Energy crisis – guidance for landlords and tenants
In early October 2022, National Grid published Winter Outlook Report in view of the potential energy crisis Great Britain may face.
From a conveyancing point of view, this may have a hefty impact on existing and new leases. Particularly, in anticipation of the possible planned blackouts for the future, landlords and tenants should be mindful of the covenants contained in their leases.
One important thing both parties should consider is the services and outgoings under the payment provisions. The bargaining power of the parties lies in how the services are paid. For example, if a tenant has a direct supply contract with a supplier, they may have more control over the level of payments and could even negotiate a reduced cost. Or on the other hand, if a tenant pays outgoings costs directly to a landlord by way of an all-inclusive rent, they may have a more difficult time getting the energy costs lowered. The latter scenario puts tenants at risk of breaching payments of service charge etc. covenants which will give grounds to landlords to seek to enforce such breaches, therefore tenants should be advised to carefully consider these provisions.
Future blackouts could also mean compromises from both parties in terms of repair provisions within the lease. Standard maintenance of the common parts may be neglected in an attempt to reduce costs and could allow the premises to fall into disrepair, risking breaches of covenant by either of the parties. To help sustain premises whilst keeping costs down, parties may be persuaded to agree on cheaper materials/plants/machinery which may be easier to maintain at a lower price.
Blackouts may fall under the protection of a force majeure clause. Understandably so as it is regarded as an unforeseeable event. However, with the Winter Outlook Report published and increased public knowledge, perhaps blackouts will no longer be considered unforeseeable and, instead, a foreseeable event.
Whilst it is good to plan ahead for any event, there are some strategies bubbling to save us from the impending dark winters. These include an increased number of battery storage schemes across the UK to help strengthen the integrity of the power grid. For example, the Planning Inspectorate is seen in favour of the development of a large battery storage facility on a green belt land by allowing an appeal against a refusal by the Selby District Council for the said development.
If you would like any more information relating to this article then please feel free to contact me by telephone – 020 8221 8049, via email here, or visit my profile.
This is not legal advice; it is intended to provide information of general interest about current legal issues.
