CRC drafting - next steps

Late last month, on the British Property Federation’s website, a property industry working party established to explore the lease drafting implications of the Carbon Reduction Commitment published a summary of responses to its initial consultation launched in December 2009. The 22 page document can be seen by clicking on The Carbon Reduction Commitment Energy Efficiency Scheme (CRC): Consultation on the Treatment of the CRC in the context of Landlord and Tenant Relationships Summary of Responses Received.

As had already been announced last month in the Estates Gazette, the working party has not been able to identify a clear one-size-fits-all approach to the drafting problems presented by CRC. The summary concludes that: “The responses to the consultation revealed no consensus about the next steps to be taken. Even landlords did not agree amongst themselves. This makes it difficult to progress, as originally intended, to drafting a standard CRC lease clause.” It says that “It seems, therefore, inevitable that one single, industry-standard, CRC lease clause is unachievable in the short term, and indeed may be undesirable as it could be seen to stifle innovations in energy improvement between landlords and tenants. However, the working party believes there may still be merit in highlighting particular approaches that landlords may choose to follow, so that so far as possible similar structures are used to achieve the same objective and simplify the drafting and negotiation processes.”

Accordingly, the industry working party intends to publish a second edition of “The Carbon Reduction Commitment: A Guide for Landlords and Tenants‟, which is stated to be issued in July 2010, but is expected to be published later this month.