Carbon Reduction Commitment - CRC

The Carbon Reduction Commitment Energy Efficiency Scheme (CRC) came into force in April 2010 relating to commercial property. Whilst initially participation in the scheme only applies to very large businesses and public sector organisations it can indirectly impact on tenants of such landlords.

On renewal of these leases the landlord may seek to include “green” provisions which enable the landlord to apportion CRC costs and receipts among itself and other tenants.

Such provisions might provide for:

• The landlord passing on CRC administration costs and allowances.
• Imposing good environmental practice on the tenants of the building including an energy       management plan to be monitored, improving and reviewing the environmental efficiency of the building and resource reduction.
• No change of use permission if the above provisions have not been complied with.

It will be interesting to see how this develops and its impact on the commercial letting market. Currently tenants have a wide choice of properties and may chose to avoid the uncertainties that CRC might impose upon them.