In the past decade or so, sustainability and eco targets have become huge focuses for the government as Britain aims to meet energy efficiency goals. This has had a huge effect upon commercial properties, with increasing numbers of building firms incorporating new technologies into both new build and redevelopment designs in order to minimise their impact upon the environment.
However, commercial property agent Prop-Search does not believe that green leases have had the desired effect following their introduction several years ago, as landlords simply pass them off as a “trendy label” which could prove expensive to initiate. This could be because, at present, landlords are still allowed to refuse permission to tenants wishing to make alterations which could improve the energy efficiency of their building.
Chris Bilson, Director at Prop-Search
Chris Bilson, a Prop-Search director, believes that many landlords would not even be able to accurately define the term green lease.
He clarifies; “A ‘green lease’ is simply a general term used to refer to provisions contained within a lease or associated documents that encourage or require the landlord and the tenant to reduce the environmental impact of the property.
“The provisions do not need to sit within the lease itself; where they have been used in practice, they are commonly set out in a memorandum of understanding between the parties.”
While many landlords have now incorporated information and terms regarding energy performance certificates into lease documents, other steps such as waste management, water management and sustainability of materials used during repairs have widely been ignored. As the majority of legally binding provisions tend to pertain only to newer builds specifically designed to be environmentally friendly, the government is currently debating increasing legislation which would require landlords of older buildings to make improvements.
A study conducted by the Better Buildings Partnership Working Group largely confirms Mr Bilson’s claims, as it found the main barriers to green leases to be doubts regarding the usefulness of sustainable improvements, confusion regarding the incorporation of green lease terms in practice and, most importantly, a fear of high costs during the improvement process. This fear was shared by both landlords and tenants, as they remain unsure exactly which party would be expected to meet the costs of sustainable improvements.
Fortunately, not all “green” measures need to be costly. Simply switching from standard to energy efficient light bulbs, switching off electronic equipment when not in use and ensuring the energy performance of the property is not compromised – perhaps by closing windows whilst the heating is on or making sure the air conditioning is properly insulated – all fall under the green lease.
These steps can all be set out in a non-legally binding memorandum of understanding shared by landlords and tenants, with additional points being added as the need arises.
Mr Bilson concludes; “It is becoming more apparent that energy efficiency and sustainability issues are not going to go away.
“Therefore, the property industry is going to have to take green leases more seriously, otherwise there is a fear that the government could legislate!”
Does your workplace currently have a green lease in place, or alternatively use energy efficient measures without a document in place?
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