An energy index of 1.3 is better known as “label C”. Research by the Netherlands Enterprise Agency (RVO) shows that on 1 July 2020 only 34% of office buildings subject to labelling met this requirement. RVO expects that many buildings will still not comply with the new requirement on 1 January 2023. The competent authority can enforce the law. However, it is unclear what this enforcement means in practice. Municipalities have the freedom as to whether, and how, they decide to enforce. It is expected that municipalities will transfer this task to the local Environmental Services organisation. In the first instance it is likely that preventative and corrective action will be taken, leading ultimately to enforcement. The latter will in all probability be done by applying the order with the threat of a penalty. In practice, this means that there are still many steps involved before fines are issued. If penalties also fail to lead to compliance with the label C obligation, the competent authority can close the office. It is expected that this will only happen sporadically.

In the case of a rental or sale transaction for non-residential property, it has been mandatory in any case since 2008 to have an energy performance certificate. In practice, there has been very little enforcement. Incidentally, the C-label obligation is not the end of the story: from 2030 all office buildings must at least have label A and by 2050 they must be completely energy-neutral.

In 2017, we already indicated in our article “Consequences C-label already visible” that it was wise to take the new situation into account. We are now three years further. If your building does not yet have at least a C-label, it is worth reading on and taking action.

Exception to the obligation

There are exceptions for various office buildings. It is not realistic or possible to meet these requirements for certain properties. If an office meets one of the conditions below, it will be exempted from the energy performance obligation.

  • The usable area of ​​the office function is less than 50% of the total area;
  • The floor area of the office (including subsidiary functions) is less than 100m²;
  • It is a national, provincial or municipal monument;
  • The office building will be used for a maximum of a further two years;
  • The building is being sold or expropriated under the Expropriation Act;
  • The office building does not use any energy to regulate the indoor climate;
  • The measures needed to achieve the energy index of 1.3 or lower have a payback period of more than 10 years (hardship clause).

Research by Sira Consulting (commissioned by the Ministry of the Interior) shows that it is expected that 30% of office owners will invoke the hardship clause.

The most common rental situation

Most tenants have a rental agreement according to the model of the Dutch Real Estate Council (ROZ). The general provisions (pertaining to the 2015 model rental agreement for office space) state that “the landlord is responsible for obtaining and maintaining the permits, exemptions and permissions required for the use of the rented property”. This means that when a landlord has agreed with the tenant that the rented property will be rented out as office space, the lessor must ensure that the rented property has the characteristics to be used as such. If this is not the case, there is a default. In the event of a default, it is possible for the tenant to claim compensation or even terminate the rental agreement.

Do you have a contract that was signed some time ago? Then you should pay attention. In ROZ 2003 model contracts, it is mainly the tenant that is held responsible for the consequences of new government regulations. Landlords can transfer the costs of complying with the legislation to the tenant on the basis of the 2003 agreement. The ROZ 2015 model is somewhat more tenant-friendly on this point and makes a distinction between the purpose of the building and the use that the tenant wants to give it. This distinction is important when it comes to sharing the costs. Based on the ROZ 2003 model, many “renovation costs” must also be borne by the tenant.

Other environmental and energy regulations

The label C obligation has overlap with other environmental regulations, the responsibility of which rests entirely with the tenant. These are, for example, the Energy Saving Obligation, the Energy Saving Information Obligation for Environmental Management – Buildings and the European Energy Efficiency Directive (EED).
Under the Environmental Management Activities decree certain companies and institutions are obliged to implement all energy-saving measures with a payback period of five years or less (Energy saving obligation). The Energy Saving Obligation applies to all establishments that consume annually more than 50,000 kWh of electricity or more than 25,000 cubic meters of gas (amounting to the consumption of approximately 400 m² of office space). On the basis of the Recognised Measures List (EML) you can check which measures will pay for themselves within five years. A list has been drawn up for the office sector and serves as an aid for companies to comply with the energy saving obligation.

The Energy Saving Information Obligation is related to the Energy Saving Obligation and means that companies that fall under the Energy Saving Obligation must report which energy-saving measures they have implemented. Based on this, the competent authority determines at which companies inspections will be carried out.

The European Energy Audit Obligation (EED) obliges companies with more than 250 employees (from approx. 3,000 m² office space) or a turnover of at least € 50 million and a balance sheet total of at least € 43 million to have an energy audit carried out every four years. This gives companies insight into energy consumption and the options for saving energy.

Don’t wait until 2023, take action now

As soon as the competent authority decides to actually enforce the law on 1 January 2023, this may mean that your own office will be locked.

Are you renting an office space that will not meet the energy performance obligation? Then it is important to take action now. Consult with your landlord and ask what measures it will take to meet the legal requirements. Placing solar panels, LED lighting, or small adjustments to the installations can already help to achieve the energy label C standard, without major renovations. In older buildings, modifications to the thermal envelope will often be required to make the difference. Office buildings with an energy label D, E or F can suffice with modifications that lead to an upgrade in the building itself. For office buildings with an energy label G, structural modifications are also required, such as insulation of the facade, floor and roof. Major adjustments not only take time to realise, but also mean that you cannot use the office space for a certain period of time, or at the least endure a lot of inconvenience.

 

Towards Energy label C

Landlords themselves also have an interest in upgrading buildings. If not in the first place to keep tenants happy and to prevent potential claims, it is because banks will no longer provide financing for buildings with a label lower than C. And that makes an office investment practically unsellable.

RVO supports taking energy-saving measures with a number of subsidies. View the subsidy guide for more information.

Opportunities for the tenant

The new sustainability requirement for office space should not only be seen as a risk, but also as an opportunity: in many cases an excellent business case can be made, which not only leads to financial savings, but also to better working comfort, better productivity and lower absenteeism.

In a meeting with the landlord, the division of the costs will therefore also be discussed and thus also any other conditions in the rental agreement. This also offers opportunities to renegotiate the lease in its entirety. Especially now that the  office market is slowly changing again from a landlords’ market to a tenants’ market due to the consequences of Covid-19.

Do you have further ambitions in the field of sustainability? Then negotiating a so-called green lease clause offers a solution. For example, you can agree that future investments in sustainability will be carried out by the landlord. If these result in lower energy costs for the tenant, the tenant will share the benefits with the landlord. In addition, it offers the possibility to include process agreements for continuous sustainability.

No agreement with the landlord?

If no agreement can be reached with the landlord about the required modifications, there is still considerable time to look for alternative accommodation. In the easiest case, you as a tenant can terminate the agreement by giving notice if the lease ends before 2023 (take into account the notice period of, usually, 12 months). Alternatively, you could be able to cancel the agreement on the basis of a default. Or, if the landlord has to remedy a default and it remains in default, you as tenant can remedy the default yourself and deduct the costs from the rent. As tenant, you will not be enthusiastic about the latter because of the enormous hassle and the fact that you have to advance considerable costs. In a multi-tenant building, this becomes even more difficult because of the indivisibility of the interventions.

In summary

As of 1 January 2023, your office space must have at least energy label C, with the risk that you may no longer use the office space. Fortunately, there are still about 700 days to go before this becomes reality. Even if it is not expected that the enforcers will be on the doorstep on 1 January 2023, now is the time to talk to your landlord and check out the alternatives.

Curious about your energy label?

The energy label can be requested easily and free of charge on the government’s website EP-Online which provides information about the label, energy index and label expiration date for each building.

More information about energy saving and other expected schemes can be found on the website of the Chamber of Commerce.

Ben je benieuwd op welke wijze REDEPT Cresa jouAre you curious how REDEPT Cresa can help your organisation to negotiate your rental agreements?  Contact us voor een vrijblijvende kennismaking.

Photo by Matthew Waring on Unsplash

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