What is a Green Lease?

A ‘Green Lease’ is an agreement between a landlord and a tenant that defines how a building is to be managed in a greener way.

A green lease connects sustainable building schemes with commitments from both the landlord and tenant to meet ecologically sustainable goals.

Green Lease Roots

The green lease was developed in Australia and is now mandatory for all government-owned buildings there. It has since expanded around the world.

What are the Benefits of Green Leases?

For the landlord:

  • The building is maintained in a more environmentally-friendly way
  • The owner’s costs of maintaining the building and relevant infrastructure are substantially lowered
  • The building is more appealing to environmentally-conscious prospective tenants
  • The owner has the benefit of an improved and ‘greener’ public image

For the tenant:

  • Safe, comfortable and greener work and/or living environment
  • Creates lower operating costs/service charges passed on to the tenant

What are the Basics of a Green Lease?

  • Target rating
  • Digital metering
  • Dispute resolution process

Target Rating

Essentially, a ‘Green Lease’ applies a target rating system into a legally-binding contract between the landlord and tenant which then allows the landlord to legally operate the building in agreement with its environmentally green plan.

This structure lets the building’s owner increase energy performance goals, decrease energy expenditures and give the building and its owner a reasonable gain in the marketplace. The tenants get a healthier and more environmentally-friendly living and/or working environment and the landlord reaps financial and reputational rewards.