Fuel for thought

What should landlords consider before installing a combined heat and power plant?

Development, ownership and operation: Who will build, own and operate it? Does your organisation have the necessary expertise or should you involvean energy service company? If the energy centre is owned by a third party, what will happen if it goes bust? Will you be able to withdraw the CHP service in the future?

Payment: Housing associations which operate CHPs themselves should treat maintenance and usage charges as variable service charges (on close analysis it is hard to see how they could not be). The normal requirements apply in relation to such charges to tenants and leaseholders. That means a potential £100 cap on charges if the rules are not followed.

Will you be recharging periodic tenants? A landlord cannot charge such tenants a variable charge in addition to rent in order to cover the cost of maintaining space/water heating equipment. Charging a higher rent to anticipate these costs is allowed, subject to applicable rent caps.

Health and safety: While the landlord will not have to maintain tenants’ own boilers if a scheme is adopted, the energy centre and network will be the landlord’s responsibility. Operating the plant and the storage of potentially hazardous fuel, such as natural gas, is regulated.

Environment: Although less polluting, the energy centre will need to comply with the clean air and noise legislation.

Finally, will there be a risk of nuisance to tenants or neighbours from noise or smoke?

Andrew Barnard is a partner at Trowers & Hamlins
abarnard@trowers.com

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