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  • Real Estate
  • 24-12-2018

On 2 November 2018 the Decree amending the Buildings Decree of 2012 regarding energy label obligations for office buildings (Besluit houdende wijziging van het Bouwbesluit 2012 betreffende de labelverplichting voor kantoorgebouwen) came into force. The amended Buildings Decree 2012 means that effective 1 January 2023, it will be prohibited to occupy or use an office building if it does not, at a minimum, have energy label C. The Energy Agreement and the 2017 Coalition Agreement that was formed later gave rise to this amendment. This measure was already announced in the autumn of 2016 and is now official. This is the first definitive step towards achieving the carbon emissions targets.

Office buildings

Starting from 1 January 2023, energy label C will be the minimum label required for office buildings. A stand-alone building and a building that is part of a larger building can be regarded as an office building as long as the situation involves a building or part of a building that has one or more office functions and office-related functions. In the case of mixed-use buildings (for example a high-rise building with shops on the ground floor and offices on the floors above it), the mandatory energy label applies only to the office building.

Based on Section 5.11(1) of the Buildings Decree 2012, effective 1 January 2023, it will be prohibited to occupy or use an office building that does not have a valid energy label with an energy index (EI) of 1.3 or lower. The explanatory notes state that a decision was made to use an energy label with a specific EI rather than a label class in this subsection. At present, an EI of 1.3 is equal to label class C. Office buildings must have an energy label within the meaning of the Dutch Energy Performance of Buildings Decree (Besluit energieprestatie gebouwen or ‘BEG’). The label obligation within the meaning of the BEG applies especially to transaction moments. The label obligation that ensues from the Buildings Decree 2012 applies to all office buildings that are used as such, regardless of who the owner is. This means that it applies to office buildings that are let, but this new obligation also applies to owner-occupied office buildings. Unlike the BEG, the label obligation is not dependent on transaction moments.
The Buildings Decree 2012 includes several exceptions to the energy label C obligation.

The obligation does not apply to:

• office buildings with a usable area for office functions that is less than 50% of the total usable area of functional use of the building of which the office building forms part;
• office buildings where the total usable area for office functions and office-related functions in the office building or in the building of which the office building forms part is less than 100 m2;
• office buildings that belong to a category within the meaning of Section 2.2 of the BEG, which includes listed buildings and buildings that are used for no more than 2 years.

The Buildings Decree 2012 also contains a hardship clause under which it is sufficient for owners of office buildings to take measures that are subject to a payback period of up to 10 years, if the measures that must be taken to comply with the energy label C obligation are subject to a payback period of more than 10 years (see Section 5.11(5) of the amended Buildings Decree 2012). It follows from the explanatory notes that the purpose of the hardship clause is to prevent owners of office buildings from having to make unreasonably high investments.

Energy label obligations in the case of letting

Although the explanatory notes to the Buildings Decree 2012 consistently refer to an obligation on the part of office building owners, it cannot automatically be inferred from these references that this obligation (and the associated costs) applies solely to owners in cases where office buildings are let.
In the case of existing leases that continue after 1 January 2023, it must be assessed on the basis of the lease which party must bear the costs associated with the modifications and facilities that are related to the use of the leased property, such as the amendments to the Buildings Decree 2012 that relate to the use of a property as office space. It may be relevant for that determination whether the lessor knew or should have known about the upcoming energy label C obligation at the time that the lease was concluded and knew or should have known that it did not have, at a minimum, energy label C for the leased property.

If the parties concluded a lease prior to the autumn of 2016 which was based on a model lease for 2015 or 2003 drafted by the Dutch Real Estate Council (Raad voor Onroerende Zaken or ‘ROZ’), we deem it likely that the costs will be borne by the lessee rather than by the lessor. Naturally, this must be examined on a case-by-case basis, since the outcome will depend of the phrasing chosen by the parties in the specific lease.
According to the explanatory notes, the costs that are incurred for achieving energy label C for offices generally have a payback period of between 3 and 6.5 years. The measures will improve the energy efficiency of the office building, which will result in a substantial reduction of the energy bill for the building. According to the explanatory notes, this means that the above-referenced investment will generally be earned back. It would be in line with this consideration in the explanatory notes for lessees to bear the costs, as they are the ones who will benefit from lower energy bills.

When entering into new leases, the parties would do well to stop and think about the current energy label and to make clear arrangements as to which party must take what measures to be able to satisfy the energy label C obligation within the specified time. In the case of long-term leases, it would be a good idea for the parties to look towards the future as the expectation is that office buildings will need to have energy label A in 2030.

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