There's no denying that environmental issues have taken centre stage in recent years, encouraging people to do their best to reduce their carbon footprint and look for ways to reduce their impact on the environment. For this reason, many industries are buying into the movement, encouraging greener campaigns to boost morale in society.
With the Extinction Rebellion making noise in the streets, people are now focusing beyond the pandemic and magnifying issues regarding the environment and sustainability, and the UK is one of the most affected by this movement.
As other businesses are in tow with the campaigns and making significant changes with operations, you're probably wondering what the commercial property market is doing to create environmentally friendly changes in their property. The answer is quite simple—green lease.
Green leasing isn't as straightforward as you may think, and when it comes to renting and payments, there are a bunch of things to consider. For this reason, it's always a good idea to work with the best conveyancing solicitors so you can rest well knowing your property—whether you're buying or selling—is handled by an expert residential conveyancer.
In this article, we'll put a spotlight on green leasing— from what it actually is, what it's for, how companies are utilising this, what happens during the lease, and more. If you're ready to learn more about green leasing, keep reading!
What is Green Leasing?
Green leasing is a term used to describe a lease that includes various environmental obligations that have been agreed upon with the tenant and landlord. These obligations are often drafted to encourage the landlord and tenant to reduce their environmental impact, making the whole property more sustainable and environmentally friendly.
Although there is no such thing as a "perfect green lease,” and living a completely sustainable life can be incredibly challenging, green lease commitments encourage both parties to cooperate to improve sustainable living in the property, which can still provide exponential benefits to the environment.
As mentioned earlier, clauses, agreements, and payments may differ from traditional leases, and because of this, working with the best conveyancing solicitor is a must. Not only will they understand the ropes of green leasing, but you'll be properly guided and presented with desirable rates for your leasing term.
What is Green Leasing For?
Basically, green leasing can improve the energy efficiency of a property or preserve an existing standard. Based on the government's plan, by 2030, a minimum energy performance certificate standard of 'B' with a lower minimum standard of 'C' should be achieved.
Most of the driving force in developing green lease agreements emerged in the private sector, but as the deadline for the energy performance certificate approaches, more landlords are looking for ways to improve their energy performance.
When properties are considering green commitments, most parties focus on energy efficiency as their key factor. But the truth is, green leasing can also include other eco-friendly obligations, including:
Improving service and waste management;
Modifications, alterations, and repairs are done using sustainable materials;
Encouraging transport facilities, such as bike racks and showers;
Providing parties to host forums to agree on strategies and targets;
Why are Companies Entering Into Green Leasing?
At first, companies were entering green leasing commitments due to corporate reporting or environmental, social, and governance policies. However, now that negative environmental impact is more apparent, companies are improving their environmental objectives, improving their public relations and enhancing employee retention and recruitment.
Besides that, companies also get to improve energy efficiency, reduce their operational costs and utility bills, and future-proof their property and business, which ultimately entices more tenants.
What Happens When a Tenant and Landlord Enter Green Leasing Commitments?
In essence, when a tenant and a landlord agree to enter into a green lease, both parties should join forces to minimise the property's environmental impact. Since green leases require a collaborative approach between both parties, proper communication, education, and cooperation is necessary. This could impact the service charge provision, consent alterations, and more with all these in mind.
When it comes to green lease commitments, the agreement can range from soft to hard, referring to the light green and dark green clauses. For light green clauses, these may not be legally binding and have a limited scope, while dark green clauses will have legal binding and a substantial level of commitment with a broader scope.
Like any agreement, a green lease can also be negotiated in different stages of a transaction:
The landlord and tenant can mutually agree to eco-conscious clauses that could be enforced under a lease;
During the term of the lease, a landlord and tenant can agree to improve and enhance the sustainability efforts of the lease;
The landlord and tenant can agree to enter a memorandum of understanding to share information regarding energy consumption and occupation of the property.
What a Green Lease Should Be
When you're about to agree on a green lease or if you're thinking of creating an agreement with a tenant, several factors need to be included in your clause. Adding the following factors can help improve your green lease agreements, not only for the time being but in the long run as well.
Easy and Cost-Effective: Demanding green behaviours isn't enough; instead, landlords should provide tenants with opportunities to behave sustainably and lower their cost implications. By encouraging green energy, landlords and tenants can reduce CO2, which is cost-effective and practical for both parties.
Collaborative: Commitments made by both parties should be collaborative as they work together to create an energy-efficient environment to help them live and operate sustainably.
Encourage Dialogues: Landlords are responsible for educating their tenants with best practices for eco-friendly living. With that, tenants should also have an open discussion with fellow tenants and their landlords to find ways to advance their sustainability efforts and improve their ecosystem.
These factors won't only encourage both parties to improve their green efforts but also allow tenants and landlords to build transparent and honest relationships for the betterment of their community.
The Bottom Line: A Green Lease is an Environmental Agreement
A green lease is an agreement between the landlord and tenant that promotes transparency and collaborations to improve a property's environmental impact. Now that environmental issues have taken centre stage, we must create sustainable efforts and systems to build a better, cleaner and safer life.
When developing green leases or signing into one, it's crucial to work with the best conveyancing solicitor to ensure that all payments and legal obligations are covered.
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Our SRA-regulated solicitors and licensed conveyancers can protect your property sale, purchase, or help you with a remortgage. Looking for a residential conveyancing expert? Reach out to us today!