Property and the Carbon Reduction Commitment

09/06/2010

By Sarah Easton, Senior Associate in Commercial Property & Development.

Buildings are responsible for around 50% of the UK's total carbon dioxide emissions and if you are a property owner or occupier you are likely to be affected by the Carbon Reduction Commitment in some way.

If your business is in the Carbon Reduction Commitment (CRC) and you have an investment portfolio you will need to consider whether you will be able to recover the net cost of participating in the CRC from your tenants.

Do your existing leases allow you to do this? Probably not.

Will you be able to negotiate new terms with tenants on renewal? Possibly.

What about new tenants? A tenant in a strong negotiating position may not accept it.

How will you decide how much each tenant should contribute?

Will you pass back recycling payments to tenants?

If your business is not in the CRC but your landlord is, you may have to contribute to the landlord's CRC costs. Your existing lease probably will not allow your landlord to recover costs, but if your landlord wants to make changes to the lease to permit recovery you could use it as an opportunity to make favourable changes to your user obligations or restrictions on alterations. You should check your service charge bills carefully as they may increase with your landlord attempting to improve the energy efficiency of the building.

If you wish to sell your property you will no doubt be asked to supply information on CRC issues and energy consumption data.

If you are considering purchasing a new property you will need information so that you can check if there will be any CRC implications for you. The purchase of a property could push you into a position where you will be covered by the CRC.