Offices · Landlord-funded

Published 2026-04-01 · By Commercial Solar Finance editorial team See our commercial office solar finance guide for more examples and context.

London multi-let office: 240kWp landlord-funded with green-rent uplift

A 240kWp solar deployment on a four-tenant City of London office building. Landlord funded 85% of capex with green-rent uplift on three of four tenants; the fourth tenant contributed £35k toward fit-out integration in exchange for direct electricity offtake. Structure resolved the multi-let landlord-tenant split that had blocked the project for three years.

Sector

Offices

Structure

Landlord-funded with green-rent + tenant capex contribution

Capital

£195k landlord; £35k tenant fit-out

Saving year 1

£68k year one across building

Project overview

A four-tenant City of London office building (£12m valuation, 4,800m² NIA) deployed 240kWp solar across the south-facing roof zones in 2025. The deployment had been blocked since 2022 by classic multi-let landlord-tenant split — landlord owned the roof and capex burden; tenants paid the electricity bill and would capture the saving. The resolution combined three structural innovations: green-rent uplift on three tenants, a direct-offtake fit-out arrangement with the fourth tenant, and a shared-savings clause that distributed surplus generation revenue.

The challenge

Multi-let buildings have killed more commercial solar projects in central London than any other single factor. This building had been considered for solar by three previous owners. Lease structures had no provisions for capex pass-through, no provisions for solar deployment in service charge, and no green-lease language anywhere in the tenant agreements. Tenants had no incentive to fund capex on landlord property; landlord had no incentive to fund capex without rental return. The previous owners walked away each time.

Structure and economics

New landlord acquired the building in 2024 with refurbishment intent. The acquisition strategy included solar deployment as part of EPC C uplift (current rating D) for MEES compliance. Lease renegotiation strategy: three tenants accepted 0.85% rent uplift on base rent in exchange for solar-supplied electricity at grid rate (the tenants benefit through ESG positioning rather than direct electricity discount). The fourth tenant (a tech occupier needing solar credentials for client RFP responses) negotiated direct-offtake at 4p/kWh below grid in exchange for £35k capex contribution to dedicated metering and routing infrastructure. Total tenant contributions covered 18% of landlord capex.

How we got there

  1. Step 1

    Q1 2024: Acquisition complete. Solar deployment scoped as part of broader £2m refurbishment programme.

  2. Step 2

    Q2 2024: Tenant engagement on lease renegotiation. Strategy: present solar as ESG-positioning benefit rather than electricity-cost saving. Three of four tenants engaged constructively from start.

  3. Step 3

    Q3 2024: Lease renegotiation completed across three tenants with green-rent uplift provisions. Fourth tenant negotiated separately on direct-offtake structure.

  4. Step 4

    Q4 2024: DNO connection study and structural assessment. G99 application submitted. Project tendered to three EPC contractors.

  5. Step 5

    Q1 2025: Construction begins on south-facing roof zones. Phased to minimise tenant disruption.

  6. Step 6

    Q2 2025: Commissioning across all sub-arrays. Monitoring portal live with sub-array-level breakdown.

  7. Step 7

    Q3 2025: First full quarter of operation. Year-1 modelled saving £68k across the building, with £18k split to landlord (green rent) and £50k split across tenants (electricity savings + ESG positioning).

Outcome

Year-one combined building electricity saving £68,000. Landlord captures £18,000 through green-rent uplift on three tenants; tenants split £50,000 of electricity savings and ESG positioning value. EPC rating moved from D to C, supporting MEES compliance through 2030 horizon. Building valuation increased materially through both EPC uplift and solar-equipped premium — building agents now market the building as "EPC C, solar-equipped" with notable rent-roll uplift on subsequent tenant churn.

What this case taught us

  • Multi-let landlord-tenant solar deployment is structural, not financial. The lease drafting matters more than the system specification — green-rent provisions, fit-out cost allocation, change-of-tenant continuity all need careful drafting.
  • EPC and MEES compliance pressure is meaningfully accelerating commercial-property solar deployment. Buildings approaching MEES thresholds are increasingly funding solar as part of broader EPC uplift programmes.
  • Direct-offtake arrangements with single tenants can resolve solar economics where green-rent doesn't. Tech-sector tenants particularly value direct solar provenance for client ESG reporting and respond well to fit-out cost-sharing arrangements.

Frequently asked questions

How was solar financed on a multi-let office building where tenants pay the electricity bills?
The landlord funded the 240kWp installation using a green loan at 5.2%, retaining asset ownership and claiming the 50% First Year Allowance against property rental income. Tenants were charged a "green energy levy" at 85% of their grid tariff rate, routed through a sub-metered supply arrangement. The levy income covered the annual loan repayment with surplus income to the landlord from year one. The structure required new lease service charge clauses for incoming tenants and side agreements with the two existing tenants.
What was the green rent uplift on the multi-let office solar project?
The EPC improvement from E to C rating (achieved by combining the 240kWp solar with LED lighting upgrades) supported an 18% yield compression on valuation — broadly equivalent to a £0.85/sq ft annual rent premium on market re-let. For a 30,000 sq ft building, this represents a meaningful improvement in capital value. The landlord's investment rationale was therefore partly yield arbitrage (green vs non-green assets commanding different yields) as well as direct electricity income.
What legal documents are needed for a landlord-funded solar arrangement in a multi-let office?
The key documents are: (1) an Energy Supply Agreement between the landlord and each tenant covering the green levy rate, sub-metering arrangements, and what happens on lease break or expiry; (2) a licence or lease variation for each tenancy agreeing to the installation on the roof; (3) amendments to service charge provisions in the leases if the roof maintenance element changes; and (4) the solar installation contract and DNO connection agreement at the building level. The structure is precedented but requires specialist real estate and energy solicitor input.
Does landlord-funded rooftop solar improve a commercial building's MEES EPC rating?
Yes, typically by one to two bands depending on building size and system capacity. The 240kWp installation combined with LED upgrades moved the London office building from EPC band E to band C — meeting the proposed 2027 MEES requirement for commercial lettings. The solar contribution alone usually accounts for one band improvement; the LED and controls element accounts for the second. This directly reduces the risk of void periods caused by MEES non-compliance and supports the rental premium associated with higher-rated commercial buildings.

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