More commercial buildings to be captured by energy efficiency disclosure legislation

Services: Property & Projects
Industry Focus: Property

What you need to know

  • The Building Energy Efficiency Disclosure Act 2010 (Cth) came into force in 2011, establishing a regime under which the energy efficiency of certain commercial buildings must be disclosed in a Building Energy Efficiency Certificate (BEEC).
  • The regime is being updated, with one of the most critical changes being the reduction of the net lettable area threshold that will trigger the need for a BEEC to be provided; the result is that many commercial buildings which previously were not caught by the legislation will now be captured.
  • Owners of commercial buildings should assess their buildings/properties to determine whether they need to comply with the updated regime, and if so, be prepared to disclose the documents that will be required for a BEEC.

Many commercial building owners will be aware of their obligations under the Building Energy Efficiency Disclosure Act 2010 (Cth) (Act), which commenced in 2011. What some commercial building owners might not know is that certain aspects of the energy efficiency disclosure regime established by the Act are changing.

The regime that has been in place since 2011 means that before an owner sells, leases or advertises a building or area in a building:

  • which has a net lettable area exceeding 2,000 square metres
  • where 75% or more of the net lettable area is being used for administrative, professional or similar information-based activities, including any support facilities for those activities
  • is over two years old (Disclosure Affected Premises).

The owner must disclose a Building Energy Efficiency Certificate (BEEC). A BEEC has three components:

  • a National Australian Built Environment Rating System (NABERS) energy rating (exclusive of Green Power) disclosing energy efficiency ratings of the building or part of the building
  • a CBD tenancy lighting assessment
  • general energy efficiency guidance materials.

So what is it about this regime that is changing?

Commercial Building Disclosure Program

The Commercial Building Disclosure (CBD) Program is an initiative of the Council of Australian Governments, established by the Act. It is in place to ensure energy efficiency information is provided to potential tenants and buyers of Disclosure Affected Premises, and it provides an incentive for Australia's larger buildings to improve their energy efficiency.

The CBD Program is being updated. While some changes are yet to take effect, others have already come into play for commercial building owners caught by the energy efficiency disclosure regime.

The most critical change for all commercial building owners to be aware of is that there will soon be a lower net lettable area threshold for buildings required to disclose a BEEC. This means that some building owners who have previously not been affected by the energy efficiency disclosure regime will now need to familiarise themselves with their obligations.

The table below summarises the changes and the impact that the Australian Government anticipates these changes will have:

Disclosure obligation Original position Revised position Impact anticipated by Australian Government1

Threshold net lettable area for BEEC

From 1 November 2011, 2,000m2

From 1 July 2017, 1,000m2
  • A reduction in emissions by a further 3.5 million tonnes over a five year period
  • More than $50 million in energy savings
  • Information disclosure between landlords / tenants and vendors / purchasers which means:
    • Purchasers and tenants can take into account the costs and other factors associated with the energy efficiency of the premises when making a purchase or leasing decision
    • Vendors and landlords are incentivised to promote greater energy efficiency levels
Tenancy Lighting Assessment Before 1 September 2016, 1 assessment must be conducted each year From 1 September 2016, 1 assessment must be conducted every 5 years
  • An estimated reduction of 24% in Tenancy Lighting Assessment costs for building owners
Equipment Energy Efficiency (E3) program Upon commencement in 1992, products considered for inclusion in the program varied on the basis of potential benefit to the consumer.

As of June 2016, the Australian Government has created a prioritisation plan, where resources will be focused on the priority products of lighting, non-domestic fans, swimming pool pumps, commercial refrigerated storage and display cabinets, air conditioning, and domestic fridges and freezers.
  • Increases in building and appliance energy efficiency will lower energy bills for Australian households and businesses
  • Estimated reduction in greenhouse gas emissions by up to 29 million tonnes by 2030.

What do these changes mean for commercial building owners?

In reducing the net lettable area threshold for a BEEC from 2,000m2 to 1,000m2 it is anticipated that a further 1,000 commercial buildings will be captured by the legislation. Commercial building owners need to assess all their assets to determine whether a BEEC is required. Not only is it an offence to sell or lease property without a BEEC if one is required, but even marketing a property or premises for lease or for sale without a BEEC is also an offence if the CBD legislation applies to that commercial building.

The legislation does exempt certain buildings from the disclosure requirements, including new or substantially refurbished buildings, strata-titled building and mixed use buildings where total office space comprises less than 75% of the building by net lettable area.

More information on the CBD Program, including specific disclosure exemptions, can be found at: http://www.cbd.gov.au/

Our previous update on the energy efficiency disclosure regime, published when the Act came into force in 2011, can be accessed here.

Key takeaways

Commercial building owners should regularly assess their commercial buildings to determine whether they are Disclosure Affected Premises and to keep records of relevant documents and information to enable NABERS Energy rating and BEEC applications to be made. If a BEEC application must be made and a NABERS assessment is required, the following documents may need to be provided:

  • 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 tenants' light and equipment and tenants' own air-conditioning
  • documents which verify the net lettable area of the building (such as layout plans).

Commercial tenants should also be aware of these requirements, and recognise that their landlords may require more energy usage information from them in order to comply with disclosure and certification requirements.

Footnote

1 Based on Australian Government information, including the CBD Program review final report accessible at http://cbd.gov.au/news-events/changes-to-the-commercial-building-disclosure-program

This article is intended to provide commentary and general information. It 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 article. Authors listed may not be admitted in all states and territories