06 February 2012
European Regulations banning the ozone depleting refrigerant gas HCFC R22 will have a dramatic impact on a vast number of Landlords and Tenants over the next few years.
Since 2010, it has been illegal to use virgin HCFCs to maintain Air Conditioning (AC) equipment. Recycled HCFCs can still be used, but as of 1st January 2015 a complete ban takes effect, meaning that it will be illegal to use any R22 refrigerant to top up leaking chillers or to repair equipment using salvaged refrigerant.
It is estimated that the cost of replacing the AC units that are no longer serviceable could reach £1.75 billion. These costs will be met by the party liable for the maintenance of the Air Conditioning system within a building. Under many older leases the tenant would be responsible for the maintenance of all fixtures and fittings within a building although a recent move to shorter more flexible tenancy agreements often means that landlords are increasingly going to be picking up the bill for this type of work.
Some landlords will be able to undertake this work and recharge it back to the tenants via the service charge but tenants are increasingly taking service charge advice from commercial property chartered surveyors to minimise the limit of their liabilities before entering into new a lease.
Geoff Springthorpe, Head of Property Management, Holloway Iliffe & Mitchell said “It may be possible, with specific AC systems, to simply re-gas with new ‘ozone friendly’ refrigerants but because the cooling performance can be significantly reduced it will still have an impact on the energy efficiency of the equipment.”
Tenants in multi-let buildings may well incur substantial increases in service charge bills for the replacement of any AC equipment that can no longer be maintained. For tenants nearing the end of their lease they may have grounds to negotiate a contribution from the landlord to meet some of these costs. Tenants may also be hit with large replacements bills as part of dilapidations claims.
Stuart Mitchell, Director, Holloway Iliffe & Mitchell commented “Tenants taking new full repairing and insuring leases in buildings with older R22 AC equipment over the next few years and certainly after the 1st January 2015 will be advised to minimise their repairing liabilities by not taking on the maintenance of equipment that may generate large replacement costs. Buildings with the older equipment may become unlettable and landlords may be forced to replace the AC equipment with new compliant equipment in order to let their building.”
Existing R22 AC kit can continue to be used after the 2015 deadline, however draining down the system, or re-pressurising will not be permitted. Consequently, when a major refrigerant linked failure occurs it is expected that those liable may have to replace the majority of the equipment at considerable cost.