27 Jul 2010
Real estate experts warn of complications for corporate trustees and LPs with the CRC scheme
Stephen Stephens, Real Estate partner, Lawrence Graham LLP
As you may be aware, The Environment Agency issued guidance last month in relation to how the Carbon Reduction Commitment Scheme (CRC) will apply to trusts. This guidance highlights that the CRC could prove problematic for Corporate Trustees and Limited Partnerships (LPs).
Real Estate partner Stephen Stephens at international law firm Lawrence Graham LLP (LG) said: "Real Estate assets held by Corporate Trustees must, in the majority of cases, be accounted for by the Trustees along with all other Real Estate owned by the Group in which the Trustee is a member, no matter who beneficially owns those Real Estate assets. The Environment Agency guidance explicitly states that this may bring some Real Estate assets within the CRC Scheme which, if they had been considered on a discrete trust-by-trust basis, would not have qualified on the basis of their electricity consumption."
"We have analysed the guidance and found that there will also be complications for LPs. It is expected that each corporate structure will need to be analysed individually to assess which Group the Real Estate assets in question should be aggregated into for the purposes of the CRC Scheme. Whether or not Real Estate Assets vested in general partners or nominees of general partners must participate in the CRC Scheme may depend on the terms of the partnership agreement and various shareholding structures."
"Any Fund Manager whose Real Estate assets are held by third party Corporate Trustees should be concerned to establish that their property is being properly accounted for under the CRC Scheme, as registration for the CRC should be finalised by the 30 September this year. Significant fines and penalties will be imposed by the government for incorrect registrations or incomplete registrations, " said Stephen.