The Energy Act 2011 contains a clause with potentially severe repercussions for about 20% of all commercial property in the UK.
Under the Act, it will become unlawful from April 2018 to let premises that fail to meet the minimum energy efficiency standards – an EPC rating of F or G, until certain energy efficiency improvements are made. Both Landlords and tenants need to understand which of their properties would fail to meet standards and what improvements would be required.
The situation is somewhat more complex where a commercial lease is already in place and will continue beyond 2018 due to the landlord and tenant relationship and the inevitable discussion between parties as to who pays for the improvements and who benefits from them. The standard modern lease includes a general clause stating that it is the tenant’s responsibility for complying with statute however this will surely be argued by both parties going forward. The response to the Energy Act will continue to be complicated, as lease terms and service charge agreements are closely scrutinised and negotiated to determine who pays for improvements to the property and when. Undoubtedly this will become a growing area of litigation and emerging case law.
Tom Neville BA (Hons) MRICS