On 17 December 2009, a consultation was launched by a Working Party of various real estate industry bodies to explore whether a cross-industry consensus could be achieved on the apportionment of costs under the CRC Energy Efficiency Scheme (CRC) between landlords and tenants in new leases.
The consultation asked for feedback on a number of issues, including:
- Whether tenants should contribute towards CRC costs incurred by landlords in relation to the energy used within the tenant’s premises, or in the common parts;
- How CRC costs should be apportioned between different tenants;
- If CRC costs are not passed on to tenants, how landlords and tenants could be encouraged to work together to reduce carbon emissions;
- Whether tenants should provide landlords with the money to buy allowances in respect of carbon emissions, or whether landlords should buy the allowances and charge tenants retrospectively; and
- What should happen if either the landlord or the tenant changes.
If the consultation showed that a consensus could be found, the Working Party intended to create standard clauses for use in commercial leases, which would help reduce the time it takes to grant or review leases, or to agree documentation for the sale and purchase of properties that are subject to occupation leases.
A summary of the responses received during the consultation was published on 7 July 2010. However, after evaluating the responses, the Working Party concluded that there was insufficient consensus on how to address CRC issues in leases, meaning there was little point in creating standard clauses.
However, due to a number of the responses calling for additional guidance on the options open to landlords and tenants, the Working Party has decided to publish a new version of The Carbon Reduction Commitment: A Guide for Landlords and Tenants (originally published in June 2009) in the next few weeks. This updated guidance will outline the CRC issues that need to be considered when drafting leases; set out the different methods by which landlords and tenants could share the costs and rewards of the CRC; and summarise the advantages and disadvantages of each method.