Have you checked your air-conditioning lately?
Air-conditioning is considered to be a comfort of modern life, but do you know what is in your system?
Air-conditioning plants use refrigeration units with hydrochlorofluorocarbon refrigerants, including one environmentally unfriendly refrigerant called R22. Use of virgin R22 became illegal in 2010, and use of recycled R22 will be banned from 1 January 2015. Potentially this could have a major impact on property investors, owners and occupiers with liability for maintenance and repair of air-conditioning systems. Air-conditioning is one of the most expensive items in a building and makes up a significant percentage of service charge costs.
When buying a building, property investors need to find out whether the air-conditioning system contains R22 and discuss with the valuer/building surveyor the likely cost of replacement and refurbishment, and whether this impacts on the value of the property.
When thinking about taking a lease, tenants should check the state of the air-conditioning system and if it needs refurbishment, consider:
- who will be responsible for the work;
- how disruptive that work might be;
- what impact this might have on service charge costs; and
- whether they should demand a service charge cap and/or a rent rebate.
After 2014, tenants could find that they have to replace or refurbish R22 equipment because the lease is likely to make them responsible for dilapidations, and require them to comply with statutory obligations requirements. Landlords and tenants will need to look very carefully at the exact terms of the lease when dealing with dilapidations.
The message is clear; in buildings with air-conditioning systems, it is time for landlords and tenants to dust off the instruction manuals and specifications to check whether there is an R22 issue, and who has responsibility.
Emma works as a solicitor in our Legal 500-rated commercial property team. With a particular interest in leasehold work, she advises clients on a wide range of issues, including sales and purchases, landlord and tenant leasehold matters, and ancillary matters.