Making sure that commercial properties are let and managed in an environmentally sustainable way is increasingly in focus. Landlords and tenants are keen to make sure they use green leases. Model form green lease clauses have been published by the Better Buildings Partnership and are widely available. Michelmores have produced template green leases which we use when acting for commercial landlords and please do get in contact if you require any assistance in this regard. Some top tips to consider when looking at this subject are as follows:
- Co-operation obligation. Will the landlord and tenant agree to sign up to a shared aim? Typically to improve the environmental performance of the premises or building in a stated way. Actual co-operation is often as important as the black letters of the lease obligations.
- Data Sharing: Will the parties share information? For instance in respect of energy consumption, water use or waste production at the premises. It is important for both practical assessment and corporate responsibility reason to know the true position and numbers.
- EPC: Is there an existing energy performance certificate? If not, when will one be prepared and what will happen with any identified steps to improve sustainable credentials or environmental performance? It needs to be considered how the cost of such steps can be shared between those involved.
- Restrictions on alterations: If the tenant wants to change the building for its use but there is the potential to negatively impact the environmental performance, will it be reasonable for the landlord to refuse consent. Equally, if the landlord wants to do works to a building or the common parts (which typically it can do with restriction) should there be requirements that it cannot thereby reduce green credentials (or must even seek to increase them).
- Yielding up: A lease often requires a tenant to reinstate any tenant’s alterations which have been carried out properly during the term. Will the landlord be able to insist these are removed, even if they are positive for environmental reasons, but are perceived by the landlord to be negative for future use or re-letting in some way (perhaps EV charging points or bike racks reducing car parking overall)?.
- BREEAM: Will any landlords works (perhaps under an agreement for lease) or tenant’s works (perhaps fit out) need to meet requirements of sustainable building schemes to be acceptable. For instance, to reach a certain standard or award under BREEAM? The carbon footprint of building works can be a factor and setting out the requirements will make clear the expectation.
This article is for general information only and does not, and is not intended to, amount to legal advice and should not be relied upon as such. If you have any questions relating to your particular circumstances, you should seek independent legal advice.