Property industry consultation on apportionment of CRC costs between landlords and tenants: summary of responses | Practical Law

Property industry consultation on apportionment of CRC costs between landlords and tenants: summary of responses | Practical Law

An update on the publication of a summary of the responses received in connection with the property industry consultation on apportionment of costs under the CRC Energy Efficiency Scheme (CRC) between landlords and tenants.

Property industry consultation on apportionment of CRC costs between landlords and tenants: summary of responses

by PLC Environment
Published on 08 Jul 2010 • UK
An update on the publication of a summary of the responses received in connection with the property industry consultation on apportionment of costs under the CRC Energy Efficiency Scheme (CRC) between landlords and tenants.
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On 7 July 2010, a working party representing the interests of the property industry published a summary of the responses to the consultation it had carried out on the apportionment of costs under the CRC Energy Efficiency Scheme (CRC) between landlords and tenants.
On 17 December 2009, a working party representing the interests of the property industry (which includes representatives from PLC) issued a consultation document seeking views from property owners and occupiers as to how the CRC Energy Efficiency Scheme (CRC) should be treated in new leases. The consultation closed on 5 February 2010. For more information on this consultation, see Legal update, Property industry consultation on how to apportion CRC costs between landlords and tenants.
If consensus could be found, the intention of the working party was to draft standard clauses for use in commercial leases. This would reduce the time taken to grant or review leases, or to agree documentation for the sale and purchase of properties that were subject to occupation leases.
The CRC Energy Efficiency Scheme: Property industry consultation: Summary of responses received was published on 7 July 2010. This sets out the responses received to the consultation, alongside information gleaned from interviews with key individuals in the property industry and the conclusions of a workshop held early in 2010.
The working party concluded that, at present, there is insufficient consensus on how to address CRC issues in leases, and that it would be premature to develop standard clauses.
However, several responses said that it would be helpful for additional guidance to be made available on the options open to landlords and tenants, and the issues which should be borne in mind. The working party will, therefore, be producing a second version of the The Carbon Reduction Commitment: A guide for landlords and tenants (originally published in June 2009) in the next few weeks. The updated guide will:
  • Outline the CRC issues that may need to be considered in lease drafting.
  • Set out different methods by which landlords and tenants (where this is agreed in heads of terms) could share the costs and rewards of the CRC.
  • Summarise the advantages and disadvantages of each method.
For further information about the working party, please contact Patrick Brown (Secretary to the working party) at [email protected].
In the meantime, for some suggested lease clauses dealing with CRC issues, see Standard clauses, Consultation draft CRC clauses for insertion into standard form leases. These include detailed explanatory notes, which highlight the issues and the purpose of the clauses. The draft clauses are intentionally very simple, and, as a result, cannot and do not address all of the many complexities to which the CRC may give rise in a landlord/tenant relationship.
Advanced drafts of the CRC additions to the CPSEs were published by PLC in May 2010 with a view to formal adoption as part of the CPSE suite in due course. For the current drafts, see the "Real estate transactions" section of the CRC Survival Kit: transactional toolkit.
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