Nordicum - Real Estate Annual Finland 2012 | Page 50

LEGAL VIEWPOINTS
ON GREEN COMMERCIAL
LEASES IN FINLAND

Sustainability and eco-efficiency with
respect to real property is usually
addressed in connection with the
construction and usage of properties.

C

onstruction legislation regulates sustainability in property construction.
Finnish buildings are fairly young
from a European perspective and our climatic conditions place great demands on energy efficiency e.g. regarding heat insulation.
The Finnish Energy Certificate Act
came into force on 1 January 2008. The energy certificate includes a multi-tiered scale
indicating the amount of energy the building will need. This scale is then implemented to facilitate the comparison of any given building’s energy efficiency with other
similar buildings. The purpose of the Act is
to direct the attention of building designers,
developers, builders, owners and users to the
amount of energy used thereby as well as
to the possibilities of reducing that amount
in both new as well as existing buildings.
The environmental classification of real estate in Finland is increasingly becoming
more important in the construction, sale and
leasing of business properties. Both real estate investors as well as tenants may require
that the building is certified or that it at least
fulfills the conditions thereof should the decision be made to apply for certification at
a later date. The environmental classification systems most widely implemented in
Finland include the international BREEAM
and LEED systems as well as Finnish system PromisE.
48 Nordicum

The decisions and acts of tenants have
a remarkable impact on the eco-efficiency
of the use of properties. This article discusses how sustainability issues are addressed in
Finnish commercial leases.

Green Leases
Finnish commercial lease agreements are
fairly standardized and usually do not mention eco-efficiency matters directly. Furthermore, the terms and conditions of commercial leases are regulated by the Commercial
Lease Act that came into force in 1995. In
view of improving the sustainability of the
use of commercial properties, the most central aspects of a traditional commercial lease
agreement would be the following:
– rent and maintenance costs (especially
electricity, water, air-conditioning, heating, lighting and waste management)
– repairs and alterations, improvements by
the tenant
In my experience, fairly few Finnish commercial leases can be regarded as pure gross
or net leases. Gross lease refers here to the
total rent, including compensation for the
capital employed for the rented premises
and the stand-alone costs thereof (real estate tax and insurance) as well as mainte-

nance costs. Net lease refers to a lease including both the cost of capital as well as
the stand-alone costs thereof, but the tenant
pays for all the maintenance costs incurred
by the rented premises. In most Finnish commercial leases the maintenance costs are divided between the lessor and the tenant. The
usual practice is to include in the agreement
a table setting out in detail the division of
maintenance and repair responsibilities between the tenant and the lessor.
A green lease should encourage the
contracting parties to strive for eco-efficiency regarding maintenance costs. In practice, this could be carried out e.g. through
the tenant being responsible for the costs
generated by the electricity, heating, water
and waste management used by the tenant.
This, however, requires that these costs can
be measured with sufficient detail for each
tenant and that clear provisions thereto are
included in the lease agreement. This model, where maintenance costs are allocated
between the lessor and the tenant, creates a
financial incentive for both parties to strive
for eco-efficiency.
Eco-efficiency issues are also relevant
when repairs or alterations are carried out
on the property or leased premises. The ecoefficiency of the building may be increased
by, for example, reducing consumption of
electricity by improving heat insulation or