The heat is on: more commercial properties swept up in energy efficiency rules
More commercial properties will need NABERS ratings and Building Energy Efficiency Certificates from 1 July 2017.
More owners and landlords must provide a Building Energy Efficiency Certificate when selling or leasing commercial buildings, following changes to the Commercial Building Disclosure Program.
What is the Commercial Building Disclosure (CBD) Program?
The CBD Program aims to improve the energy efficiency of Australia's large commercial buildings to ensure that Australia can achieve the target of increasing energy productivity by 40% from 2015 to 2030. Currently, 10% of Australia's energy consumption comes from commercial buildings. The CBD Program seeks to encourage the use of greener buildings by ensuring that prospective buyers and tenants are aware of the energy efficiency of the commercial building.
Under the CBD Program, sellers and lessors must acquire a Building Energy Efficiency Certificate (BEEC) before putting the property on the market for sale or lease; in turn, the BEEC must be provided to the buyer or lessee at the time of sale or lease. In addition, any advertising material for the sale or lease must include the building's NABERS Energy star rating.
Currently, a BEEC is required when:
- at least 75% of the net lettable area is used for office space;
- the building's net lettable area is greater than 2,000 square metres; and
- no exceptions under the Act apply.
From 1 July 2017, the CBD Programme will apply to all commercial buildings with a net lettable area of at least 1,000 square metres, rather than the current threshold of 2,000 square metres.
Along with this change, Tenancy Lighting Assessments (which are required as a part of the BEEC) approved after 1 September 2016 will be valid for five years, rather than the current term of one year.
What does the expanded BEEC requirement mean for owners, landlords and tenants of commercial buildings?
The Government estimates that the changes to the CBD Program will require an additional 1,000 commercial buildings to provide a BEEC when selling, leasing or subleasing their property and will deliver over $50 million in energy savings. This, it estimates, will reduce emissions by a further 3.5 million tonnes over five years.
More immediately, the changes will ensure that more information is revealed between the parties. Owners and lessors also have more of an incentive to ensure their commercial buildings have a greater energy efficiency level, as this will most likely affect the market value of the property.
If your commercial building property will become subject to energy efficiency disclosure obligations, make sure that you keep records of relevant documents and information to allow you to obtain a NABERS Energy rating and a BEEC when necessary.
Documents you will require when applying for a BEEC and a NABERS Energy rating may include:
- all utility bills (electricity, gas, LPG, coal, oil) for the previous 12 months;
- data related to energy consumption by all central services such as common lighting , lifts and air conditioning;
- data related to energy consumption by building occupants such as tenant's light and equipment and tenant's own air-conditioning; and
- documents which verify the net lettable area of the building (such as layout plans).
Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.