Commercial Property

Practical and Legal issues to consider before granting a roof lease

What will I cover?

• What practical issues and general matters need to be considered before granting a roof lease

• What title issues need to be considered before granting a roof lease

• Who is the 'owner' of the FIT installation • Lease Terms

Practical issues and general considerations

• Who is in occupation of the building and on what basis • Does a lender have a charge secured against the building• Will the installation have any impact on the buildings insurance • Is planning permission required for the installation • What are the Landlords long term plans for the building • Where is the installation to be sited and how will it connect to the

grid • What parts of the installation are to be attached to the roof • How will the panels be put into position initially

Is the building occupied?

Is the building occupied?

NO YES

Whole building let Roof and Airspace

YESPart building let

Roof not Airspace

YESPart building let

Not roof or airspace

No consent required Empty rates relief?

Consent required

Consent required No consent required

Title issues

• Will the installation interfere with existing rights of third parties

• Are rights required over third parties land • Does the Landlord own the roof and the

airspace • Are there any restrictive covenants affecting the

building

Lease Terms

• Contracting out of the Landlord and Tenant Act 1954 • Declaration as to who the FIT generator is • Length of lease term • Option to break • Rent • Construction covenants • Obligation on Tenant to obtain and maintain FIT accreditation • Tenants obligation to operate the FIT installation in accordance

with statutory requirements • Tenants obligation not to cause nuisance or annoyance

Who is the owner of the FIT installation

• OFGEM guidance permits the owner of the FIT equipment to be different from the owner or tenant of the building as long as there is sufficient evidence to show that to be the case

• FIT INSTALLERS BEWARE - If the installation is attached in such a way so as to become a fixture then the legal ownership of the panels will pass to the Landlord as part of the land, irrespective of what may be agreed on paper!

Michael Gerson Leasing) Ltd v Greatsunny Ltd • Lease should contain a declaration as to:-

– Who paid for the installation – Who is intended to be the owner – Whether the FIT generator can remove the installation at the end of the lease – Whether the Landlord can insist that the FIT generator removes the FIT

installation at the end of the lease – If the FIT installation is left behind at the end of the lease, whether the Landlord

will inherit the ownership of it

For better or for worse…

It is not clear whether purchasers of commercial property will be deterred from buying property subject to a roof lease but as energy prices rise it is hard to see how it would impact upon the value; providing that any arrangements have been set up correctly and the Landlord has some benefit from the cheaper electricity

Senior Associate

Agriculture and Rural Affairs

mwathen@hcrlaw.com

01989 561421

07759444199

Ross-on-Wye Office

Mary Wathen