Property Insights: Green lease provisions - Boodle Hatfield

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06 Jul 2023

Property Insights: Green lease provisions

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Kate Symons View profile
2 min read

Green lease clauses in some form or another have been included in commercial leases, albeit not necessarily commonplace, for some time following the initiatives of organisations such as the Better Building Partnership and the Chancery Lane Project. The City of London Law Society Certificate of Title has also acknowledged green lease clauses in its recently revised Certificate of Title. But what is a ‘green lease’ and do the clauses that make a green lease merit separate billing or are the clauses in fact now commonly accepted lease terms with both landlord and tenant wanting to invest in and occupy a sustainable property?

The form and content of green lease clauses may vary considerably. In so far as there is a standard, green lease clauses will commonly include obligations on both landlord and tenant to undertake specific responsibilities regarding the sustainable operation and occupation of a property including (for example) energy efficiency, disposal of waste, alterations to the property and the monitoring and sharing of environmental data such as energy consumption. We are now beginning to see the emergence of ‘next generation’ green lease provisions such as the promotion of environmental social and governance requirements which may require changes in the behaviour of both landlord and tenant and the way in which buildings are used and occupied rather than relating directly to the structure and energy use of the building.

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“Environmental social and governance provisions are increasingly forming part of the green lease suite of provisions in lease negotiations but in practice may sit less comfortably in the established landlord and tenant covenants and need to be drafted carefully to protect value and allow appropriate flexibility.”

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