Oliver Connew MRICS, Associate Director at crbn solutions, part of the Morris & Spottiswood Group.
The factors that influence the decarbonisation of non-domestic buildings are often discussed in terms of technology, finance and regulation. Rather less attention however is paid to the quiet but powerful influence of leasing structures and landlord / tenant relationships. Yet for facilities managers operating in leased buildings, it’s this tension between occupier requirements and landlord obligations that frequently determines whether decarbonisation projects progress or stall.
Recent research I conducted during my time at Oxford University into UK non-domestic property highlights how traditional lease structures have shaped – and in some cases constrained – decarbonisation decisions.[1] This results in a ‘split incentive’ problem where landlords typically control the services and fabric of the building, while tenants pay the energy bills. Where leases are long and inflexible, neither party may see sufficient benefit to invest. However, the research also points to a shift underway that facilities managers can use to their advantage.
One of the most significant changes in the commercial property market over the past decade has been the shortening of lease lengths. Five-year leases with breaks are now commonplace, replacing the 15 or 25-year terms that once dominated. While this trend is often framed as a barrier to long-term investment, it can also create more frequent windows of opportunity to address energy performance. Each lease renewal or extension becomes a moment when energy efficiency upgrades, data sharing and cost recovery mechanisms can be discussed afresh.
In practice, this is already happening, with the introduction of Minimum Energy Efficiency Standards (MEES) compliance encouraging many commercial landlords to upgrade lighting, heating and insulation at lease intervals rather than waiting for vacant possession.
Shorter leases mean landlords increasingly retain responsibility for EPC performance, prompting proactive investment to protect asset value and letting appeal. For facilities managers, being prepared with clear operational data and realistic improvement proposals at these moments can influence outcomes significantly.
The regulatory framework adds another layer of complexity. MEES obligations fall squarely on landlords, yet many improvement measures affect occupier operations. At the same time, security of tenure under the Landlord and Tenant Act 1954 can discourage landlords from imposing new obligations mid-term, as illustrated by recent court cases where ‘green clauses’ were rejected at renewal. The lesson for facilities managers is not that leases are immovable, but that timing and collaboration matter. Attempting to retrofit obligations unilaterally is likely to fail; aligning improvements with mutual benefit is more effective.
Encouragingly, data from the research project mentioned earlier suggests that landlord / tenant relationships are slowly becoming less adversarial. In some multi-let office buildings, for example, it was found that collaborative retrofit projects are emerging where landlords fund fabric upgrades while tenants commit to operational changes or longer lease terms. Similarly, interviewees working in the logistics and retail sectors reported that shared energy monitoring and performance targets are being agreed outside the lease, reducing the need for complex legal provisions while still delivering carbon savings.
Facilities managers are often at the centre of these evolving relationships. They understand how buildings actually operate and where energy is wasted, and they are well placed to translate sustainability ambitions into practical interventions. Rather than viewing leases solely as obstacles, facilities managers can use them as tools: identifying where risk can be shared, where investment is best placed, and where operational savings can support the business case.
Real-world examples uncovered during the research show that even modest collaboration can unlock progress. In one regional office portfolio, tenants agreed to minor alterations to fit-out reinstatement clauses in exchange for landlord-funded heat pump installations. In another case, a tenant’s commitment to longer occupation enabled the landlord to justify deeper retrofit works that would not have stacked up over a shorter period.
Decarbonising leased buildings will never be straightforward. Financial pressures, regulatory uncertainty and competing priorities will continue to shape decisions. But the research is clear that leases are living instruments within this process, and facilities managers who engage early, understand the institutional context and foster collaborative dialogue, can play a decisive role in accelerating decarbonisation where it matters most: in the buildings we already occupy.
For more information about decarbonisation in the non-domestic property sector, please visit: www.crbnsolutions.co.uk
Read the full research here.
[1] Connew, Oliver (2025) ‘UK Non-Domestic Property Decarbonisation: The Institution of Leasing’, Dissertation for the degree of Master of Science in Sustainable Urban Development, University of Oxford – research based on interviews with landlords, property managers, tenants and legal professionals.