 20p a kilowatt hour with a 55p standing charge to 37p and 39p respectively.

That wasn’t the only bad news. The development’s managing agent, Rendall & Rittner (R&R), said an extra charge was going to be slapped on their bills because of a £198,986 debt that had accumulated on the heat network’s energy account over a 15-month period spanning 2022 and 2023.

Georgiou’s neighbour Calum Matheson, a software developer who owns a leasehold flat in the same block, was told he owed an extra £550. He immediately sought a way to fight it. “It was plainly wrong,” he says. “I had already paid my bills. You don’t get to send me an extra one.”

Residents who were up to date with their bills struggled to comprehend the situation, and in a follow-up letter, R&R – which manages 90,000 homes – tried to explain what happened.

R&R said River Gardens’ energy supplier With Energy had ceased buying gas for the building in 2022, and R&R’s own procurement arm had taken over. However, said R&R, in the months that followed, while the price it was paying for gas nearly doubled, it did not get With Energy – which still issues the bills – to review the tariff paid by residents quickly enough.

The “regrettable delay”, as R&R put it, resulted in a deficit opening up between the cost of the gas used to operate the heat network and the bills being paid.

The debt would be shared out among the homeowners and tenants of the flats based on their usage during the period. The bills ranged from £50 to £600, with Georgiou’s share £337.

R&R warned residents that they could not move to the cheaper deal it had secured for winter 2023 until the debt was cleared.

The letter provoked a furious reaction. “Our energy contracts had clear terms and conditions,” says Georgiou.

“I could not believe they thought they could just send a letter telling us they should have charged higher tariffs on the invoices already paid and show over £300 outstanding on my account with no bill … Imagine if British Gas did that? We’re absolutely not paying it. It is outrageous.”

Matheson was determined to fight the bill. He contacted everyone he could think of for help, including the Energy Ombudsman, but was turned away. (Since last April, new legislation means heat network customers can now use the ombudsman service). When it emerged the landlord would seek to recover the debt from individual leaseholders through the service charge, he made an application to a first-tier property tribunal. These specialise in dealing with common property disputes.

“There is no legal basis for charging historical tariff increases to residents,” says Matheson, pointing to the terms and conditions on their energy bills, which stated that With Energy agreed to bear the risk of volatility in the gas markets. “In any event, consumer protection law would prevent any additional charges based on energy already used and paid for at published and contracted prices.”

Matheson represented himself and 56 other leaseholders at the tribunal, a process which he says meant “hundreds of hours’ work”.

Last month that work paid off when the tribunal found in their favour. It said the money is “irrecoverable as service charges under the respective leases”.

It also disallowed 20% of R&R’s fees for the 15-month period when the debt arose.

Many residents, including Matheson, had paid their part of the bill in 2024 after receiving letters which said failure to do so would see the charge “passed to solicitors for collection”.

The tribunal does not have the power to order the money to be refunded. The debt is still outstanding on Giorgiou’s account at the time of writing.

An R&R spokesperson says: “We are aware of the tribunal findings. We are reviewing the matter and will then liaise with our client in relation to the charges for heating, which are legally payable to our client rather than to Rendall & Rittner. We have not raised any fees in relation to the heat services at the River Gardens.”

They add: “The case was brought against our client by leaseholders and proceeded without our involvement. We are therefore unable to comment further.”

Matheson says: “I hope R&R will put residents back in the financial position that they ought to be in. If nothing else, I am glad this is out in the open, as I know it is happening across the country. I hope it will make other developers think twice before they act like this. As a point of principle, I’d also like my £550 back.”

Stephen Knight, the chief executive of Heat Trust, the consumer champion for people on heat networks in Great Britain, says: “We see this quite a lot. What they were seeking to do was retrospectively increase the price they charge for a service. And one of the rules that has come in is that you have to announce your tariff rate 31 days before it applies. This will effectively outlaw the practice.”

Turning up the heat: how watchdog can police poor service

Ofgem is now in charge of policing heat networks and can step in if customers face unfair price hikes or suffer poor service.

The networks supply heat from a central source via a network of insulated pipes carrying hot water. The supplier is usually the landlord or freeholder, which buys energy on the commercial market for residents.

Because heat network operators buy energy at commercial rates, their customers are not protected by the Ofgem price cap, which limits how much a supplier can charge a domestic customer for each unit of energy, as well as the maximum daily standing charge.

The vulnerability of people with this type of energy contract came to the fore during the energy crisis fuelled by the Russian invasion of Ukraine.

Before the war, operators could buy gas at a fraction of the price that domestic consumers could – but amid turbulent gas prices, some heat network customers saw their energy costs surge by up to 450%.

Despite the problems, heat networks are a big part of the country’s net zero push. The set-up is supposed to provide communities with low-cost and efficient heat, and by 2050 the government hopes they will supply a fifth of England’s heat – up from 3% today.

The Competition and Markets Authority made the case for proper regulation of heat networks back in 2018, and their rollout has made the case even more pressing.

Helena Charlton, Ofgem’s director of heat networks, says: “Many heat network customers already receive a good service, but we also know that too many people face unclear bills, poor communication or uncertainty about what to do when things go wrong.”

Over time, the new regime would ensure that customers could understand their bills, that prices were fair and that they could rely on their heat supply, she says. “These are protections that are commonplace for customers of gas and electricity companies … Heat networks customers can expect the same in future.”

Some new protections took effect in 2025. The Energy Ombudsman started accepting disputes relating to heat networks, and a new advice service provided by Consumer Scotland and Citizens Advice in England and Wales launched.

Stephen Knight, of Heat Trustsays regulation is “long overdue”.

“There is an increasing number of people on heat networks, and until now, no clear set of rules on how they should be treated,” he says. “There’s a whole huge range of detriment issues due to this sector having not been properly regulated.”

He adds: “The new Ofgem rules include a package of protections, which are obviously a huge step forward, but the bits that are missing include proper price protection – an equivalent of the price cap. All we have is a general rule that pricing has to be fair and proportionate, and that Ofgem will start to monitor prices and can intervene.”