Drafting for leasehold agreements that impose obligations on buyers and tenants to use the property in an environmentally conscious way.
Why use this?
The covenants make flat owners and tenants aware of what is required to use a building efficiently and make such behaviour mainstream.
How to use this clause
Disclaimer - please read
The clauses on this website (and published in our Climate Contract Playbook) have been prepared in good faith on a pro bono basis and are free to download and use. The clauses have been drafted and edited by a variety of lawyers and, as such, the approaches to drafting may not conform to any particular drafting norms. We acknowledge this as a consequence of the collaborative drafting process.
The clauses on this website (and published in our Climate Contract Playbook) are provided on an ‘as is’ basis and without any representation or warranty as to accuracy or that the clauses will achieve the relevant climate goal or any other outcome.
This website (and the Climate Contract Playbook) does not comprise, constitute or provide personal, specific or individual recommendations or advice of any kind, and does not contain legal or financial advice. The clauses are precedents for legal professionals to use, amend and negotiate using their professional skill and judgement and at their own risk.
While care has been taken in the drafting of these clauses, neither The Chancery Lane Project nor any of its contributors owe a duty of care to any party in relation to their preparation and do not accept any liability for any errors or omissions, nor for any loss incurred by any person relying on or using these clauses or any other person. Users should use their own professional judgement in the application of these clauses to any particular circumstance or jurisdiction or seek independent legal advice.
At present, all the clauses are based on the laws of England and Wales. We encourage the conversion of these precedent clauses for use in other jurisdictions.
The Landlord and Tenant [and the Manco] [have signed up to the Race to Zero and] acknowledge their common intention to achieve their respective net zero targets and align with the objectives of the UNFCCC Paris Agreement, in particular pursuing efforts to limit global temperature increase to 1.5 degrees Celsius above pre-industrial levels, and achieve net zero or net negative emissions by 2050 or sooner. The parties agree to pursue these objectives in a manner that promotes a just transition to a low carbon economy and results in at least a 7%* reduction of greenhouse gas emissions year on year.
Rights excepted and reserved
[The right to receive and use Data in relation to the Environmental Performance of the Building in accordance with the provisions of Schedule [X].]
1. Tenant’s covenants
The Tenant covenants with the Landlord and the Manco and the Other Lessees as follows:
1.1 The Landlord and/or the Manco reserve the right to collect Data (as defined in Schedule [ ] ) to monitor the consumption of [energy and/or Heat Supplies] to the Premises and to use such Data in accordance with the provisions of Schedule [ ] and, where in the reasonable opinion of the Landlord and/or the Manco the consumption of [energy and/or Heat Supplies] at the Premises is excessive (by way of comparison with Other Lessees or otherwise) then the Tenant shall pay to the Landlord on demand such reasonable and proper charges in respect of the excessive [energy and/or Heat Supplies] to the Premises as the Landlord and/or the Manco shall deem reasonable in the circumstances (which said charges may be demanded with Service Charge demands by the Landlord for administrative purposes).
2.1 To keep the Premises in good and substantial repair and condition and, when repair is no longer possible, to replace and renew any landlord’s fixtures and fittings with ones of equivalent quality and value and with equivalent [or better] sustainability and environmental performance credentials to the reasonable satisfaction of the Landlord.
2.2 Where the Tenant is required to replace or renew any relevant Landlord’s fixtures or fittings or other appliances at the Premises then it shall do so (where applicable) with A rated models and/or LED light bulbs [or other designation].
3. Decoration Maintenance and Cleaning
3.1 To carry out all works of repair, decoration and maintenance and other treatment of the Premises in a proper and workmanlike manner in accordance with good practice current at the time and using good quality sustainable, and sufficient materials.
4.1 The Tenant shall not carry out any alterations to the Premises that may adversely affect the Environmental Performance (as defined in Schedule [ ]) of the Premises or the Building or the EPC rating of the Premises (without the prior written consent of the Landlord or the Manco).
The Tenant covenants with the Landlord and the Manco and the Other Lessees as follows:
1. To ensure that the electricity consumed at the Premises is purchased on a 100% renewable energy tariff.
2. To minimise the use of energy [and/ or Heat Supplies] at the Premises to help meet the greenhouse gas emissions targets set by the Landlord and the Manco in respect of the [the Estate/ the Building].
3. Not to park or accommodate any vehicle on any parking space or any other part of the Estate that runs on diesel fuel.
4. Not to store or use any patio heater or any other exterior high energy heating facility on any external patio terrace or other external areas forming part of the Premises.
5. To comply with all requirements and recommendations from time to time of the Manco in relation to the energy efficient use of the Premises and apparatus within it.
6. Not to sub-let or rent the Premises other than on an assured shorthold tenancy basis that obligates the sub-tenant to occupy the Premises in accordance with the Environmental Performance and energy efficiency requirements of this lease.*
7. Not to carry out any works to the Premises which could affect the heat insulation or the rate of transfer of heat through the Premises structure, windows and doors (“U Value”).
8. Not to damage or tamper with or make any alterations or additions to the heat interface unit or Heat Infrastructure within the Premises or any other meter installed in the Premises and to pay to the Landlord or the Manco on demand the reasonable cost of repairing or reinstating or replacing any such heat interface unit, Heat Infrastructure or meter so damaged or tampered with or altered.
9. At all times to observe and perform all such variations or modifications of the foregoing regulations and all such further or other regulations as the Landlord or Manco may from time to time in its reasonable discretion make (and notify to the Tenant) for the energy efficient use of the Building and the Estate and the comfort, safety and convenience of the tenants and occupiers.
* [Drafting note: See Toryn’s Clause (Green Assured Shorthold Tenancy) for AST wording.]
Schedule [ ] – Environmental performance provisions
In this Schedule [ ] the following definitions shall apply:
Carbon Dioxide Equivalent (CO2e or CO2eq) means a unit of measurement that is used to standardise the climate effects of various Greenhouse Gases on the basis of their global warming potential over a specified timescale.
Data means data all and any data held in respect of the Environmental Performance of the Premises, the Building and/or the Estate (as the context requires).
Environmental Performance means all or any of the following in relation to the Premises, the Building and/or the Estate:-
(a) energy consumption;
(b) water consumption and discharge;
(c) waste generation and management;
(d) generation and/or emission of Greenhouse Gases; and/or
(e) other adverse environmental impacts.
GHG Emissions means emissions of GHGs, each expressed as a total in units of Carbon Dioxide Equivalent (CO2e) and from all sources, categorised as Scope 1, 2 and 3 Emissions.
Greenhouse Gas (GHG) means gases that contribute to or accelerate the greenhouse effect by absorbing infrared radiation and as specified in Annex A to the Kyoto Protocol to the United Nations Framework Convention on Climate Change (UNFCCC) or as otherwise specified by the UNFCCC at the date of this Lease and “Greenhouse Gases” shall be construed accordingly.
Net Negative means that the aggregate of the [Landlord, Tenant and the Manco]’s actions to reduce their GHG Emissions and remove them from the atmosphere exceeds their unabated GHG Emissions.
Net Zero Target means both a reduction of GHG Emissions overall and a removal of GHG Emissions associated with Offsets acquired to address Residual Emissions of the [Landlord] [Tenant] [Manco] by [INSERT DATE/ 2050 or sooner] in order to achieve:
(i) a balance between sources and sinks of GHG Emissions in a calendar year and for each subsequent year thereafter; and
(ii) the goals of the Paris Agreement.
Net Zero Target Plan means a plan [as agreed by the Landlord / Tenant / Manco] to deliver the Net Zero Target and to remain Net Negative thereafter that:
(i) includes an Offsetting Strategy;
(ii) sets interim GHG Emission reduction targets, split into Scope 1, 2 and 3 Emissions, that are aligned with the Paris Agreement goal of limiting global temperature increase to 1.5°C above pre-industrial levels [and that result in annual reductions of GHG Emissions of at least 7%];
(iii) links executive remuneration to the achievement of the interim targets; and
(iv) promotes a just transition to a low carbon economy.
Offset Provider means a provider of carbon credits or voluntary emission reduction credits that relate to:
(i) a project that has been verified in accordance with [insert name of voluntary standard]; or
(ii) a United Nations Framework Convention on Climate Change (UNFCCC) clean development mechanism (CDM) [or [successor/ equivalent] UNFCCC mechanism] project.
Offsetting Strategy means a plan [as agreed by the Landlord, Tenant and the Manco] specifying:
(i) the verified credits from a recognised Offset Provider that may be used by the [Landlord] [Tenant] [Manco] to offset [its/their] Residual Emissions;
(ii) how the [Landlord] [Tenant] [Manco] will transition from using credits resulting from offsetting projects that avoid or reduce emissions of GHGs to those from projects that remove emissions of GHG and involve long-term storage methods that have a low risk of reversal; [and]
(iii) how the [Landlord] [Tenant] [Manco] will reduce [its/their] use of credits by reducing [its/their] Residual Emissions [to zero/ by [x] %] by 2050[;] [and][.]
[(iv) the impact of the relevant offsetting projects on a just transition and wider social and ecological goals.].
Residual Emissions means the GHG Emissions measured in Carbon Dioxide Equivalent, that are emitted after all reasonable efforts have been made by the Landlord, Tenant and the Manco to reduce GHG Emissions.
Scope 1, 2 and 3 Emissions means the three classifications of emissions in The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard, Revised Edition 2015 as updated from time to time.
1. Co-Operation Obligations
The Landlord and the Manco may:
1.1 take such reasonable steps as are required to promote and improve the Environmental Performance of the Premises, Building and the Estate; and
1.2 identify and pursue appropriate strategies for improvement of the Environmental Performance of the Premises, Building and the Estate.
2. Environmental Management Plan [and Net Zero Target Plan]
2.1 The Landlord and/or the Manco shall (or procure via its managing agent) put in place an appropriate environmental management plan for the Building and the Estate (‘EMP’).
2.2 The Tenant agrees that the Landlord and/or the Manco may use the Data for the purposes of creating an EMP and ensuring that the Building and Estate is run in a sustainable way that improves Environmental Performance.
2.3 The Tenant shall comply with any Estate Regulations relating to the Environmental Performance of the Premises, the Building and/or the Estate.
2.4 The Landlord and/or Manco shall each develop a Net Zero Target Plan to achieve their respective Net Zero Targets, and their related Offsetting Strategies shall account for Residual Emissions related to [this Lease]. [The parties shall [jointly agree to]/The Landlord/Tenant/Manco shall]* purchase a quantity of carbon credits equal to the amount of [annual] Residual Emissions associated with [this Lease] from a project that has been verified in accordance with [insert name of voluntary standard].
* [Drafting Note: responsibility to be agreed by parties.]
3. Data Sharing and Metering
3.1 The Landlord and the Manco may collect Data and share this with any other third party that the Landlord and/or the Manco considers needs to receive the Data.
3.2 The Landlord and the Manco may disclose the Data collected pursuant to this Schedule [ ] to third parties in order to promote the sustainability credentials of the Building and/or the Estate and to encourage and promote sustainability to third parties with the house building and construction sector provided that sensitive personal data shall not be disclosed.
3.3 The Landlord and/or the Manco shall only use the Data for the purposes of procuring, promoting or encouraging the Environmental Performance of the Building or the Estate.
3.4 The Landlord shall ensure that similar restrictions on the publication and use of the Data are placed on its managing agent.
3.5 The Landlord and the Manco shall have the right (at the Landlord’s cost) to install, inspect, maintain and receive Data from meters relating to energy supplies and Heat Supplies used in the Premises. The Tenant shall give the Landlord the necessary access in order to allow for such metering to be inspected and maintained (the Landlord or the Manco complying with any entry requirements).
4. Tenant’s General Obligation on Environmental Performance and Information
4.1 The Tenant shall:
4.1.1 not do or omit to do anything which adversely affects the Environmental Performance of the Premises, the Building or the Estate; and
4.1.2 provide to the Landlord and/or the Manco (and all persons authorised by the Landlord and/or the Manco) all information, assistance, access to the Premises and other facilities reasonably requested by the Landlord or the Manco (or such person), and cooperate with the Landlord in relation to any initiatives, in connection with the Environmental Performance or sustainability characteristics of the Building or the Estate (including the Energy Performance Certificate and related recommendations report).
4.2 The Tenant shall use all reasonable endeavours to minimise energy consumption and waste and to recycle waste generated at the Property.
4.3 The Tenant shall use all reasonable endeavours to assist the Landlord and the Manco achieve their Net Zero Target.
The reasonable and proper costs incurred by the Landlord and/or the Manco of implementing and operating the provisions of this Schedule [ ] may be included within the Service Charge.