Energy label C: time to take action now!

As of Jan. 1, 2023, it will be illegal to use an office building if that building does not have at least energy label C. This follows from new rules in the 2012 Building Code. Because January 1, 2023 is fast approaching, it is time to take action now. Not only by taking the necessary measures. But also by adjusting existing (rental) agreements.

The current corona crisis is already frequently leading to various modifications in leases. Therefore, now is the time to include clauses on the label C obligation. And, further into the future, also about future obligations. Because eventually (2030) energy label A will be required. The following is a brief overview of what to think about.

Update November 2023: Also watch the update in this video.

What is label C and when is label C mandatory?

Energy label C amounts to an energy index of 1.3 or better. The obligation to have at least label C by January 1, 2023, applies in principle to every office larger than or equal to 100 m2 by 2023.

There are some exceptions. For example, this does not apply to office space that is only used as a secondary function. Think of an office at a larger business park, where less than 50% of the usable area has an office function. Other exceptions are monuments (with the exception of protected city and village sights), buildings that will be demolished, transformed or expropriated within two years. There is also an exception in the event that measures must be taken with a payback period of more than ten years. The so-called hardship clause. Important exceptions. So the label C requirement does not always apply.

Consequence of missing label C - close office building

As of January 1, 2023, an occupancy ban will apply if an office building does not have a registered label C. A ban that greatly hinders owners and users in the use of the building. Because without registration of label C, enforcement by the municipality where the office building is located must be seriously considered.

In principle, it is the landlord's duty to ensure that the leased property is not used in violation of the Building Code and thus that the label C requirement is met. If a landlord fails to do so, he can be considered a violator. Various sanctions can be imposed on the violator. Think of an order under penalty, an order under administrative enforcement, an administrative fine or a criminal sanction. Thus, the lack of a label C can also lead to the office building having to be closed.

In some cases, a tenant/user may also be considered a violator. Sometimes the landlord and tenant are both trespassers.

It underlines the importance of properly defining contractually who is responsible for what and to do so in a timely manner. That is why it is important to check now whether all necessary measures can be taken in time for the label C to be registered.

Is there a defect?

Good determination of tenant and landlord responsibilities is mutually desirable. In terms of tenancy law, the question of whether failure to meet the label C requirement constitutes a defect is particularly interesting.

There is a defect if the tenant is not provided with the enjoyment that he could expect when entering into the contract. It follows from the explanation of the law that a statutory provision prohibiting a certain use is also considered a defect. It is then important that there is actually a closure of and building, because this building does not meet the label C requirement. Then the leased building is not suitable for the use.

If there is a defect then a tenant has several options. First, the tenant will be able to request the landlord to remedy the defect. This means that a label C must still be provided. Another possibility is to claim a rent reduction, which is proportional to the limited enjoyment, while damages can also be claimed. In the latter case, however, there must be an attribution to the landlord.

An important condition, however, is that the landlord has not excluded its liability.

Here again, a comparison with the corona crisis arises, namely with a restriction in use due to government action. In the case of corona, this is now often held to result in a defect. Thus, if the leased property does not comply with government regulations or the tenant cannot obtain a permit for the intended use or only after alterations or provisions have been made, then there is generally a defect.

This means that failure to meet the label requirement by Jan. 1, 2023, constitutes a defect. There must then be an unacceptable risk. And - if not - a disruption of the tenant's enjoyment, at the time the municipality proceeds with enforcement. In both cases, the tenant does not have the enjoyment he or she was entitled to expect, and the tenant can then hold the landlord accountable. That compliance or non-compliance with the label requirement poses an unacceptable risk does not seem to be the case easily. Enforcement by the municipality is a greater risk.

Making arrangements in the lease agreement

Precisely in order to avoid this discussion, it is important to start consultations at this time about sustainability work to be carried out and to make contractual agreements about it. Also take future obligations into account. It is better to make adjustments now and make clear agreements about the costs and who does what, than at a later time with all the possible problems that may arise.

If it is not possible to reach further agreements by mutual agreement, it must be considered whether a tenant can be forced to cooperate on the basis of the existing lease. The landlord can then invoke urgent work or renovation that is necessary.

To avoid discussions, the ROZ (for the ROZ model office space 2015, see www.roz.nl), has proposed several useful additional provisions in the model, distinguishing between two situations. Namely, the situation that there is already a building with Energy Label A to C and the situation that there is an energy label lower than C. The ROZ already provides some options, so you can think about:

• Who takes what energy-saving measures?
• Who is responsible if agreed-upon obligations are not met?
• Who bears the cost of the measures to be taken?
• Are measures taken accompanied by a rent increase?
• What is actually being rented out?

It is important to properly record these passages and incorporate them into a new lease agreement so that both parties know where they stand. The options in both cases boil down to the fact that for maintenance, landlord is bound to choose the recognized energy-saving measures. While in addition, there are additional provisions that require consultation on improvements that are necessary, indicate cooperation with each other on energy-saving measures, that measures do not have to be undone, with consultation on compensation and an information obligation on energy-saving measures.

Opinion

Although it is not yet here, by January 1, 2023, a minimum label C will apply to most office buildings. It is therefore important to prepare for this. Not only by actually taking the necessary energy-saving measures. But also by making agreements between tenants and landlords now.

Take advantage of it!