UK: Green Lease Toolkit

Last Updated: 9 December 2013
Article by Dilpesh Shah and Malcolm Dowden

With the ever increasing focus on environmental concerns, the property industry is being pushed to become more energy efficient. As reduction targets cannot be met simply by improving the efficiency of new buildings, attention is now being given to existing buildings.

The Better Building Partnership (BBP) has issued a new version of its Green Lease Toolkit (first issued in 2009) and a new Memorandum of Understanding (MoU) to encourage greater dialogue on environmental issues between owners and occupiers of both new and existing buildings.

A green lease is a standard form lease with additional clauses to provide for the management and improvement of the environmental performance of a building. It can also address wider sustainability issues such as water management, waste management and use of sustainable materials for buildings. The provisions in the lease are legally binding on the parties and remain in place for the duration of the lease term. The extent to which green clauses will be adopted depends on how 'green' the parties wish to be and the circumstances of the transaction (such as the age and nature of the building).

Alternatively if the parties do not agree that green clauses should be added to a lease they can enter into a MoU. This is a separate and voluntary agreement between owners and occupiers which is not legally binding and can remain in place for any chosen length of time. A MoU runs alongside a lease and addresses the same matters as the green lease clauses, but it cannot be enforced if either party is in breach of their obligations. Although most relevant to commercial properties, green lease clauses or a MoU can also apply to residential property owners and occupiers.

Both the 'green' lease clauses and MoU address the following:

  • Promotion and discussion of strategies to improve the environmental performance of the building.
  • Sharing of data on environmental performance and metering for different parts of a building.
  • Limitations on the parties' ability to carry out works to a building which adversely affect the environmental performance of the building.

Reinstatement of tenant alterations which adversely affect environmental performance. This clause, if adopted, would relax the need to reinstate where reinstatement would adversely affect the environmental performance (unless the landlord reasonably required otherwise).

Wider scope for the parties to carry out works which enhance environmental performance.

A MoU can also be suitable for existing leases where both parties want to deal with environmental performance of the building and have already signed a lease.

Whilst it is not currently obligatory to include green lease clauses in a lease or enter into a MoU, energy efficiency and sustainability issues are being given increased attention. The property industry is going to have to seriously consider 'green' issues when agreeing heads of terms, failing which the government may push for legislation.

A copy of the green lease toolkit and MoU can be found at

The model clauses in the green lease toolkit provide an extremely useful starting point for drafting and negotiation. However, they must be used with care, and with an eye to the landlord's legitimate interest in enhancing the return from its investment.

Green lease clauses – hidden risks for landlords?

The green lease toolkit was reissued in August 2013 by the Better Buildings Partnership, a group including some of the UK's leading landlord bodies. It includes a range of model clauses designed to promote cooperation and to facilitate improvements in the energy performance of commercial buildings.

There is a compelling reason to focus on energy performance. If Section 49 of the Energy Act 2011 is implemented as required by April 2018, commercial premises with an energy rating of F or G "may not be let". That prohibition on letting is intended to apply pressure on parties to take steps now to improve energy efficiency. The green lease toolkit includes clauses to govern works carried out by the landlord or tenant to improve efficiency, and to restrict works that may have an adverse effect on energy performance.

Of particular concern is the clause that reads:

The Landlord shall not carry out any works to the Building or to the plant, equipment or services within and serving the Building which [will/may] adversely affect the Environmental Performance and/or any EPC rating of the Premises and/or the Building unless it first obtains the [written] consent of the Tenant to such works [such consent not to be unreasonably withheld or delayed].

For the purposes of the toolkit, "Environmental Performance" is defined in very wide terms. It includes energy consumption, water consumption and discharge, waste generation and management, generation and/or emission of greenhouse gases and other adverse environmental impacts. One consequence is that an increase in energy consumption for whatever reason would count as an "adverse effect".

Consent not to be unreasonably withheld

The model clause provides optional wording requiring tenant's consent not to be unreasonably withheld or delayed. That would certainly help, but it is essential to remember that the statutory regime governing landlords' consent differs significantly from general consent requirements, and that tenants are not bound by the regime that governs landlords.

Where landlords' consent is required for tenant's "improvements" it may not be unreasonably withheld, and in reaching its decision the landlord is bound by case law to have regard only to matters directly relating to the landlord-tenant relationship and its interest in the premises. The landlords' scope for refusing consent is limited by a combination of Landlord and Tenant Act 1927 and judgments interpreting that statutory regime.

Given that tenants are not bound by that statutory regime, a requirement for tenant's consent must be analysed on general commercial principles, meaning that the tenant may acquire a significant – and perhaps excessive – degree of control over the landlords' Building.

The concern stems from, and is exemplified by, Barclays Bank v Unicredit [2012] EWHC 3655. In that case Barclays' consent was required for termination of a commercial arrangement. Barclays refused to consent, and that decision was upheld by the court. Outside the statutory regime applicable to landlords, a party whose consent is required may make its decision by reference only to its own commercial interests. It is not required to carry out a balancing exercise, weighing its interests against those of the other party.

The model clause requires tenant consent before a landlord can carry out works to parts of the Building that are outside the tenant's demise. One example might be a landlord's decision to reconfigure the Building to allow for greater intensity of occupation, whether by adding space such as an extra floor or extension, or by subdividing existing units. In any such case it is highly likely that intensified occupation would result in increased energy consumption or greenhouse gas emissions. From the landlord's perspective, increased returns from its investment in the Building might more than justify those "adverse effects". However, a tenant armed with the model clause – whether or not with the optional wording stating that its consent is not to be unreasonably withheld or delayed – might conclude that it should block the landlord's proposal. With Barclays v Unicredit in mind, the tenant might reasonably decide that it can safely refuse consent by reference only to its own commercial interests.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Malcolm Dowden
In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.