20 February 2025
In recent years, sustainability has become a big topic of conversation, and as many industries revise their way of doing business by implementing sustainable practices, the real estate sector is no different and business and property owners are now more conscious of their environmental footprint. As a result, green leases are becoming more prevalent in real estate, particularly in large buildings with a significant environmental impact.
What are green leases?
Green leases, sometimes also referred to as environmental, or sustainable leases are clauses within a lease that are intentionally designed to promote environmentally friendly practices between a landlord and tenant during the term. This relatively new area of interest and its intricacies can be complex and obtaining legal advice is essential to ensure that the terms are both clear and beneficial to both parties.
Why should you consider implementing a green lease?
Increased property value: A property with a green lease may be more desirable, potentially commanding higher rents and increase in market value for landlords.
Improved working environments: Many green leases result in improved indoor air quality, lighting, and other factors contributing to a healthier work environment for tenants.
Cost savings: Green leases typically include energy saving initiatives, which can lead to lower utility bills for tenants and reduced maintenance costs for landlords.
Future proofing: As governments impose stricter environmental regulations, green leases help both parties comply with these laws, preparing the property for future legislation and avoiding penalties.
Financial incentives: Green leases may unlock financial benefits such as tax subsidies for making environmentally friendly upgrades to a property. A solicitor can assist in identifying and negotiating these opportunities, ensuring both parties maximise the financial savings.
The legal complexities of green leases and how solicitors can assist
Whilst green leases offer many benefits, drafting and negotiating the agreements between parties will require careful consideration and costs must be carefully balanced to ensure the lease is effective for both parties.
Tailored clauses: Every business and property are unique, and so are their sustainability needs. A solicitor can help tailor green lease clauses to reflect specific environmental goals, whether it’s reducing energy consumption or otherwise.
Financial incentives: Many green leases offer financial incentives such as tax credits, government subsidies, or other financial support for sustainable improvements. A solicitor can assist in identifying and negotiating these incentives to ensure both parties’ benefit.
Long term success: A well drafted green lease can include performance monitoring clauses to track progress toward sustainability targets. A solicitor can help ensure the lease is structured to achieve these long-term goals.
Whether you’re a tenant seeking an environmentally conscious space or a landlord aiming to increase the sustainability of your property, consulting with a solicitor will help ensure that your green lease meets all legal requirements and protects your interests now and in the future.
If you would like assistance on navigating green leases, our commercial property lawyers can support you. For further information please contact our Real Estate team on 020 3814 2020 or email realestate@blasermills.co.uk.