Property management agreements Andries VanDerWalt and Sue Highmore explain how lawyers and managing agents can lead the way on spreading good sustainability practice at the drafting stage
There are convincing reasons for landlords and managing agents to improve the sustainability performance of buildings. Cost savings and statutory compliance are clear, but corporate responsibility targets, improved tenant satisfaction and improved value may also apply. Managing agents have a key role in shaping how buildings operate, so are best placed to see where sustainability best practice can be most effective.
The BBP Managing Agents Partnership, a group of 10 leading managing agents (“MAs”) including JLL, plans to encourage all MAs to build sustainability into their service and work with landlords to reap the benefits. If successful, handover of properties to a new MA will not result in any change of approach to sustainability. Targets will roll over seamlessly; records and data will pass swiftly from one MA to another.
Key principles
The first stage of this plan is the publication of Integrating Sustainability into Property Management Services: Core Provisions for incorporation into all property management agreements (PMAs). These core provisions set out principles that everyone should be happy to embrace, but leave them free to decide how to price and reflect them in their contract documents. All 10 firms have committed to adopting the provisions, hoping to set an example other MAs will follow and landlords will seek to impose. Commercial real estate lawyers must understand the provisions so that, if asked to prepare a standard PMA, or draft a tender for MA services, they will choose words which reflect the provisions consistently.
The partnership is already moving on to identify best practice. Next year, its recommendations will be factored into the first comprehensive review of the BBP Managing Agents Toolkit (www.betterbuildingspartnership.co.uk/managing-agents-sustainability-toolkit). The final piece of the jigsaw will be the development of suitable training, so that managing agents’ staff, building managers and the rest of the supply chain know how to implement the core provisions.
Brexit may mean that EU-imposed limits cease to bite, but sustainability will continue to feature strongly as a potential value and risk issue for property owners and occupiers. Establishing good baseline practices on sustainability through widespread adoption of the core provisions is a significant first step in raising the bar.
Core provisions
● Managing compliance with legislation
● Providing data on utilities consumption and waste collection to agreed timetable
● Including sustainability requirements in the terms and conditions for providers of services to the building and policing those
● Checking the sustainability pedigree of contractors
● Training direct staff to achieve the sustainability standards
● Making sure tenants know what the sustainability targets are, how they will be achieved, and the benefits of doing so
● Choosing more sustainable methods of repair and alteration of the property
● Where reasonable, and a business case is made, organising a review of energy, water and waste use at the property
The full core provisions can be found at: www.managingagentspartnership.co.uk/integrating-sustainability-property-management-services-core-provisions.
Sample clauses: How the core provisions might translate into legal drafting
Repair and maintenance
Usually a managing agent agrees to monitor the need for repairs and maintenance and commission works as needed, discharging the landlord’s obligations under the occupation leases in a cost-effective manner. Clauses in such agreements could be adapted to reflect the provisions by using the italicised words:
● “To procure the preparation and implementation of a cost-effective programme for planned maintenance of both the property and any communal plant and machinery in it, which programme shall, where reasonably practicable, seek to achieve improvements in energy and water efficiency and reuse or recycling of materials.”
● “To arrange a prompt and appropriate response to any unplanned repairs that become necessary so as to discharge the client’s legal obligations to any tenants or other persons. The agent will, where cost- effective and reasonably practicable, source new construction materials and equipment in a responsible way that enhances the sustainability performance of the property following completion of the works.”
● “To require all cleaning contractors engaged to provide services to the property to comply with statutory requirements concerning procurement and use of materials, to follow a sustainable procurement strategy, and both minimise creation and maximise recycling of waste created by the provision of those services and monitor their performance against these standards on a regular basis.”
Collation of energy data
The bare minimum expected of a managing agent will be something like this:
“To take regular readings of the meters which monitor energy consumption in the property and/or by each tenant in the property and to provide a report to the client no less than quarterly.”
Applying the provisions could result in a longer clause, incorporating some or all of:
“To take all of the following steps relating to the electricity consumption at the property:
(a) At least monthly, to take and record meter readings from the landlord’s meters in the property which monitor electricity consumption.
(b) To report the consumption data to the client promptly.
(c) Where reasonably practicable, to comment on significant variations in consumption.
(d) To advise the client whether and when there is a positive business case to commission an energy review to identify baseline consumption data, potential savings and energy efficiencies and, where instructed by the client, to engage a suitable expert to conduct that review and implement any changes agreed by the client as a result of the review.
(e) To ensure that any review carried out in accordance with paragraph (d) is carried out in a manner that will discharge the client’s obligations, if any, under the Energy Efficiency Opportunities Scheme.
(f) To procure the energy supplies to the property from renewable sources where reasonably practicable at reasonable cost.”
Andries VanDerWalt is head of sustainability – property and asset management at JLL and Sue Highmore is an editor with Practical Law Property
