How costs and responsibilities are split between landlords and tenants regarding space heating, hot water generation, cooling and energy efficiency improvements
Allocation of heat and energy efficiency related costs in rented non-domestic buildings research and analysis
The Department for Energy Security and Net Zero has published research on how costs and responsibilities are split between landlords and tenants regarding space heating (including hot water generation) and cooling and energy efficiency improvements.
It covers:
- operational costs, such as energy bills, maintaining and repairing heating systems, choosing an energy supplier/tariff, and metering responsibilities
- capital costs, such as installing new or replacing existing infrastructure in the building.
The research highlights the lack of a consistent approach between landlords and tenants regarding the allocation of costs and suggests any future policies promoting the replacement of heating systems and energy efficiency improvements will require agreement between landlords and tenants, irrespective of who the requirement falls on.
Key takeaways include:
- Larger capital and operational costs are generally the responsibility of landlords, especially in spaces rented by micro-sized organisations with shorter leases.
- Cost responsibilities vary by sector, with notable deviations in the hospitality, office and industrial sector. Future policies should be nuanced to consider these dynamics, as one-size-fits-all approaches are unlikely to be effective.
- Government may need to be more prescriptive about cost responsibilities. A more formalised structure could make it more straightforward to introduce policy to encourage decarbonisation buildings.
- The traditional split of costs may become more flexible due to the increasing demand for businesses to futureproof and achieve net zero targets, leading to more collaboration between landlords and tenants.
