Building energy efficiency changes to mandatory disclosure requirements

The Commercial Building Disclosure (CBD) Program requires most sellers and lessors of office space of 2,000 square metres or more to obtain a Building Energy Efficiency Certificate (BEEC) before the building goes on the market for sale, lease or sublease.

Close to 900 buildings in Australia are covered by a BEEC. Recent changes to the Building Energy Efficiency Disclosure Act 2010 (Cth) (“the Act”) will commence on 1 July 2015.

Background

A constitutional corporation which owns a disclosure affected building (being most office space of 2,000 square metres or more) must not sell, lease or sublease the building unless a current BEEC for the building is registered.

A constitutional corporation which owns or leases a disclosure affected building must provide a current BEEC to potential buyers or lessees or sublessees free of charge as early as possible in the transaction enquiry process and when requested. BEECs must also be publicly accessible on the Building Energy Efficiency Register.

The NABERS Energy star rating must also be included in any advertising for the sale, lease or sublease of the building. The NABERS Energy for offices rating is a national rating system that measures building performance on a scale of zero to six stars.

Only CBD accredited assessors can apply for a BEEC on behalf of building owners or lessors.

What is the change?

The changes to the Act have been generated in response to requests from industry stakeholders since the inception of the CBD program. The intention of the changes is to make a number of improvements to the original Act that will streamline administration and reduce the regulatory burden on business.

Major changes to the Act include:

  • Allowing transactions between wholly-owned subsidiaries, or a holding company and a wholly-owned subsidiary, to be excluded from the disclosure obligations.
  • Introducing the ability to determine a commencement date for a BEEC which is later than the date of issue. This will provide greater flexibility for businesses wishing to proactively maintain current BEECs for their property portfolios.
  • Removing the need for new owners and lessors to reapply or pay the application fee for fresh exemptions if there is a valid one in place for a building.
  • Removing the requirement for 6 pages of standard energy efficiency guidance text to be included in the BEEC. Instead, live and interactive online information about improving energy efficiency for office buildings will be put in place.
  • The Building Energy Efficiency Disclosure Regulations 2010 (Cth) have also been amended to include a new exemption when a building owner receives an unsolicited offer to purchase, lease or sublease a building. If a building owner wishes to commence negotiations and possibly move to exchange of contracts with the third party making an unsolicited offer, the building owner needs to apply for an exemption in accordance the Act[7]. The third party making the offer must waive its rights to be given a BEEC.

Penalties

The penalties for non-compliance with the Act remain unchanged. Penalties for non-compliance with an energy efficiency disclosure obligation are up to $170,000 per offence.

Conclusion

Sellers and lessors of office space of 2000 square metres or more should be aware of the current BEEC requirements and the proposed changes. Generally, the proposed changes will benefit sellers and lessors by reducing the regulatory burden on business.

For further information please contact:

Christine Murray — Partner — Property, Conveyancing and Finance Team
(02) 6279 4402
christine.murray@mvlawyers.com.au