IMPACT OF SUSTAINABLE ENERGY AND CLIMATE CHANGE REGULATION…  A WARNING!

Here at BuilderScrap we think it’s possible, if not probable, that plant and equipment will need to be replaced even where it is not beyond economic repair, as a result of the new regulations. Service charge provisions in leases will not generally allow a landlord to recover the cost of works which amount to improvement. As with the Asbestos Regulations, it may be possible for the landlord to recover the cost of compliance through service charge provisions or the statutory compliance clauses.

In an FRI lease, the provisions will have an effect upon terminal dilapidation claims where plant and equipment must be replaced rather than repaired. There will be no obligation upon a tenant to fund the cost of replacement of any item that is not in disrepair and therefore serious concentration upon statutory compliance clauses and service charge clauses will be necessary.

The testing of equipment is bound to lead to conflicts over liability for failure in design and construction, leading to claims against Architects, Project Managers and Contractors. Standard warranties will need to be reviewed.

Reputation is all important. Investors have already announced they may boycott companies that fail to meet socially responsible standards in energy efficiency. Directors reporting duties are becoming increasingly focussed towards environmental issues. Companies providing services to the public sector are often already required as part of the tendering process to demonstrate carbon neutral status.

The Property Industry will not be able to ignore this particular bundle of red tape. In time, it will have an effect on the bottom line if it is not addressed seriously and quickly.

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