• Landlords don’t know whether they have to participate
Many landlords will face potential fines for missing the September 2010 deadline for the Government’s new CRC Energy Efficiency Scheme (CRC) because the Government has rushed its implementation, warns leading commercial property consultancy NB Real Estate.
The CRC is a carbon trading scheme that will put a price on carbon emissions from non-domestic energy use (see box below for full details). Companies are responsible for deciding whether they are caught by the scheme and many of them won’t know their liability before the deadline.
If a company fails to register by the required deadline it could receive a fine of £5,000, plus an additional £500 per day until it is registered according to the latest scheme guidance.
Jonathan Lovejoy, Executive Director at NB Real Estate, comments: “Commercial landlords have suddenly found themselves in a race against time to prepare for the CRC’s launch next year. Considering the huge hurdles they now face many of them won’t be ready in time.”
“Landlords should not be fined for failing to be ready for the CRC when the Government has left them with the responsibility of working out whether they are included and not enough time to do so.”
According to Jonathan Lovejoy, the CRC has a complicated threshold system and landlords are struggling to assess whether they are full members or whether they just have to comply with the expensive monitoring obligations of the scheme.
Says Jonathan Lovejoy: “Only the biggest landlords with large portfolios know they will be in the CRC next year and can start to prepare. For those near the two other threshold levels for the scheme it is much harder to decide whether they have to participate and at which level.”
“Companies with complex holding structures may find it really difficult and expensive to work out if they will have to participate – even if they ultimately prove to be below the lower threshold.”
“There is even more confusion over the CRC than there was with Energy Performance Certificates (EPCs) which have been in place for over a year now and still aren’t fully understood.”
Problems facing landlords in the run-up to the CRC:
• The Government’s failure to properly explain the CRC means the lower threshold of the scheme is not widely known about. A large number of slightly smaller landlords don’t know that they may be required to report their energy consumption. A lot more landlords will have to participate than in the full scheme and they will all face expensive monitoring and reporting obligations.
• All CRC participants have to monitor energy usage in all their properties, even if they are vacant or void. Landlords who have already suffered the vacant rates fiasco under this Government are angry that vacant property will become even more expensive to hold.
• Landlords often hold their properties under different subsidiaries. While the holding company is ultimately responsible for administering the CRC, landlords are struggling to work out their group’s liability, particularly when the holding company is off-shore.
• The Environment Agency has been confusing matters by sending out letters using old data to inform landlords that they might need to participate. In one recent example the Environment Agency sent a letter to a landlord about a property it didn’t own.