Cleaner and greener leases?

As reported in the summer edition of Real Estate Matters, the Energy Act 2011 could have far-reaching implications for owners of commercial property. The act contains provisions that impose an obligation on the secretary of state to make regulations before 1 April 2018 to ensure that a landlord of commercial property, for which there is an EPC that falls below a certain level, does not let such property until it has made energy-efficiency improvements. 

In addition to applying to new lettings, the act also confirms that ‘to let’ can be defined to include ‘continue to let’, meaning that it will apply equally to renewals of existing leases. This could, quite clearly, prove problematic for landlords who have granted leases protected by the Landlord and Tenant Act 1954 as it is unclear to what extent they could insist on the inclusion of new terms in the renewal lease dealing with energy-efficiency measures.

Green lease provisions can vary enormously and there is no one provision that makes a lease ‘green’…

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