‘Green lease’ toolkit updated

Landlords, tenants, property agents, investors, lenders and professional advisors will welcome updates to the Better Buildings Partnership green lease toolkit.

A green lease is a commercial property lease that includes provisions requiring the landlord, tenant and/or managing agent to manage the property in a more sustainable way. Benefits can include making the property more marketable and reducing running costs. The Better Buildings Partnership is an association of major property owners, which first produced their green toolkit some ten years ago.

The updated toolkit contains suggested green lease clauses and guidances to help the parties to a lease and their agents and advisors negotiate green, sustainable provisions in their leases, to improve energy performance and encourage a sustainable approach to property management. This is becoming more important as investors and lenders are increasingly taking notice of sustainability issues and the energy costs of buildings when making investment decisions.

The update includes:

• coverage of a wider range of issues than previously, including Energy Performance Certificates, and use of and alterations to property. Particularly, there is greater coverage of data sharing issues, to ensure landlords, tenants and agents have the information they need to measure the impact of their activities, both in relation to individual properties and as organisations
• help for landlords and tenants to take a more bespoke approach, ie choose from a range of options, dependent on the degree to which they wish to embrace sustainability and the type of property being let
• specific guidance and templates to use when agreeing heads of terms
• a practical checklist which can act as a green benchmark for the parties and for investors, regulatory bodies (such as the Competition and Markets Authority, responsible for policing green claims) and other stakeholders.

Common provisions in green leases include rules saying fit-outs and repairs must not reduce or affect a property’s green credentials and energy efficiency, and that the landlord can enter and carry out repairs and other works that reduce the building’s environmental impact. They can require tenants to:

•  comply with efficiency targets
• use renewable or recycled water, electricity, gas and other energy sources
• use service systems efficiently so as not to increase energy consumption
• use waste removal and cleaning services provided by the landlord
• provide facilities for cyclists
• educe creation of waste, and manage its storage and disposal.

Rent reviews can be linked to these targets or standards, and a tenant’s savings can be rewarded by a reduction in service charges.

Find out about the updated toolkit on the Better Buildings Partnership website and consider whether a green lease, or updates to an existing green lease, could bring benefits to the parties, their agents and investors/lenders.