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Mercury rising - new energy obligations for sellers and landlords

On and from 1 July 2017, the Commercial Building Disclosure (CBD) Program and Building Energy Efficiency Disclosure Act 2010 (Cth) (the Act) will now apply to commercial office buildings with a net lettable area of 1,000m2.

The Program

As part of Australia's National Strategy on Energy Efficiency, the CBD Program aims to help mitigate climate change by improving energy efficiency in commercial buildings, which account for 10% of Australia's total greenhouse gas emissions. For commercial landowners, when selling or leasing these buildings, the CBD Program requires you to obtain a Building Energy Efficiency Certificate (BEEC) prior to putting the property on the market.

The Changes

Prior to 1 July 2017, the CBD Program applied to commercial office buildings and office areas in these buildings (other than strata titled offices) with a net lettable area of 2,000m2 or more, where at least 75% of the net lettable area is used for office space. Reducing the threshold to 1,000m2 is expected to capture an additional 1,000 buildings.

What are your obligations?

Should you wish to sell or lease a commercial building, you will need to appoint an accredited assessor to apply for a BEEC on your behalf. The cost of obtaining a BEEC can range from $4,000 to $13,000 depending on the nature of the building, and the process usually takes up to two months.

The BEEC must contain an assessment of the efficiency of the lighting for the building, and a NABERS energy efficiency rating for the building, which must also be included in any advertisement for the sale or lease of the building.

A BEEC remains current for 12 months after the date of issue, and must be registered on the public Building Energy Efficiency Register before advertising the property for sale or lease, inviting offers for purchase or lease, or offering to enter into option agreements to sell or lease the property.

Consequences of non-compliance

These changes will provide greater information to prospective buyers and tenants about the building and potentially increase the return on the sale or lease of buildings with higher levels of energy efficiency.

For buildings that do not comply with the CBD Program and Act, contracts for sale or lease will not become void or unenforceable, however the building owner will be liable to fines of up to $210,000 for each offence, and further fines of up to $21,000 per day for subsequent offences.

As the Act states that a new offence occurs each day that a building is offered for sale or lease without a registered BEEC, these fines can escalate quickly. It is important to ensure that you are compliant before putting your property on the market, whether that's for sale or lease.

If you need any assistance in understanding your compliance obligations under the CBD Program, please don't hesitate to contact us.

"The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication."