Well, for starters, what is a ‘Green Lease’? It is simply a lease which incorporates clauses whereby the landlord and tenant agree to undertake specific obligations in relation to the sustainable occupation and operation of the property. This can include, among other things, provisions relating to energy efficiency and waste reduction.

More and more leases are becoming ‘Green’ – so what sort of terms can you expect to see within one, and what do they mean?

  • MEES - Minimum Energy Efficiency Standards. MEES prohibits the letting of a building if the EPC rating is below an E.
  • EPC – Energy Performance Certificate. An EPC gives a property an energy efficiency rating from A (most efficient) to G (least efficient) and is valid for 10 years.
  • BREEAM - Building Research Establishment Environmental Assessment Method. BREEAM is used for measuring a building’s environmental performance in terms of sustainable design. It is the most commonly used method in the UK.
  • BMS – Building Management System. This is a computer-based control system which is installed in a building to help manage the operation of its services e.g. heating and colling.
  • CCHP – Combined Cooling Heat and Power. This is a localised electricity generator which produces electricity, heat and cooling which is usually fed by natural gas from the national grid.
  • Environmental Performance – this is typically taken to mean all or any of the following, which arise from the operation and use of a premises:
    • Energy consumption;
    • Water consumption and discharge;
    • Waste generation and management;
    • Generation and/or emission of greenhouse gases;
    • Other adverse environmental impacts.
  • Environmental Performance Data – this is typically data which relates to energy consumption, water use, waste production and recycling in relation to a building.
  • Green Building Management Group – this is a group which meets to review the Environmental Performance of a building.
  • LEED – Leadership in Energy and Environmental Design. This is an international green building certification system which measures a building’s design against performance categories. It is being used in the UK more frequently, as an alternative to BREEAM.
  • MoU – Memorandum of Understanding. A written agreement setting out how the Environmental Performance of a building will be managed and improved by a landlord and tenant.
  • NABERS - NABERS measures and rates the actual energy use of offices, by providing a rating from 1 (poor) to 6 (market leading) stars.

It is important to note that a ‘Green Lease’ (as with any lease) is legally binding, and the provisions in the lease will remain in place for the duration of the term (unless varied).

Green Leases are becoming increasingly important as commercial buildings and their occupants contribute significantly to energy and water consumption, and to waste generation. Huge carbon reductions are required from the built environment sector, and Green Leases provide useful tools to support both landlord and tenants by setting out provisions relating to environmental management and improvement of buildings.

It is important that, going forward, Green Leases are seen as a benefit, rather than a burden. Increasing knowledge of the terms usually included in Green Leases is a first step towards this.

For more information on any of the topics raised in this article, please contact Rachel Francis-Lang.