New Technology Versus Old Law

Advice  |   8 September 2022

Written by
David Gibson, Head of Leasehold

Practical Issues With Getting Energy Efficient Technology Into Flats

For those with freehold homes there is an ever-growing list of technologies available to improve buildings with a view to improving energy efficiency, reducing carbon footprint and preventing energy bills from brutalising their bank accounts.

Blocks of flats are a different story. The rules in different blocks’ leases are as varied as the personalities and budgets of the flat owners inside them. Flat owners and block landlords wanting to implement new energy technologies either throughout block or within their flat must each look realistically at impediments in their leases, and think creatively about how to make energy efficiency projects work.

Landlord’s improvements

Whether a block is managed collectively or by an external freeholder, the landlord may find the flat lease wording strictly limits what they can change about the building or prohibits service charges from being used to make improvements.

If a landlord and the flat owners agree, the leases can be varied to permit specific improvements as time goes on, or to reserve rights to further develop the block for the purposes of energy efficiency. In other cases, lease changes can be achieved via a tribunal application from a majority.

In blocks without a strong majority of leaseholders in agreement, universal lease changes are totally unrealistic. Where the lease cannot be changed, but there is general support for a particular project, it may be a more practical to put in place an agreement outside the leases for those willing to contribute a higher price in exchange for a benefit. One example could be where a landlord and a majority of the flat owners agree to pay for solar panel installation between them, in return for repayment via a higher proportion of the reduction in energy costs or a higher share of any energy sold back to the grid.

Tenant’s improvements

Works in one flat can cause both temporary and permanent nuisance to others, and for this reason the vast majority of leases restrict flat owners from freely altering their flat, whether that be simply requiring a consent or wholly prohibiting some types of change.

Whilst the risks of alterations to other owners are real and significant, energy efficiency requirements have grown more and more strict. As the energy supply landscape continues to evolve, there is mounting pressure for landlords to untie the hands of those flat owners who are ready and willing to implement new technologies in their own flats.

Landlords producing standard documentation and implementing quicker approval procedures for specific energy efficiency works can make it easier and cheaper for tenants to obtain consent and put them in place.

Where new leases are being drawn up landlords could reduce restrictions on alterations for energy efficiency purposes, or include simplified consent procedures.

Incentivising improvements

Getting flat owners on board with plans to implement modern energy improvements may require more than a willing landlord and the endeavours of a few flat owners keen to improve their own properties. A residents’ charter drawn up by the flat owners can help establish a collective plan to encourage energy improvements, and can raise awareness of any incentives offered for particular improvements. Where a lease allows a landlord to charge a premium for permitting certain improvements, a landlord could set a policy to cap or discount any such premium for particular types of works. Where flat owners own a block collectively, a ground rent amendment or discount could be offered in exchange for a tenant agreeing to vary their lease to pay a sum toward improvements instead.

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