The green leases framework, which was first published in June 2022, is now in place. The aim of the framework is to provide guidance to, and a foundation for, NHS organisations in improving their green credentials in relation to their leasehold property (whether acting as landlord or tenant).
The initiative supports the NHS’ aim of achieving net zero carbon emissions by 2040; an aim which NHS Property Services are viewing as a necessity, rather than just a bold ambition.
The scheme also reflects a wider shift in modern lease provisions which, particularly in the case of institutional landlords, will now include “green” clauses as standard, as investors are keen to see a commitment to ESG within real estate assets.
The NHS framework consists of three documents:
1. Template memorandum of understanding
The intention is that this memorandum can sit alongside existing leases (as an alternative to varying the leases). Whilst not intended to be legally binding, the memorandum is a fairly comprehensive document which sets out agreements on data sharing and building management, and also offers a schedule of best practice recommendations.
2. Suite of green lease provisions
This “essential” checklist of landlord and tenant obligations is comprised of “light green” – lighter touch – and “dark green” – more substantial – interventions. These can be tailored based on the landlord-tenant relationships, and nature of the property in question.
Whilst both sets of provisions have been produced with the aim of driving carbon reductions, parties will need to pay particular attention to the inclusion of any dark green provisions, as compliance with these will likely mean either or both of landlord and tenant incur some costs.
Perhaps most controversial is the suggestion that rents will be increased or decreased based on the tenant meeting, or failing to meet, specified energy reduction targets. This will necessitate real engagement from both landlords and tenants, and may be difficult to police in practice.
3. Draft green clauses
Perhaps most useful to professionals supporting NHS clients will be the suite of draft green clauses. These are designed to be incorporated into new or renewal leases, and are aligned with the PLC model lease of part. Again, parties should consider the potential financial or operational impact of these clauses, which should be tailored in each case.
Overall, NHS England has produced what is in theory a user-friendly framework, which sets out clear objectives and expectations. In practice, a forward-thinking mindset and collaborative approach from both NHS organisations and third parties will still be required to implement these provisions, and keep the NHS on track to achieve its net carbon zero target.
This blog was written with the support of Carla Harris, trainee solicitor.
Our content explained
Every piece of content we create is correct on the date it’s published but please don’t rely on it as legal advice. If you’d like to speak to us about your own legal requirements, please contact one of our expert lawyers.