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EPC - passing on the cost |
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Suppose that the T of a head-lease wants to assign his interest. Clearly, he
cannot pass on the cost to the buyer/assignee since that is prohibited by the
Regs. But can T pass the cost on as part of a service charge to sub-Ts?
The Regs do not specify whether it is possible to recover the cost of an
EPC through the service charge. It will therefore depend upon whether the
wording of the service charge provisions in the subleases is wide enough
to allow that cost to be charged. Assuming it is (and that will often be the
case) there is one pitfall to watch for. If the cost of the EPC is put through the
service charge, and that EPC is then relied on by a sub-T when it assigns its
interest, then T (or T’s assignee) might be in contravention of the Regs if the
new sub-T is billed for service charge expenditure that includes the cost of the
EPC. In short, if an existing sub-T relies upon an EPC commissioned by T, then
care should be taken to ensure that the new sub-T will not be required to pay,
through the service charge, any proportion of the cost of the EPC. See note in
[2008] EG 23 August 71.© Practical Lawyer
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October 2008 |
