A proposed scheme by the Federal Government places mandatory
reporting obligations on landlords (and in some instances tenants)
to disclose the energy efficiency of their commercial
The new scheme is intended to begin operation in 2010 under the
National Framework for Energy Efficiency. As such, now is the time
to consider and address the proposed reporting obligations in any
The new scheme
In December 2008, the Federal Government issued two Consultation
Documents on the mandatory disclosure of commercial office building
energy efficiency for public consultation. The Consultation
Documents followed on from a Concept Paper in March 2008 and a
number of energy efficiency policy initiatives.
What are the reporting obligations?
Under the scheme, companies that own or lease certain commercial
buildings will be required to disclose the energy efficiency of
those buildings using the NABERS rating tool (National Australian
Built Environment Rating System). NABERS rates a building on the
basis of its 'measured operational impacts on the
environment' on a scale of one to five, with five being the
lowest impact on the environment. While NABERS has various ratings
including 'Water' and 'Indoor Environment', only
NABERS Energy is proposed to be used at this stage.
It is proposed, that when commercial office buildings (or any
part) with a net lettable area of 2000 square metres or more are
leased or sold, an energy efficiency rating and assessment report
must be disclosed:
In any advertising for the lease or sale of the building (or
the relevant part thereof).
To prospective tenants or buyers.
In a central registry.
The type of buildings captured by the scheme are Class 5
buildings under the Building Code of Australia, ie buildings used
for a commercial or professional purpose, but this may be extended
to other buildings down the track. Exemptions to the reporting
obligations may also apply but these are yet to be outlined.
The proposed penalties for failure to comply with the reporting
obligations are civil and criminal penalties. In the case of a
sale, failure to comply may enable the purchaser to hold back part
of the settlement monies until the owner or vendor complies.
What are the potential issues for landlords and
Under the proposed scheme, building owners may need to collect
information on energy efficiency/usage not only from their own
records but also from tenants. This will require landlords to have
access to tenant records on an annual basis.
Many commercial leases do not contain any clauses that provide a
landlord with the rights of access needed for this kind of
information gathering. So it may be necessary to review existing
leases for this purpose and to consider including access clauses
within any future leases.
While the Consultation Documents make it clear there will be
mandatory obligations on tenants to provide this information, they
identify that information will be provided to the
'assessor' and specifically state not to the landlord.
Accordingly, a clause in the lease may be necessary to ensure
landlords have access to the necessary information so they can
prepare relevant reports and obtain ratings as and when needed.
What's next for the scheme?
The Government is currently in the process of considering
submissions it received to the two Consultation Documents and to
comments made during a series of information forums held throughout
January and February this year. The submissions can be viewed on
the Department of Environment, Water, Heritage and the Arts
DLA Phillips Fox is one of the largest legal firms in
Australasia and a member of DLA Piper Group, an alliance of
independent legal practices. It is a separate and distinct legal
entity. For more information visit
This publication is intended as a first point of reference and
should not be relied on as a substitute for professional advice.
Specialist legal advice should always be sought in relation to any
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.
Many retail leases include a covenant to trade, requiring the tenant to open the premises for trade during certain hours.
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).