In Australia, Green Lease Schedules (GLS) are rising in popularity. Perhaps the most common format is the Government Green Lease Schedule, which includes among other items, the requirement to conduct annual NABERS Energy ratings. Depending on building setup, typically a landlord undertakes a base building NABERS Energy rating, and tenants undertake ratings for their tenancies. Minimum NABERS performance standards usually apply to both the base building and tenancy.
On face value this is a great outcome. The tenant and landlord have greater access to performance data from the other party, and each is held to account for actual performance.
Where this gets tricky is when ratings are not completed on time or at all, or performance falls short of target. Then, instead of serving as a tool to promote collaboration between landlords and tenants, the GLS can be a point of division and argument.
So how can you avoid this?
– Take the time to understand what the lease is asking, and be confident that you can achieve your obligations.
– Agree on reasonable and specific lease clauses, particularly around targets, timelines, penalties, exceptions, green power, and dispute management.
– Understand how you will measure performance. Does the building have sufficient metering and monitoring in place? Does someone monitor performance throughout the year? Do they have the right skills, experience and support?
– Understand how the landlord and tenant(s) impact on each other’s performance. Have a clear process for measuring and managing this.
– Meet regularly to discuss performance honestly. Where performance falls short of targets, work collaboratively to rectify the situation.
– Treat the NABERS rating as the culmination of a year of effort in fine tuning building performance, rather than a one-off compliance task. This is particularly important when target performance is high. Remember, highly efficient buildings do not happen by accident.
Ultimately, the GLS has great potential to drive improved building performance and collaboration between landlord and tenant. However, for this to be effective, both landlords and tenants must ensure they are appropriately resourced, and take their obligations seriously.