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A recent case has highlighted the approach taken by the courts in relation to 'green lease' terms in lease renewal proceedings under the Landlord and Tenant Act 1954. This judgment is of particular importance as more and more landlords look to increase the energy efficiency of their properties.
The case (Clipper Logistics Plc v Scottish Equitable Plc) concerned a tenant of an industrial unit who sought determinations from the court under the Landlord and Tenant Act 1954 in relation to various terms of a renewal lease.
The terms in dispute between the landlord and tenant were as follows:
The court approached the disputed terms in accordance with the principles set out in O'May v City of London Real Property Company Limited, firstly by considering the terms of the current tenancy and noting the burden of persuading the court to depart from these terms rests on the party proposing the change, and secondly by noting that the proposed changes must be fair and reasonable as between landlord and tenant, taking into account the circumstances of the case.
The court also noted that the bulk of the obligations in the Energy Performance of Buildings (England and Wales) Regulations 2012 and the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 are specifically placed upon landlords and not tenants.
Taking these points into consideration, the court deemed that, taken together, the proposed clauses would impose a number of unfair and unreasonable duties on the tenant, many of which were actually the landlord's obligations. The only clause which was permitted was part of the reinstatement clause requiring the tenant to return the property with the same EPC rating as at the start of the lease. The court held that without this, the landlord does not have the benefit of any real protection against any inaction by the tenant.
If you have any questions or would like more information regarding 'green lease' terms, you can contact our Commercial Property Team below.
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