- Do EPCs need to be provided on sales and lettings and if so, are there any statutory minimum requirements?
- Is there any legislation requiring new or existing buildings to satisfy ESG requirements?
- 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?
- 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?
- How are green lease provisions enforced?
- 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?
- 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)?
- Are there any regulations relating to soil artificialisation or other biodiversity concerns which impact on new builds and/or refurbishments? How are they enforced?
jurisdiction
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 for both sales and lettings. This requirement applies to both residential and commercial buildings.
The certificate is valid for ten years. The certificate for new buildings must be issued no later than two years after the building is put into use. If the building is to be sold or rented out, or has been frequently visited by the public within the last two years, the building should have an EPC.
The Swedish National Board of Housing issues regulations on EPCs.
There's no minimum requirement in Sweden.
2. Is there any legislation requiring new or existing buildings to satisfy ESG requirements?
Sweden has no legislation specifically mandating ESG requirements for new or existing buildings. Nevertheless, various laws and regulations, both national and EU-, directly or indirectly promote ESG aspects in the real estate sector and other industries.
Environmental legislation, primarily the Environmental Code, significantly contribute to promoting the environmental aspects of ESG. EU directives on e.g. the restriction of the use of certain hazardous substances in electrical and electronic equipment will lead to fluorescent tubes containing mercury being phased out over the next couple of years. Regulations relating to building and demolition permits aim at increased reuse of construction and demolition materials, increased recycling of construction and demolition waste, and responsible handling and disposal of hazardous waste, e.g. asbestos.
The developer is responsible for issuing an EPC for a new building.
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?
Green lease provisions are common among major actors in the real estate market. These provisions, which act as a statement of intent rather than mandatory requirements, are market driven. They are more commonly found in commercial leases and are not a legal requirement.
A green lease involves a commitment from both parties to work together towards environmentally sustainable leases. It is the responsibility of both parties to initiate measures and activities that can reduce the environmental impact of the tenancy and improve the environment and health of the premises. The parties also undertake to jointly set goals and find forms for the ongoing co-operation that best suits the parties.
Common areas covered by green leases include reducing climate impact and resource use. This includes optimising the heating, cooling and ventilation of the premises based on how they are used. It also means finding solutions to increase reuse, recycling and sharing. Environmentally friendly and non-hazardous materials should be used in the building and furnishings. Both the tenant and the landlord are expected to implement activities and measures that promote and facilitate sustainable behaviours.
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?
It depends on institutional investors'/bank’s own sustainability strategies and objectives. They may require leases that promote sustainability and take ESG issues into account. There is no market standard and such agreements are highly dependent on the individual needs of the parties involved.
It may be appropriate to report on the absence of such clauses if it is relevant to provide a full picture of sustainability issues, but this will vary depending on the context.
5. How are green lease provisions enforced?
It depends on institutional investors'/bank’s own sustainability strategies and objectives. They may require leases that promote sustainability and take ESG issues into account. There is no market standard and such agreements are highly dependent on the individual needs of the parties involved.
It may be appropriate to report on the absence of such clauses if it is relevant to provide a full picture of sustainability issues, but this will vary depending on the context.
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?
Property owners in Sweden are increasingly obtaining environmental certifications for their buildings to enhance their sustainability profiles. The most common certification schemes in Sweden are Miljöbyggnad, BREEAM and LEED. Certification of buildings is primarily driven by market demand and subject to no legal requirement. The documentation can vary depending on the type of certification used and what is agreed between the landlord and the tenant. Usually, the certification information is attached to the green lease agreement.
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)?
The regulatory framework for construction of alternative energy sources differs depending on the energy source in question.
Solar cells: You may need a building permit if the solar panels are located in an area with a zoning plan or area regulations. If the building is located in an area regulation, you may need to apply for a building permit. If the building is located in a zoning area, the solar cells must not contravene the zoning plan, regardless of whether the solar cells require planning permission or not. If you want to install solar panels in a non-regulated area and the measure is liable to have a significant impact on the natural environment, you will need to make a notice of consultation to the supervisory authority.
Other types of energy supply systems such as wind turbines and hydroelectric power plants need building permit and/or licence or at least a notification under the Environmental Code. Furthermore, the general rule is that a network licence (permit) is required to build and use a power line. Some electricity lines are however exempted from the network licence requirement.
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 Swedish Environmental Code stipulates comprehensive guidelines for managing and protecting land and water areas, emphasizing the conservation of biodiversity, cultural values, and the natural landscape. Most notably, the code includes provisions for protecting land of national importance for agriculture. It is against this provision that most assessments are made and that is where important localisation assessments, essential public interests, etc. come in.
Furthermore, large tracts of land and water bodies, minimally affected by human activities, are safeguarded against developments that could alter their character. This includes preventing the establishment of major facilities like traffic routes, industrial complexes, and large-scale recreational developments, especially in areas not previously affected by such interventions. Areas sensitive from an ecological perspective, such as those with unique biodiversity, threatened species, or significant ecological values, are also to be protected against damaging activities. The legislation aims to preserve biodiversity and ecological integrity, prioritizing the protection of these sensitive zones against potentially harmful measures. The code also includes provisions for protecting land of national importance for forestry, land significant for reindeer husbandry, outdoor activities, and areas with noteworthy natural or cultural values.
Enforcement of protection rules takes place mainly within the building permit process and other planning activities. Regarding activities that is liable to have a significant impact on the natural environment, but for which a permit or notification is not required under the Environmental Code, a notice of consultation shall be made to the supervisory authority.
