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Green Leases

QUESTION: How can I ensure my tenants do not undermine my building’s green credentials? I have heard about green leases. What do these entail?

As a formal agreement, a lease requires professional legal advice on its compilation.

Typically, green leases provide an agreement between landlord and tenant on mutual responsibilities for the environmentally sound running of an office.

Commitments are typically two-way. For example, tenants could be responsible for segregating their waste, while the landlord could then commit to recycling it.

Tenants may even have requirements beyond those considered by a landlord - for example, paying more for renewable power.

Green leases can have certain commercial advantages. They can deliver reduced operating costs, improve building management and provide a landlord with a different market proposition. They can also impact on service charges, although some tenants are prepared to pay an increased rate as part of meeting their environmental policies and commitments.

Green terms can be included in the lease itself, although a more flexible approach would be to include environmental commitments in a tenant handbook, which tenants are required to follow as part of their lease agreement.

The handbook could be updated yearly, as the sustainability agenda continues to move forward, negating the need for the complete renegotiation of the lease should either party wish to add a new stipulation to its terms.

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