- Do EPCs need to be provided on sales and lettings and if so, are there any statutory minimum requirements?
- Is there any legislation requiring new or existing buildings to satisfy ESG requirements?
- How widespread are green lease provisions? Are they regulated or market driven? What areas do green leases commonly cover? Do they apply to both residential and commercial leases?
- What do institutional investors and banks/other financing institutions require in terms of the green lease drafting? Is there any market standard approach to green lease drafting? Do you report on the lack of any green lease provisions in your due diligence reports on an acquisition or refinancing?
- How are green lease provisions enforced?
- How widespread is the certification of buildings (e.g. LEED, BREEAM, NABERS, WELL etc.)? Are they regulated or market driven? How is this documented between the Landlord and Tenant?
- Are there any additional regulatory requirements that need to be met or contractual provisions that need to be considered regarding the installation of alternative energy supply systems (e.g. rooftop photovoltaic systems)?
- Are there any regulations relating to soil artificialisation or other biodiversity concerns which impact on new builds and/or refurbishments? How are they enforced?
jurisdiction
1. Do EPCs need to be provided on sales and lettings and if so, are there any statutory minimum requirements?
EPCs are mandatory for all new buildings as of 2015, including when they are sold or rented out. Neverthless, lack of EPCs does not make the sale/letting invalid, but may lead to a financial sanction for the seller/lessor. Mandatory EPCs should contain the energy efficiency rating of the building, as well as recommended measures for said efficiency's improvement.
Building constructed before 2015 (except for: temporary buildings, places of worship, agricultural buildings with low energy consumption, production buildings and residential buildings occupied less than 4 months a year or buildings with built-up area of less than 50 sq.m.) are to be certified only if they are being fully renovated. In that case, EPCs are mandatory for their sale and lettings as well.
2. Is there any legislation requiring new or existing buildings to satisfy ESG requirements?
New buildings (i.e. ones constructed from 1 January 2024 onwards) should satisfy the nearly zero-energy requirement by both (i) being rated 'A' for energy efficiency; and (ii) having at least 55 % of their energy consumption provided from renewable energy sources located either within or near the building. If a building is supplied with central heating or gas provider, or if the nearly zero-energy requirement is proven technically unachievable, it will be exempt from this requirement until 31 December 2027.
Priorly constructed buildings (i.e. prior to 1 January 2024) should satisfy the above requirements only in cases of being fully renovated. Otherwise, priorly constructed governmental buildings should strive to achieve the requirements for energy efficiency ‘B’ rating and all other priorly constructed buildings – either ‘B’ or ‘C’.
3. How widespread are green lease provisions? Are they regulated or market driven? What areas do green leases commonly cover? Do they apply to both residential and commercial leases?
Green lease provisions are not regulated in Bulgaria, and they are not widespread as a market practice. However, energy efficiency is becoming a factor for tenants leasing office space.
4. What do institutional investors and banks/other financing institutions require in terms of the green lease drafting? Is there any market standard approach to green lease drafting? Do you report on the lack of any green lease provisions in your due diligence reports on an acquisition or refinancing?
In Bulgaria there is still no general market practice on the matter. So far, clients have not asked us to report on the lack of green leases provisions in due diligence reports on acquisitions or refinancing.
5. How are green lease provisions enforced?
As there is no regulatory framework for green lease provisions, the enforcement of green lease provisions varies on a case by case basis. It is legally permitted, however not yet common, to provide for contractual penalties in case of breach of green lease provisions.
6. How widespread is the certification of buildings (e.g. LEED, BREEAM, NABERS, WELL etc.)? Are they regulated or market driven? How is this documented between the Landlord and Tenant?
The only regulated certificate remains the energy efficiency one (mandatory for new and renovated buildings). For these buildings, the owner must provide the buyer or the lessee with a copy of the certificate at the time of signing of the lease or sale agreement (the original is provided to the buyer if the entire building is transferred).
7. Are there any additional regulatory requirements that need to be met or contractual provisions that need to be considered regarding the installation of alternative energy supply systems (e.g. rooftop photovoltaic systems)?
New (constructed from 1 January 2024 onwards) and fully renovated priorly constructed buildings should satisfy certain energy efficiency requirements, with new buildings having at least 55 % of their energy consumption provided from renewable energy sources located either within or near the building. However, the second requirement would not apply until the end of 2027, provided that the building is provided with central heating or gas supply, or if the nearly zero-energy requirement is proven technically unachievable for it.
The permitting process for rooftop photovoltaic panels is simplified (in most cases not requiring a construction permit, but simply a technical assessment). If the owner would like to install rooftop photovoltaic panels it is recommended that this is expressly set ou in the lease agreement, so as to avoid dispute with the tenant (in the event of a lease of entire buildings).
8. Are there any regulations relating to soil artificialisation or other biodiversity concerns which impact on new builds and/or refurbishments? How are they enforced?
There are no regulations regarding soil artificialisation. Biodiversity concerns are regulated by the Bulgarian Biodiversity Act, which only applies to constructions within NATURA 2000 protected areas and said assessment is part of the enviromental assessment and environmental impact assessement by the environmental authorities.
