Climate Contract Playbook Edition 3
180
[Rosie’s clause] NEW
The Origin Story
Child’s name
Rosie’s clause
Alteration/improvement provisions within leases to improve climate/ environmental impact of buildings and better use of shared space
Full name
Practice Area / Sector
Real Estate
In commercial leases, tenants usually need their landlord’s consent for alterations or improvements to the property or the common parts - even if the aim of the alteration/improvement is to achieve a more positive environmental impact. Sometimes landlords will give consent, but on terms which do not encourage tenants to improve the climate or other environmental impact of the property and this can be a barrier to the transition to net zero. Including wording in leases to require landlords to act reasonably when tenants propose (i) alterations to their premises (and associated change of use) or (ii) improvements to common areas, which (in all cases) have a positive climate or environmental impact. This will encourage a shift towards a more collaborative landlord/tenant relationship and reduce the climate or other environmental impact of buildings and shared areas in a move towards Net Zero. In 2013, the Better Buildings Partnership (BBP) 103 launched their ‘Green Lease Toolkit’, which included some proposed drafting expanding a tenant’s ability to carry out alterations which improve environmental performance. The proposed clause was limited to non-structural alterations and, in the seven years since its launch, take up of this clause (or something similar) has been limited. The UK Government’s ‘Clean Growth Strategy’ has led to some improvement in energy efficiency in commercial buildings (with minimum requirements for such buildings to be able to be let) 104 . However, the lease itself needs to promote proactive environmental improvements to address the impact of commercial buildings on climate change and the environment. The ‘Climate Change Commitment’ (signed in 2019 by 23 leading commercial landlords covering over £300bn of assets under management, responsible for over 1.2 million tonnes of carbon emissions per annum) focused on the target for buildings to be net zero carbon by 2050 105 . To help achieve this, building owners will need to allow (and encourage) occupiers to make changes to the buildings which will have a positive impact on their environmental performance.
Issue
Solution
Context
103 See https://www.betterbuildingspartnership.co.uk/. 104 See the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 (SI 2015/962) (MEES Regulations). 105 See https://www.egi.co.uk/news/better-buildings-partnership-outlines-climate-commitment/..
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