Leaseholders let down by new energy code

Thousands of residential leaseholders could face hefty backdated energy bills despite a new Code of Practice that is supposed to protect them, ARMA gas warned.

The new Code, issued by the Energy Retail Association (ERA), is supposed to protect small businesses-including leaseholder run Residents Management Companies (RMCs) from crippling backdated energy bills but completely fails to do so, according to the Association of Residential Managing Agent (ARMA).

ARMA believes that RMSs will be left particularly vulnerable, saying, These micro-businesses are run by volunteer leaseholders purely to manage the communal areas of their homes and do not make a profit. Unexpected bills often the result of energy companies misreading meters, can run into tens of thousands of pounds and area especially damaging to the leaseholders who must then foot the bill through their service charge payments. Under the Code, energy companies commit to limit backdated bills to three years for electricity and five years for gas. ARMA says the limit should be one year, the same as for domestic customers and that the Code should be compulsory-so far it is voluntary and not all energy suppliers have signed up.

ARMA chairman Peter Dening, who is a partner in Pennycuick Collins in Birmingham, said: We are very disappointed that the ERA has not gone further to protect leaseholders from the disastrous effects of back-billing. ARMA has campaigned for this Code of Practice so that energy companies will treat the communal areas to blocks of flats like the domestic premises they are. At a time when many families are struggling with fuel poverty, it is simply not fair that flat owners could still be billed for charges going back five years. Mary-Anne Bowring, Chair of membership at the Institute of Residential Property \Managers (IRPM) SAID: Leaseholders should not be punished for the mistakes of energy suppliers.

In these tough economic times it is simply not acceptable that residents can receive unexpected bills of thousands because their supplier has misread a meter. This is why we are backing ARMAa call for a Code of Practice to protect leaseholders from the crippling effects of such mistakes and avoid unnecessary debt. ARMA estimates that for around 60% of the blocks of flats in England and Wales, the effective landlord for supplies to communal area is an RMC. The organisation recently agreed to protocol with ERA to protect leaseholders from power disconnections to the communal areas of their property which can be downloaded from the ARMA website at www.arma.org.uk