Abstract from a paper published in the Journal of Building Surveying, Appraisal & Valuation, Volume 9, Number 2, November 2020
Energy usage in existing buildings contributes 30% of the UK’s total carbon emissions. If we are to meet the government’s 2050 net zero target, then the refurbishment of our existing buildings needs to be at the forefront of what we are doing.
Legislation is certainly helping to drive the issues forwards. The Streamlined Energy and Carbon Reporting (SECR) legislation means that almost 12,000 businesses now have mandatory carbon and energy reporting commitments, which, it is hoped, will motivate them to put into place measures to reduce energy use and save costs. The increasing scrutiny from investors on the Environmental, Social and Governance (ESG) performance of their investments means landlords are also increasingly recognising that carrying out energy efficiency improvements is the best way to reposition their assets in the marketplace.
However, commercial leases currently put significant barriers between landlords and tenants and their ability to implement improvements to reduce carbon usage in buildings. To push forward the sustainability agenda we need to see much greater landlord/tenant collaboration. This will require a fundamental shift in culture and the way leases are drafted, towards the green lease model. Green leases enable landlords and tenants to work together to reduce their buildings’ environmental impact and include clauses which provide for improvements in the building’s environmental performance by both landlords and tenants. They also set out the way in which reinstatement is dealt with at lease end.
Between now and 2050 there may only be couple of refurbishment cycles available, so landlords need to start acting now.