An EUA is as an agreement between a building owner, local
council and financier. The finance is provided to the owner to
carry out pre-approved upgrades. The council then places a charge
against the land, collecting and forwarding its proceeds through
the rating system to the financier. It is the security provided by
the charge that has stimulated private sector investment as the
liability to repay the loan attaches to subsequent owners and
tenants of the charged land.
WHEN IS IT USED?
An EUA can be entered for existing commercial buildings and
buildings that are "predominantly used for non-residential
purposes". In NSW, multi-residence strata scheme buildings
comprising more than 20 lots are also eligible. Councils cannot
make entering into an EUA a condition of their consent for
WHO BEARS THE COST?
EUAs are an attempt to provide a stronger incentive to owners to
carry out upgrades. They reduce the "split incentive"
that used to benefit tenants, who would reap the rewards of the
owner's investments. Under an EUA, the owner can pass on the
cost of the upgrades to tenants as outgoings. The upgrades are
expected to pay for themselves through savings on power bills.
SO WHAT'S THE CATCH?
In Victoria, the legislation requires that every tenant in a
building must consent to the EUA. NSW has reached a more
appropriate balance as an owner does not need the consent of
tenants, however tenants' contributions cannot exceed a
reasonable estimate of the savings they will make under an EUA. The
practical effect of the Victorian position means tenants will only
consent to an EUA if they too will not pay more, however this
appears to add an unnecessary obstacle to forming an EUA.
The legislation is also complex, particularly in Victoria. Sound
legal advice will be invaluable to help navigate these early days
WHY ARE THEY IMPORTANT?
Although EUAs have only been introduced in Victoria and NSW, it
is expected that other Australian states will follow. As a sign of
their importance moving forward, the City of Melbourne aims to
retrofit 1200 buildings.
The diversity of parties to an EUA means that local councils,
commercial landlords and their tenants should all be aware of EUAs
and their benefits. Hunt & Hunt is well placed to advise on
EUAs due to our extensive leasing and local government
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
The Council announced planning policies to encourage more inner suburban retirement village and aged care development.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).