The Better Buildings Partnership (BBP) has issued a new version of its Green Lease Toolkit, including new model green lease clauses and a new Memorandum of Understanding (MOU).
The original 2009 version of the Toolkit has been completely revised in light of practical experience. It is hoped that it will encourage greater dialogue on, and improvements to, environmental performance in shared buildings.
What are 'green leases'?
'Green leases' include provisions encouraging - 'light green' - or requiring - 'dark green' - a reduction in the environmental impact of the premises.
The provisions can be within the lease itself or within an MOU, which sits outside the lease. The MOU is likely to be voluntary, rather than legally binding.
The clauses usually focus on improving the energy efficiency of the building (for example obligations to share energy consumption data, install separate metering facilities, cooperate on energy reduction strategies and consideration of on-site renewable energy sources), but can also include wider environmental impact and sustainability, including:
- water management (e.g. water use efficiency, fittings)
- waste management (e.g. minimising waste, recycling facilities)
- suitable material for repairs and alterations (e.g. using energy efficient, recycled, non-polluting and/or local materials)
- green transport (for example showers and cycle racks, car-share schemes)
The revised Toolkit
The revised Toolkit contains:
- best practice recommendations for collaboration between owners and occupiers of commercial property regarding improvement of environmental performance
- revised model form green lease clauses with drafting notes
- a shorter and simpler form of MOU, for use where green lease causes are deemed inappropriate
There continues to be no recommendation on how costs of works to improve environmental performance should be split between owners and occupiers. BPP believes the parties should discuss this issue at the outset.
- highlight of investment benefits of green leases
- explanation of how environmental improvements depend on day-to-day cooperation and how this can be encouraged by wording in legal documents
- less emphasis on forming a Building Management Committee (feedback suggested it was too prescriptive)
- no specific requirement for an environmental management plan (feedback suggested these could be expensive and inflexible)
- clauses on cooperation and sharing best practice are grouped together and are seen as 'bare minimum' clauses
- new section on works done to buildings
- new model clauses on compliance with BRE Environmental Assessment method (BREEAM)
- the MOU is rolling, rather than lasting only 12 months
Strong market forces
The market has been slow to embrace green leases, but strong market forces are emerging which may encourage their uptake.
- rising costs of CRC allowances under the CRC Energy Efficiency Scheme
- minimum energy standards for letting properties (see http://www.shoosmiths.co.uk/no-search/Will-an-EPC-rating-of-F-or-G-prevent-a-letting-4304.aspx)
- the requirement on all large enterprises under the EU Energy Efficiency Directive to carry out energy audits at least every four years (http://www.shoosmiths.co.uk/client-resources/legal-updates/EU-Energy-Efficiency-Directive-4512.aspx) and the government consultation on its implementation (http://www.shoosmiths.co.uk/client-resources/legal-updates/energy-savings-opportunity-for-larger-companies-5813.aspx)