Utility Management for Blocks of Flats Guide
A comprehensive guide to managing shared utilities in residential blocks of flats, covering communal electricity supplies, gas and water management, sub-metering and heat metering regulations, bulk energy purchasing, and strategies for reducing communal utility costs. Understand how utility cost allocation works within the service charge and how smart metering can improve efficiency and fairness across your block.
Types of Shared Utilities in Blocks of Flats
Shared utilities in a block of flats are those services consumed collectively by all residents and common areas, rather than by individual flats alone. The cost of these utilities is typically recovered through the service charge and must be managed efficiently to keep costs fair and transparent for all leaseholders. Understanding the types of communal utility supplies in your building is the first step towards effective utility management.
The main categories of shared utilities found in blocks of flats include communal lighting for hallways, stairwells, lobbies, and external areas; electricity for lifts, door entry systems, CCTV, and fire alarm panels; communal heating systems powered by gas or electricity; water supply for communal areas, irrigation, and shared water systems; and electricity for water pumps and pressurisation units in taller buildings. Each of these utility types has its own metering, billing, and management considerations.
Effective management of these shared utilities requires the managing agent to monitor consumption, negotiate competitive supply contracts, and ensure that costs are allocated fairly among leaseholders. For guidance on how utility costs fit within the broader service charge framework, see our service charge budget guide.
Communal Electricity and the Landlord's Supply
The landlord's electricity supply is a dedicated meter and supply point that serves the communal areas and shared equipment in a block of flats. It is separate from the individual electricity meters in each flat and is the responsibility of the freeholder or managing agent to maintain and manage. The costs incurred on the landlord's supply are recovered through the service charge.
What the Landlord's Supply Powers
The landlord's electricity supply typically powers all lighting in communal hallways, stairwells, lobbies, and car parks. It also supplies electricity to lifts, door entry and intercom systems, security cameras and CCTV, fire alarm panels and emergency lighting, communal heating plant rooms, water booster pumps, and any other shared electrical equipment. In larger or more complex blocks, there may be multiple landlord's supply meters serving different parts of the building or different systems.
Managing the Communal Electricity Account
The managing agent is responsible for ensuring the communal electricity account is held with a competitive supplier and that the tariff is regularly reviewed. Errors in meter registration, such as the communal supply being incorrectly registered to an individual flat, can lead to significant overbilling for that leaseholder and underbilling on the service charge. Regular meter audits help identify and resolve these issues. Managing agents should also ensure that the meter point administration number (MPAN) for each communal supply is correctly recorded and that estimated bills are challenged where actual readings are available.
Reducing Communal Electricity Costs
Significant savings on communal electricity can be achieved by upgrading to LED lighting, installing presence detection and daylight sensors, and ensuring that equipment such as lifts and pumps is well maintained and energy efficient. For a broader overview of sustainability measures, see our sustainability and green block management guide.
Sub-Metering and Heat Metering Regulations
Sub-metering involves installing meters on individual supplies within a building to measure the consumption of each flat or area separately. This is distinct from the main utility meter, which records total consumption for the building. Sub-metering is particularly relevant for blocks with communal heating systems, where the Heat Network (Metering and Billing) Regulations 2014 impose specific requirements on how consumption is measured and billed.
Heat Network (Metering and Billing) Regulations
The Heat Network (Metering and Billing) Regulations 2014 require suppliers of communal or district heating to install heat meters or heat cost allocators where it is technically feasible and cost-effective to do so. The regulations are designed to ensure that residents in buildings with communal heating are billed based on their actual consumption, rather than paying an equal share regardless of how much heat they use. This promotes energy efficiency and fairness. For further detail on communal heating obligations, refer to our communal heating guide.
Types of Sub-Metering
Sub-meters can be installed for electricity, gas, water, and heat. Electricity sub-meters are commonly used where a single supply feeds multiple units, for example in converted buildings. Heat meters measure the flow of hot water through radiators or underfloor heating in each flat, while heat cost allocators are devices fitted to individual radiators that estimate consumption based on surface temperature. Water sub-meters measure the volume of water used by each flat and are increasingly being installed in new-build blocks and during major refurbishment projects.
Obligations for Building Owners
Building owners and managing agents must comply with the Heat Network Regulations by notifying the relevant authority of their heat network, carrying out a feasibility assessment for individual metering, installing meters where viable, and providing billing information to residents based on actual consumption. Non-compliance can result in civil penalties. The regulations apply to any building where heating or hot water is supplied through a communal system, including both new-build developments and older blocks with shared boiler systems.
Bulk Energy Purchasing and Switching Suppliers
Bulk energy purchasing is a strategy that allows blocks of flats to benefit from economies of scale when buying electricity and gas. By aggregating the energy demand of multiple buildings or multiple supply points, managing agents can negotiate lower tariffs than would be available to individual domestic consumers. This approach can result in significant savings on communal utility costs and is an important tool in effective utility management.
How Bulk Purchasing Works
In a bulk energy purchasing arrangement, the managing agent or a specialist energy broker aggregates the communal supply requirements of multiple buildings into a single procurement exercise. Suppliers bid for the combined volume, and the resulting tariff is typically lower than standard commercial or domestic rates. The contract is then applied to each building's communal supply. Some managing agents form purchasing consortia with other management companies to increase their buying power further.
Switching Communal Energy Suppliers
Regularly reviewing and switching communal energy suppliers is one of the most effective ways to reduce utility costs for leaseholders. The managing agent should monitor contract end dates, compare available tariffs, and assess whether the current supplier is offering a competitive rate. Switching can be carried out by the managing agent without the need for a Section 20 consultation, provided the contract value does not exceed the statutory consultation threshold. The process is similar to switching a domestic energy supplier and can typically be completed within a few weeks.
Using Energy Brokers
Many managing agents work with energy brokers to identify the best tariffs for communal supplies. An energy broker acts as an intermediary, searching the market on behalf of the building and presenting a range of options. While brokers can deliver genuine savings, managing agents should ensure that the broker's commission or fees are transparent and that the savings achieved are clearly demonstrated in the service charge budget. Leaseholders are entitled to see evidence that utility contracts have been competitively procured.
Water Supply Management and Shared Water Systems
Water supply management in blocks of flats presents unique challenges. Many older buildings have a single incoming water main that supplies the entire block, with no individual metering for each flat. In these buildings, water costs are shared equally among leaseholders through the service charge, regardless of individual consumption. Newer developments are more likely to have individual water meters, allowing each flat to pay for their own usage.
Communal Water Systems
In taller blocks, communal water systems often include water storage tanks, booster pumps, and pressurisation units to ensure adequate water pressure to upper floors. These systems consume electricity on the landlord's supply and require regular maintenance, testing, and Legionella risk assessments. The cost of running, maintaining, and testing communal water systems is a legitimate service charge item and can represent a significant expense in larger buildings. Managing agents must ensure compliance with water hygiene regulations, including the HSE Approved Code of Practice L8 for Legionella control.
Individual Water Metering
Where individual water meters are installed, each leaseholder pays their water company directly for their own consumption, and only the communal water usage is charged through the service charge. Water companies have programmes to promote the installation of individual meters, and in some areas, compulsory metering has been introduced. For blocks without individual meters, the managing agent may consider installing sub-meters to enable fairer allocation of water costs, although the cost of installation and ongoing meter reading must be weighed against the potential savings.
Reducing Water Waste
Leak detection, prompt repair of communal plumbing, and regular inspection of water storage tanks and distribution pipework can significantly reduce water waste and costs. Managing agents should monitor water consumption patterns and investigate any unexplained increases, which may indicate a leak in the communal system. Educating residents about water conservation and ensuring that communal taps, irrigation systems, and other water-using equipment are fitted with efficient devices also contributes to reduced consumption and lower costs.
Utility Cost Allocation and Service Charge Apportionment
How utility costs are allocated among leaseholders is determined by the apportionment schedule in the lease. The method of apportionment should be transparent and consistent, and leaseholders have the right to see a full breakdown of communal utility expenditure as part of the annual service charge accounts. Disputes over utility cost allocation are among the most common sources of disagreement in blocks of flats.
- Equal shares: each flat pays the same proportion of communal utility costs, regardless of size or location
- Weighted shares: costs are apportioned by floor area, rateable value, or number of bedrooms, reflecting differing levels of benefit
- Fixed percentages: some leases specify an exact percentage for each unit, which cannot be varied without lease amendment
- Metered consumption: where sub-meters are installed, costs can be allocated based on actual usage, which is the fairest approach
- Hybrid methods: some blocks use a combination of fixed shares for certain utilities and metered billing for others
- Managing agents must follow the apportionment method specified in the lease and cannot unilaterally change it
- Leaseholders can apply to the First-tier Tribunal if they believe the apportionment method is being applied incorrectly
Transparent reporting of utility costs in the service charge accounts helps leaseholders understand what they are paying for and reduces the risk of disputes. For detailed guidance on service charge budgeting, see our service charge budget guide.
Smart Metering and Energy Efficiency in Blocks of Flats
Smart metering technology is transforming how communal energy consumption is monitored and managed in blocks of flats. Smart meters provide real-time data on electricity, gas, and water consumption, enabling managing agents to identify patterns of waste, detect faults, and make informed decisions about energy procurement and efficiency improvements. Combined with broader energy efficiency measures, smart metering can deliver meaningful reductions in communal utility costs.
Smart Meters for Communal Supplies
Smart meters installed on the landlord's electricity and gas supplies transmit consumption data automatically to the supplier and to the managing agent. This eliminates the need for manual meter readings, reduces the risk of estimated bills, and provides accurate, up-to-date consumption data. Managing agents can use this data to benchmark consumption against similar buildings, identify anomalies, and track the impact of efficiency measures. For more on how technology is enhancing building management, see our smart building guide.
Energy Efficiency Measures
Improving energy efficiency in communal areas is one of the most effective ways to reduce ongoing utility costs. Key measures include upgrading communal lighting to LED with automatic controls, insulating communal heating pipework and hot water cylinders, installing variable speed drives on pumps and ventilation fans, optimising heating controls and time schedules, draught-proofing communal entrance doors and windows, and considering renewable energy sources such as solar panels for communal electricity generation. An energy performance assessment can help identify the most cost-effective improvements for each building. For further information, see our energy performance guide.
Monitoring and Reporting
Effective utility management requires ongoing monitoring and regular reporting to leaseholders and directors. Managing agents should provide periodic reports on communal energy consumption, benchmark performance, and highlight any areas where costs are increasing unexpectedly. This data-driven approach enables proactive management and ensures that leaseholders can see the impact of efficiency investments on their service charge. Automated monitoring platforms can generate alerts when consumption exceeds expected levels, allowing rapid investigation and resolution of issues such as leaks, equipment faults, or billing errors.
Frequently Asked Questions About Utility Management in Blocks of Flats
Who pays for communal electricity in a block of flats?
Communal electricity in a block of flats is paid for by leaseholders through the service charge. The landlord or managing agent contracts with an energy supplier for the communal electricity supply, which powers shared areas such as hallway and stairwell lighting, security systems, door entry systems, communal heating plant, car park lighting, and lifts. The cost is then apportioned among all leaseholders according to the terms of their leases, typically on an equal share basis or weighted by flat size. This communal electricity cost forms part of the annual service charge budget and must be reasonably incurred under Section 19 of the Landlord and Tenant Act 1985. Leaseholders have the right to request a breakdown of utility costs and to challenge any charges they consider unreasonable through the First-tier Tribunal.
Can a managing agent switch utility suppliers for the block?
Yes, a managing agent can switch utility suppliers for the communal supply to a block of flats, and doing so is often part of their duty to manage costs effectively on behalf of leaseholders. The managing agent should seek competitive quotes from multiple suppliers and compare tariffs, contract terms, and standing charges before making a switch. Some managing agents use energy brokers or participate in bulk purchasing schemes to secure better rates. Before switching, the agent should check the terms of the existing contract to ensure there are no early termination penalties that would outweigh the savings. Transparency is important, and the managing agent should be able to demonstrate that any switch results in a genuine cost saving or improved terms for leaseholders. The decision to switch does not usually require a Section 20 consultation unless the contract value exceeds the statutory threshold.
How are shared utility costs divided between leaseholders?
Shared utility costs are divided between leaseholders according to the apportionment schedule set out in each lease. The most common methods are equal shares, where every flat pays the same proportion, or weighted shares based on floor area, rateable value, or the number of bedrooms. Some leases specify fixed percentages for each unit, while others refer to a fair and reasonable proportion as determined by the managing agent. The apportionment method for utility costs is usually the same as for all other service charge items, although some leases make specific provision for certain utilities. Where sub-metering is installed, individual consumption can be measured and charged directly, which is considered the fairest method. The apportionment method cannot be changed without the agreement of all parties or a variation of the lease terms, which may require a Tribunal application.
What is a landlord's electricity supply?
A landlord's electricity supply is the electricity meter and supply point that provides power to the communal areas and shared equipment in a block of flats, as distinct from the individual meter supplies to each flat. The landlord's supply typically powers communal lighting in hallways, stairwells, and lobbies, external and car park lighting, door entry and security systems, communal heating plant and boilers, lifts and lift motor rooms, water pumps and pressurisation systems, and any other shared electrical equipment. The account for the landlord's supply is held in the name of the freeholder or managing agent, and the cost is recovered from leaseholders through the service charge. It is important that the landlord's supply is correctly registered and that the tariff is competitive, as communal electricity can represent a significant proportion of the annual service charge budget.
How can blocks of flats reduce communal energy costs?
There are several practical steps blocks of flats can take to reduce communal energy costs. Upgrading communal lighting to LED fittings with presence detection sensors can reduce lighting energy consumption by up to 80 percent. Installing timer controls on heating systems and optimising boiler settings ensures that communal heating operates only when needed. Regularly reviewing and switching energy suppliers or participating in bulk purchasing schemes helps secure the most competitive tariffs. Improving insulation in communal areas, including pipe lagging and draught-proofing, reduces heat loss. Smart metering and monitoring systems allow the managing agent to track energy consumption in real time and identify waste. For blocks with communal heating, ensuring that the system is properly maintained, descaled, and balanced prevents inefficiency. An energy audit or assessment by a qualified energy consultant can identify further opportunities for savings and may recommend technologies such as solar panels or heat pumps.
What are the metering requirements for blocks of flats?
Metering requirements for blocks of flats depend on the type of utility and the heating arrangements in the building. For electricity, each flat should have its own individual meter registered with a licensed supplier, and the communal areas should have a separate landlord's supply meter. For gas, individual meters are required where each flat has its own boiler, but blocks with a communal heating system may have a single bulk gas meter. The Heat Network (Metering and Billing) Regulations 2014 require buildings with communal or district heating to install heat meters or heat cost allocators where technically feasible and cost-effective, enabling individual billing based on actual consumption. For water, many older blocks have a single incoming water main with no individual metering, although water companies are increasingly promoting the installation of individual water meters. Sub-metering can be installed for any utility to measure individual consumption, and is encouraged as a means of promoting fair billing and reducing waste.
Need Help Managing Utilities in Your Block?
Whether you need assistance with communal electricity contracts, bulk energy purchasing, heat metering compliance, or reducing communal utility costs, Block is here to help. Our experienced team manages utility procurement and energy efficiency programmes across hundreds of blocks nationwide, ensuring leaseholders benefit from competitive tariffs, transparent billing, and well-maintained communal systems.