What is a green lease?

In addition, Section 172 of the Companies Act 2006 states that your business must take steps with regard to “the impact of the company's operations on the community and the environment". The practical application of these ideals will form an important component of the negotiations you will have with your landlord.

One area where a green lease could become contentious is when alterations or improvements to the commercial property are needed. The cost of meeting these changes and also complying with the environmental demands of the Companies Act 2006 could mean higher overall costs. Whether you, your landlord or a combination of both will meet these additional costs should be built into your commercial lease agreement.

Some commercial property solicitors are designing special ‘green’ leases that businesses can use to help them meet their environmental responsibilities. Using a commercial property solicitor with experience of this type of commercial lease can be beneficial to your company. Green leases must be worded to ensure they are not ambiguous and they must clearly state which party is responsible for carrying out any work that is needed on the commercial property.

Landlords may be resistant to the cost of meeting any environmental conditions, but overall, early negotiations will produce a commercial lease that all parties can agree on. Aspects of a commercial lease such as alienation, service charges and rent reviews all now have green aspects your business must address. Protecting the environment is a business imperative that can’t be ignored by any company. Landlords are also becoming aware that they must factor environmental protection into their commercial leases. For any further advice on green leases, contact a commercial property solicitor.

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