Green Lease Toolkit

With the ever increasing focus on environmental concerns, the property industry is being pushed to become more energy efficient. As reduction targets cannot be met simply by improving the efficiency of new buildings, attention is now being given to existing buildings.

The Better Building Partnership (BBP) has issued a new version of its Green Lease Toolkit (first issued in 2009) and a new Memorandum of Understanding (MoU) to encourage greater dialogue on environmental issues between owners and occupiers of both new and existing buildings.

A green lease is a standard form lease with additional clauses to provide for the management and improvement of the environmental performance of a building. It can also address wider sustainability issues such as water management, waste management and use of sustainable materials for buildings. The provisions in the lease are legally binding on the parties and remain in place for the duration of the lease term. The extent to which green clauses will be adopted depends on how 'green' the parties wish to be and the circumstances of the transaction (such as the age and nature of the building).

Alternatively if the parties do not agree that green clauses should be added to a lease they can enter into a MoU. This is a separate and voluntary agreement between owners and occupiers which is not legally binding and can remain in place for any chosen length of time. A MoU runs alongside a lease and addresses the same matters as the green lease clauses, but it cannot be enforced if either party is in breach of their obligations. Although most relevant to commercial properties, green lease clauses or a MoU can also apply to residential property owners and occupiers.

Both the 'green' lease clauses and MoU address the following:

Promotion and discussion of strategies to improve the environmental performance of the building. Sharing of data on environmental performance and metering for different parts of a building. Limitations on the parties' ability to carry out works to a building which adversely affect the environmental performance of the building. Reinstatement of tenant alterations which adversely affect environmental performance. This clause, if adopted, would relax the need to reinstate where reinstatement would adversely affect the environmental performance (unless the landlord reasonably required otherwise).

Wider scope for the parties to carry out works which enhance environmental performance.

A MoU can also...