Mandatory disclosure of energy efficiency for commercial office buildings

The Federal Government is expected to introduce new laws in mid 2010 which will require the disclosure of energy efficiency information for commercial office buildings.

It is important that commercial office building owners consider the timeframe and costs associated with obtaining the information to be disclosed now so that sales and leases are not delayed when the disclosure regime commences in mid 2010.

Who will be affected by the mandatory disclosure regime?

Owners of commercial office buildings in Australia that have a net lettable area of more than 2000 square metres must disclose the energy efficiency of the building when it is offered for sale and lease.

The mandatory disclosure regime will initially only apply to Building Code of Australia Class 5 buildings. Class 5 buildings are office buildings used for professional or commercial purposes.

At this stage the following exemptions are anticipated:

• leases of commercial offices that are for a term of 12 months or less, irrespective of the premises area;
• sales of and leases in all commercial office buildings where, through no fault of the building owner, 12 months worth of energy efficiency data is not available. For instance the sale or lease of new and newly refurbished buildings;
• strata titled commercial offices, irrespective of the premises area.

What energy efficiency information needs to be disclosed?

The National Australian Built Environment Rating System (NABERS) energy star rating for the base building will need to be included in all advertising material for the sale or lease of office space that exceeds 2,000 square metres.

In addition, a Building Energy Efficiency Certificate (BEEC) will need to be provided to prospective buyers and tenants.

The BEEC will need to include the following information:

• the NABERS energy star rating for the base building;
• information on how to improve the energy efficiency of the building; and
• an assessment of the lighting energy efficiency for the building.

It is expected that BEECs will have to be lodged with a central register. Penalties of up to $100,000 may apply to building owners or agents where the disclosed information is not accurate.

Mandatory disclosure – how do commercial office building owners prepare?

Although the new laws are yet to be finalised, property owners together with selling and leasing agents should start to prepare now for the mandatory disclosure regime as the lead-time required for an initial NABERS assessment can be lengthy.

Legal documentation for sale and lease agreements will need to also be updated to contemplate the introduction of the mandatory disclosure regime.