Important regulations came into effect on 1 January 2015 which will affect you if you own, manage or are a tenant of an air conditioned building.

It is also an aspect that you should investigate if you are currently negotiating to purchase or lease an air conditioned building. Ask your surveyor or solicitor to check what kind of refrigerant is used in the existing air conditioning system because older systems that use a refrigerant gas called R22 are likely to need replacing or, at the very least, expensive modification.

What is R22 Gas?

R22 is a hydrochlorofluorocarbon refrigerant gas that has been shown to have a detrimental effect on the ozone layer. Since 2004 it has been illegal to use R22 in new air conditioning systems and in 2010 it became illegal to use new (“virgin”) R22 to maintain existing air conditioning systems. However, this did not prevent the use of recycled or reclaimed R22 for maintenance purposes.

The Regulations

From 1 January 2015 it became illegal to top up any air conditioning systems with virgin, recycled or reclaimed R22, under Regulation (EC) No 1005/2009 of the European Parliament and of the Council on substances that deplete the ozone layer. There are now two options: replace air conditioning systems with new equipment or, if possible, convert existing air conditioning systems to use alternative refrigerants. In many cases, however, the second option may prove to be inefficient and as a result could lead to an increase in energy costs. Whichever option is chosen the costs involved could be considerable.

Impact on Landlords and Tenants

This change in the law will have important implications for commercial landlords and tenants as it will be necessary to determine who will be responsible for undertaking the work and bearing the cost of compliance. Landlords and tenants will need to examine the lease entered into by the parties, and in particular scrutinize any clauses that relate to repair of the property or specify an obligation to make alterations required under statue. The precise wording of the lease will be of particular importance in determining whether any repairing obligations also cover the cost of replacing or improving plant and machinery.

In a multi-let building it will also be important to examine the service charge provisions of the lease to determine what costs, if any, can be passed on to the tenant. The RICS Code for Service Charges in Commercial Property provides useful guidance on how to determine what work will be viewed as repair, replacement or improvement.

Tenants should also be aware that there is uncertainty as to whether landlords could include the cost of compliance with the regulations in a dilapidation claim at the end of the lease term. Dilapidation claims can only be brought if the equipment needs to be repaired; however, if changes are required by statute as part of the repair works, the cost of this work could also be recoverable. The wording of the particular lease will need to be examined to determine whether a claim could be made in these circumstances.

If you are in any doubt as to whether your system uses R22, please contact your local air conditioning engineer.

If you wish to discuss this article further or have any concerns about this, please contact either Julian Rowden or Kate Fowler.

Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.

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