Mandatory disclosure of energy efficiency information for commercial office buildings

From 1 November 2010, the Building Energy Efficiency Disclosure Act 2010 (Cth) will require prospective sellers, lessors and sub-lessors of commercial office space exceeding 2,000 sq. metres in nett lettable area (NLA) to obtain and disclose energy efficiency information for the premises to all prospective buyers and tenants.

The disclosure is required each time an affected premises is offered for sale, lease and/or sub-lease.

What information needs to be disclosed?

The information to be disclosed will be introduced over the following timeframes:

Transition Period – 1 November 2010 to 31 October 2011:

During the transition period, every advertisement for the sale, lease or sublease of affected buildings must detail a current National Australian Built Environment Rating System (NABERS) star energy base or whole building rating. The NABERS star rating must be publicly accessible on the Commonwealth Government’s Commercial Building Disclosure program website www.cbd.gov.au

Full compliance period – From 1 November 2011:

From 1 November 2011, building owners and sub-landlords must:

• continue to include the NABERS star rating for the base building in any advertisement for the sale, lease or sublease of the building; and
• obtain and register a Building Energy Efficiency Certificate (BEEC) when selling, leasing or subleasing an affected office building or area of a building.

What is a BEEC?

Every BEEC must be publicly accessible on the online Building Energy Efficiency Register and include:

• the NABERS star rating for the building;
• an assessment of the existing tenancy lighting; and
• a general energy efficiency information sheet for the building detailing the suggested methods improved building operation.

BEECs will only be valid for a period of 12 months.

The template BEEC is still being produced by the Government and is expected to be released shortly.

Advertising Requirements

All advertising, irrespective of whether it is during the transition period or afterwards, must include the NABERS star rating.

The appearance of the NABERS star rating must be clearly visible and in text that is the same size, colour and position as the bulk of the advertisement.

The rating must be expressed using a rating from 0 to 5 followed by the words ”…star NABERS energy rating” (for example, “4 star NABERS energy rating”).

Under the Act, the definition of advertisement includes all forms of media including, banners, signs, internet sites and newspaper appearances.

The Federal Government will be releasing detailed advertising requirements before 1 November 2010.

What buildings will be exempt?

The mandatory disclosure regime will not apply to:

• newly constructed office buildings and parts of office buildings that have a certificate of occupation less than two years old;
• buildings held under strata title;
• leases and sub-leases with a term of 12 months or less (including any option to extend).

In certain circumstances, owners of buildings that are:

• used for police and security operations; and/or
• not able to have an energy efficiency rating assigned because of certain building characteristics  (for example, a warehouse with an office component with one electricity metre, or where a major refurbishment has taken place and the building is vacant or not fully occupied for an extended period),

may apply to the Department of Climate Change and Energy Efficiency for an exemption to the disclosure requirements.

There are other exceptions to the Act because of the jurisdictional limitations of the Act. For example:

• the transfer of a building through the sale of shares or units, or the sale of a partial interest in a building; and
• sales or sub-leases between two natural persons, even as trustees,

are not caught by the Act (although instances of these types of transactions will be rare).

Penalties for non-compliance

From 1 November 2010, building owners and tenants wishing to sub-lease will face fines of up to $110,000 for the first day of non-compliance and $11,000 for each subsequent day of non-compliance, for the failure to properly and accurately disclose energy efficiency information.

What advice to commercial building owners and agents need to prepare for the commencement of the mandatory disclosure regime?

It is important for building owners and agents that will be affected by the regime to obtain a NABERS star rating for the base or whole building so that compliant advertising can commence from 1 November 2010.

A NABERS Accredited Assessor must be used for new assessments. A list of NABERS AccreditedAssessors can be found by clicking http://www.cbd.gov.au/FindAssessor.aspx

Owners are encouraged to get specialist advice where it is unclear as to whether a building will fall within the parameters of the disclosure scheme.

In addition, leasing and sales agents must update all advertising mediums to accommodate the new requirements.

Legal documentation may also need to be updated to comply with the commercial building disclosure regime.

Information gathering and access by Accredited Assessors

Building owners, building managers and tenants must co-operate with Accredited Assessors, during the assessment process.

Accredited Assessors must be able to access the entire building, including parts already tenanted in order to carry out an energy efficiency assessment. Additionally, owners, lessees and sublessees may be required to give Accredited Assessors energy information that is necessary to carry out the assessment (for example, electricity and water accounts).

Non-compliance with an Accredited Assessor’s entry and information notice may attract a penalty of up to $55,000.

The Act implements an extensive auditing process for Accredited Assessors to ensure that assessments are being made consistently and fairly.

Applicable legislation and regulations

The applicable legislation and regulations are:

Building Energy Efficiency Disclosure Act 2010 (Cth)
Building Energy Efficiency Disclosure Regulations 2010 (Cth)
Building Energy Efficiency Disclosure Act 2010 (Cth) – Proclamation
Building Energy Efficiency Disclosure (Disclosure Affected Buildings) Determination 2010
Building Energy Efficiency Disclosure Determination 2010

Conclusion

This legislation will have a dramatic effect upon sales and leasing and the penalties for non-compliance are substantial.