1. Do EPCs need to be provided on sales and lettings and if so, are there any statutory minimum requirements?

Yes, EPCs must be provided on both sales and lettings. The EPC should be prepared for a building or premises, depending on which of them is the subject of a sale/lease. EPC can be issued in a paper or electronic form, and it should be provided to: 

  1. the buyer, at the moment of signing the sale agreement (in original), 
  2. the tenant, at the moment of signing the lease agreement (in a copy of paper version / print-out of an electronic version). 

Failure to do so is treated as an offence subject to a fine of PLN 5.000, imposed on the owner or administrator of the building (or its part) or persons acting on behalf of them. 

 In addition, Polish law requires that some energy performance information (e.g. index of annual energy demand, CO2 emission rate) has to be made available in the announcement or advertisement concerning the sale of lease of the building or its part, for which the EPC has been prepared.

 Poland has not yet adopted the EP class system for buildings (but this will most probably bea fine of PLN 5.000, imposed on the owner or administrator of the building (or its part) or persons acting on behalf of them. 

 In addition, Polish law requires that some energy performance information (e.g. index of annual energy demand, CO2 emission rate) has to be made available in the announcement or advertisement concerning the sale of lease of the building or its part, for which the EPC has been prepared.

 Poland has not yet adopted the EP class system for buildings (but this will most probably be

2. Is there any legislation requiring new or existing buildings to satisfy ESG requirements?

ESG requirements result directly or indirectly from a variety of Acts. One such Act is the regulation the Minister of Infrastructure on technical conditions to be met by buildings and their location. This Act sets out detailed parameters for aspects such as EP standard, heating installations or thermal isolation, with which any new designed buildings must comply with. The Appendix I to EU Regulation 305/2011 also sets out requirements on EP, thermal isolation or sustainability use of the natural resource) that must be met by the buildings. Any new development must also comply with the Environmental Protection Act (and related regulations), under which environmental assessments and permits are required for specific new developments before applying for a building permit. Such environmental permit may set out additional conditions to be met during the construction process or further use of the development. Other environmental related Acts (such as Water Law Act) also need to be taken into account in any development process. The Electromobility Act requires that some buildings must be designed and built to meet specific parameters with regard to charging points or installations for electric cars.  

3. How widespread are green lease provisions? Are they regulated or market driven? What areas do green leases commonly cover? Do they apply to both residential and commercial leases?

There is currently no legal obligation to implement green provisions in leases. Green leases are market driven, resulting from the commercial decisions of the parties which depend primarily on their strategy and approach to ESG issues as well as aspects related to the specific lease (such as condition of the building, term of the lease, existing certification, etc.). They are not yet a standard for all leases on the market, but they are becoming more and more popular and important in commercial leases - mainly office, logistics but they are also relevant for other asset classes. Given the specifics and relatively smaller size of other, more specialized sectors in Poland (such as healthcare, data centers, student’s housing, etc.), negotiating green provisions is less popular and may be more difficult. 

 Green lease provisions usually cover at least one of the following areas: (i) obtaining or keeping an existing certification for the object (including obligation to refrain from actions that may negatively affect the certification), (ii) general obligation to cooperate to meet ESG requirements or implement voluntarily some of the green solutions for using, managing and maintaining the building, (iii) regular provision (exchange) of data related to media and utilities consumption, (iv) solutions aimed on reducing the consumption of media or utilities (such as reduced use of HVAC outside the working hours, energy-efficient lighting), (v) sustainability forum and(vi) sourcing renewable energy other. In the case of leases for logistics spaces, specific provision relating to the installation and use of the rooftop PVs are also becoming more common. 

 Green solutions (especially those aimed on reducing costs) are taken into account by tenants in their decision-making processes, but are often not explicitly stipulated in the body of the lease or technical specification attached to it. 

4. What do institutional investors and banks/other financing institutions require in terms of the green lease drafting? Is there any market standard approach to green lease drafting? Do you report on the lack of any green lease provisions in your due diligence reports on an acquisition or refinancing?

Currently as part of the legal due diligence process, we deal with questions, rather than strict expectations or mandatory requirements, regarding green provisions in lease agreements. Investors and financial institutions currently focus currently on the condition of the land and buildings, rather than contractual provisions in leases. In our experience "green financings” are generally classified as such due to quality of the buildings rather than the way this is reflected in the lease terms. Any green solutions will be rather the subject of technical due diligence. However, it is expected that financial institutions and institutional investors will shortly look to assess lease provision. The reason is that the quality of leases, especially long term lease, in respect of “green lease provisions” may have in the future an impact on a cash flow of a project.  

5. How are green lease provisions enforced?

Green clauses are usually drafted quite “softly” and, as a result, are hardly enforceable in practical terms. 

 In specific cases, leases may introduce a stricter approach and treat certain breaches as a reason for price adjustment, right for refusal of the handover or even termination of the lease. Based on our experience we think it may be more likely to see such stricter approach with logistics properties (mainly pre-let agreements in a in a “build to suit” formula), where some technical parameters or conditions of the building are not met at the time of handover (e.g. regarding PV installations or building temperature solutions) or a tailor-made lease of larger office where an ESG strategy would be important for a tenant.  

6. How widespread is the certification of buildings (e.g. LEED, BREEAM, NABERS, WELL etc.)? Are they regulated or market driven? How is this documented between the Landlord and Tenant?

There is no general legal obligation to obtain a certification for the building, however in recent years it became a market standard for new office buildings, and for most modern logistics and retail buildings. Most common certification is BREEAM, then LEED and much less common – WELL, DGNB, GBS or HQE. Major market players provide one of such certifications for new and existing buildings in their portfolio. Landlords of non-certified buildings may struggle to commercialise, especially in prime locations. The certification is usually verified or renewed when selling the building. 

 Certification clauses are increasingly appearing in commercial leases – mainly in a form of parties’ obligation to cooperate to obtain or keep the certificate, the landlords’ right to introduce any changes to the building that are necessary to keep the certificate or prohibition of any tenant’s alterations that may have negative impact on the certification.  

7. Are there any additional regulatory requirements that need to be met or contractual provisions that need to be considered regarding the installation of alternative energy supply systems (e.g. rooftop photovoltaic systems)?

As of today, there is no statutory obligation to use or install such systems but this will probably change after adoption and implementation of the revised EPBD 

 The installation of alternative energy supply systems has to be considered within three aspects: zoning, energy regulations and lease provisions. 

  1. Zoning: PV rooftops may be installed on any building allowed by the local zoning plan. With regard to the free-standing RES installations the zoning issue is more complex. According to the recent zoning law amendment, any installations located on certain types of agricultural land or installations of power exceeding 1000kW (on any land) are possible only if the local zoning plan allows for such installations which may result in the necessity of process of adopting or changing the zoning plan. Temporarily (until the end of 2025), they may also be located based on the zoning decision (if no zoning plan is adopted for the area). 
  2. Energy regulations: It is essential that all such systems and installations comply with the regulatory requirements arising from the Energy Law Act. The scope and nature of the requirements will depend on the connection and technology used (e.g. whether the system is "off-grid" or connected to the distribution grid) or the ownership of the installation. For example, there are far fewer requirements to be met in the case of self-consumption systems, while there are far more conditions in the case of a near site direct wire connected to the building and owned by third party producer (with whom the relevant corporate power purchase agreement is to be concluded), including that the installation must be notified to the President of the Energy Regulatory Office (Polish: Prezes Urzędu Regulacji Energetyki) and entered in the list of direct wires prior to its construction, or that the surplus energy may not be fed into the grid by the consumer without an energy trading concession. Due to the complexity of the regulatory issues, each case should be assessed and verified individually. 
  3. Lease provisions: There is no general legal obligation to include lease provisions concerning alternative energy supply installations, but it would be desirable to include specific clauses, especially given the above aspects. 

8. Are there any regulations relating to soil artificialisation or other biodiversity concerns which impact on new builds and/or refurbishments? How are they enforced?

The acquisition of agricultural land and its development is rather strictly regulated in Poland. The Agricultural System Act imposes a number of restrictions on the acquisition of agricultural land by entities other than individual farmers, including the obligation to obtain a prior decision of the National Agricultural Support Centre (Polish: Krajowy Ośrodek Wsparcia Rolnictwa), the right or pre-emption of the said entity, obligations for the purchaser (farming for at least 5 years from the date of acquisition) or restrictions (5-year prohibition on selling the land from the acquisition), each subject to many specific exceptions. Some restrictions also apply to the acquisition of shares in companies that own or have perpetual usufruct over such land (of 5 ha or more), as well as their parent companies. Developers often circumvent the above by applying for an adoption of a local plan so that it would designate such land as non-agricultural (although this is often an uncertain and time-consuming process). In addition, before any development on some types of arable or forestry land, the investor must exclude the land from agricultural/forestry production through the formal process of obtaining a relevant decision. This involves additional costs for the investor (one-off fees and annual fees payable over 10 years). 

 Another important piece of legislation aimed at protecting biodiversity and affecting construction processes is the Polish Act on providing information on the environment and its protection, public participation in environmental protection and environmental impact assessment (Polish: ustawa o udostępnianiu informacji o środowisku i jego ochronie, udziale społeczeństwa w ochronie środowiska oraz o ocenach oddziaływania na środowisko). Some categories of developments are legally classified as having or potentially having a significant impact on the environment. The catalogue of such developments is quite broad and includes, among others, some larger logistic, industrial, residential or commercial developments that the thresholds specified in the regulation. In such cases, the law requires an appropriate environmental impact assessment prior to the application for a construction permit, which may include, depending on the case, the preparation of an environmental report, obtaining administrative approvals, and finally, obtaining a decision on the environmental conditions of the investment. The decision may impose various restrictions - for example, it may determine specific conditions for the investment (e.g. specific obligations related to the waste management or wastewater discharge, or maximum emissions) or set specific measures to protect the environment during the construction process. In addition to making the construction process conditional on the completion of the above procedure, the Act provides for financial liability for the breach of certain obligations. The need to comply with the above regulations may significantly affect the development plans and also extend the investment timeline. There are also many other, more specific laws related to the biodiversity protection that may apply during the development - for example, this includes the provisions of the Polish Water Law which may require maintaining a relevant permit for water intake or discharging rainwater or wastewater from the property. Therefore, each investment should be assessed on a case-by-case basis to determine the scope of applicable legislation and restrictions.