The Coalition Government has confirmed that the Green Deal, an initiative to drive the implementation of energy efficiency measures to buildings, will be included in the Energy Bill due to be introduced to Parliament this year. Although the Green Deal has been largely promoted as a voluntary scheme to support measures to improve domestic energy efficiency, there has been significant recent media speculation that there are plans to compel landlords of both residential and commercial property to implement upgrades by 2015.
The Green Deal and landlords
The Green Deal has been promoted by the Government as a finance-based initiative entitling homeowners to apply for loans to improve energy efficiency, for example, insulating their lofts, with the capital and interest costs intended to be covered by savings on energy bills. On 2 November 2010, the Energy and Climate Change Secretary, Chris Huhne gave a speech on the Green Deal in which he earmarked private rented homes as a priority and issued a warning to landlords who fail to take up the Green Deal that, if necessary, the Government "will look to take powers to ensure that from 2015, any tenant who asks for energy efficiency improvements cannot be refused".
Possible application to commercial property?
Whilst the focus to date has been on residential property, it appears that the Government may also now be looking at commercial property. In his speech, Chris Huhne noted that the Government "will look at how we can apply the Green Deal model to businesses". Recent reports in the national press have suggested that the Green Deal will apply to commercial property and speculated that landlords and tenants may need to renegotiate existing documents to accommodate the Green Deal proposals.
The detail of how the proposals will affect commercial property (if at all) remains very unclear. The recent announcement that the Government will retain revenues generated from the CRC Energy Efficiency Scheme, rather than recycling them back to participants, should encourage landlords to look at improving the energy efficiency of their properties. Bearing in mind the unexpected nature of the CRC announcement and its financial consequences, the Green Deal is therefore another "watch this space" issue for commercial property landlords.