With recent reports warning that temperatures in the UK could regularly top 40 degrees within the next decade, climate change has never been more important to address. Extreme weather events will affect how we live, work and of course also life, essential food and water supplies! More and more individuals and businesses are taking action to stop and hopefully even reverse their effect on the climate. The harsh reality is that it has taken decades to get to this position and there are no quick fixes. We can all do something, from consistent recycling at home to larger projects for businesses.
The Climate Pledge, which currently has 112 big business names signed up, requires its signatories to pledge net zero carbon emissions by 2040. Each of these companies will have assessed their carbon emissions and will be monitoring the actions they take to reduce them.
Smaller businesses have a role to play too and there are small changes they can also make to reduce their impact on the climate. This might include staff engagement and encouraging a mantra of “reduce, re-use, recycle”. It could mean physical changes to premises such as high spec insulation and heat exchange systems. Much will depend on the resources available and the cost implications of the works.
The owners of all commercial premises are required by law to produce an energy performance certificate (“EPC”) for their premises, before the premises can be sold or let out. The regulations require premises to have a minimum “E” rating before a new lease can be granted. This means that buildings with poor ratings cannot be let out (even on a renewal) without remedial works and some lenders will refuse to lend on such premises. Whilst this has gone some way to compel remedial works to be carried out, this does not go far enough with many owners only carrying out the bare minimum to have the rating improved just enough! It is highly likely that the regulations will be tightened up in coming years and already the way in which assessors give the ratings has changed. A property that would have had an “E” rating 5 years ago is unlikely to get one today. EPCs are generally valid for 10 years so this is potentially a ticking time bomb for “E” rated premises.
Of course, the owner of a commercial property who is committed to reducing their environmental impact is free to carry out whatever improvement works they require to their property and indeed a state of the art building is likely to command higher rents. This all comes at a cost and owners should carefully check the wording of their leases (where their buildings are tenanted) to establish whether they can recoup any of the cost from the tenant. In the case of major works the lease should also be checked to establish whether these can be carried out (e.g. does the landlord have a right to erect scaffolding if needed).
What can tenants do? A tenant, unless they have a lease of a whole building, is unlikely to be able to do anything to the main structure. They will only have control of their part of the building. Generally speaking most works will require the landlord to consent and in all likelihood that consent cannot be withheld or delayed – this does, of course, depend upon the wording of the lease. This will have an impact on costs – the tenant having to pay their own and the landlord’s costs for this consent and any monitoring and sign off by a surveyor that the landlord may require. Once the works have been completed, the tenant is also likely to be required to obtain a new EPC at their own cost.
Most leases contain a requirement for tenants to comply with statutes and it is likely within the next decade that the Government will start to require further positive steps to reduce the environmental impact of buildings. In those circumstances, tenants may find themselves required to carry out those works notwithstanding that they will still need formal landlord’s consent.
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*This is not legal advice; it is intended to provide information of general interest about current legal issues.