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Green leases

Green leases. Malcolm Dowden. What is a ‘green lease’?. Developed in Australia for the public sector, 2006 Extended into the private sector on a voluntary basis Promoted in UK by leading landlords. Green leases in the UK.

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Green leases

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  1. Green leases Malcolm Dowden

  2. What is a ‘green lease’? • Developed in Australia for the public sector, 2006 • Extended into the private sector on a voluntary basis • Promoted in UK by leading landlords

  3. Green leases in the UK • Better Buildings Partnership (BPP) published its Green lease toolkit in April 2009 • http://www.lda.gov.uk/upload/pdf/BBP_Green_Lease_Toolkit.PDF

  4. Green leases in the UK • Common clauses include: • rental level and review attached to energy performance targets • service charges enabling landlords to recoup costs of introducing, replacing or maintaining energy and water efficient plant, equipment and machinery • fit out covenants prohibiting tenants to carry out works detrimental to the energy performance of the demised premises as a whole • financial reward for tenant’s complying with energy efficient incentives

  5. MOUs • An alternative to lease schedules or variations • Recommended for use within a lease term where variation is not possible

  6. What are the drivers? • Corporate social responsibility? • Energy Performance of Buildings regulations? • CRC Energy Efficiency Scheme?

  7. CRC – flawed assumptions? • Cost of allowances – who should pay? • Recycling payments/rebates • who should receive them? • How should they be applied?

  8. Institutional lease – fit for purpose? • Landlord’s objective is a ‘clear’ lease • Rent represents ‘pure’ profit • Costs of repair and operation collected from tenants • Capital value a function of clear rental income

  9. Drafting for CRC • CRC has accelerated the use of ‘green leases’ • Clauses in circulation seek to pass all costs on to tenant • Tenant amendments seek a ‘fair and reasonable’ apportionment of costs

  10. Drafting for CRC • Tenants’ requirement for information, within a building and across a portfolio • Tenants’ amendment excluding additional costs triggered by the landlord’s commercial activity • Tenants’ amendments requiring distribution of recycling payments – and then what?...

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