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Solar Panels on the Roof, Electric Car in the Garage, Devil in the Detail

Solar Panels on the Roof, Electric Car in the Garage, Devil in the Detail

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The challenge to mitigate climate change is now present in every industry, and not surprisingly in the construction sector as well. Yet the building regulations adopted for this purpose often give rise to controversy and, in many cases, pose a serious challenge to participants in the domestic real estate market.

Fires of unprecedented intensity are destroying the Amazon rainforest… a terrible hurricane hits the Bahamas… news stories appear daily about yet another disaster caused by global climate change. Protecting our natural environment is becoming a top priority around the world. The construction industry is very much a part of this story, and these days, standards based on EU directives determine what the buildings of the future should look like. However, these rules are not always easy to follow. 

Solar panels on the roof… 

All buildings are affected by the requirement that after 31 December 2020, only ‘zero-energy buildings’ will be given an occupancy permit. A near-zero-energy building must meet a number of technical requirements, including some related to the heat-reflection coefficient of boundary structures and of doors and windows, and to the minimum rates of renewable energy used. The latter requirement also means that a certain part of the building’s energy needs must be met from renewable energy that is generated in the building, that is coming from the property (such as energy collected by solar panels or heat pumps) or that is produced near the property (such as district heating or district cooling).

…electric car in the garage…

In addition, commercial property developers and operators are also required by law to build charging stations to cater for the increasing numbers of electric cars being used. A regulation that has been in force for several years now specifies how many of the parking spaces at stores that sell fast moving consumer goods, and with a gross area of more than 300 m², need to have an electric vehicle charging point. The regulation imposes a similar obligation on the operators of structures that sell parking spaces for payment. 

…the devil in the detail…

However, the above rules often give rise to difficulties of interpretation and pose a serious risk to real estate companies. For example, take a property owner who has a valid building permit to construct a building that does not comply with the near-zero-energy building regulations. The building is scheduled to be completed before the end of 2020. What happens, then, if the construction work is delayed and is not completed until 2021? Even though the owner has a building permit, the occupancy permit will only be issued if the building complies with the new regulations. This will result in significant additional costs and damage, with the investor and the contractor pointing at each other as to who should bear these additional expenses. 

There may also be a question as to which energy source will meet the requirements in force from 2021 onwards. The requirements regarding an energy source produced close to the property will, for example, only be met by district heating or district cooling that, apart from the electricity used for energy transmission, only uses the energy sources specified in the law and only if, besides these, there is no possibility of using another energy source in the district cooling or district heating system. However, it is questionable how the fulfilment of these requirements can be ensured and monitored in practice. 

There is also the perplexing requirement that “structures serving the sale of parking spaces for payment” must offer parking spaces fitted with electric charging points. What exactly are these structures? A multi-storey car park obviously falls into this category but should the car park of an office building also be classified here? Does the answer depend on whether parking is included in the rent or payable separately? A similar problem of interpretation is raised by the parking lots of shopping centres. The practice of whether customers have to pay for parking or not is changing… does this affect the obligation to install electric charging stations?

At what price?

Climate protection is one of the greatest challenges of the 21st century. However, it is important that the objectives are achieved through transparent and clear regulations that take due account of the situation in the market. Otherwise, in addition to the legal uncertainties and risks burdening real estate market participants, climate protection goals will also be more difficult to achieve

By Peter Gyimesi, Senior Attorney, Jalsovszky

Hungary Knowledge Partner

Nagy és Trócsányi was founded in 1991, turned into limited professional partnership (in Hungarian: ügyvédi iroda) in 1992, with the aim of offering sophisticated legal services. The firm continues to seek excellence in a comprehensive and modern practice, which spans international commercial and business law. 

The firm’s lawyers provide clients with advice and representation in an active, thoughtful and ethical manner, with a real understanding of clients‘ business needs and the markets in which they operate.

The firm is one of the largest home-grown independent law firms in Hungary. Currently Nagy és Trócsányi has 26 lawyers out of which there are 8 active partners. All partners are equity partners.

Nagy és Trócsányi is a legal entity and registered with the Budapest Bar Association. All lawyers of the Budapest office are either members of, or registered as clerks with, the Budapest Bar Association. Several of the firm’s lawyers are admitted attorneys or registered as legal consultants in New York.

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The firm advises a broad range of clients, including numerous multinational corporations. Among our key clients are: OTP Bank, Sberbank, Erste Bank, Scania, KS ORKA, Mannvit, DAF Trucks, Booking.com, Museum of Fine Arts of Budapest, Hungarian Post Pte Ltd, Hiventures, Strabag, CPI Hungary, Givaudan, Marks & Spencer, CBA.

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