Changes to the Commercial Building Disclosure Program

If you own or manage an office building, you may be affected by changes to the Commercial Building Disclosure (CBD) Program coming into force from 1 July 2017.

The below information will ensure that you are fully informed about changes over the horizon. 

Changes are being made to the CBD program to increase its effectiveness, and from 1 July 2017, the mandatory disclosure threshold on commercial office space will be lowered from 2,000 to 1,000 sqm. What this means is that owners and lessors of smaller commercial office buildings may need to disclose the building’s energy efficiency when they sell or lease their property after this date.

Disclosure affected buildings or tenancies of 1,000 sqm or more that are offered for sale or lease will require a Building Energy Efficiency Certificate.

The BEEC includes a:

• National Australian Built Environment Rating System (NABERS) Energy star rating for the building; and,
• Tenancy Lighting Assessment for the relevant areas of the building.

BEECs are publicly accessible through the online Building Energy Efficiency Register. 

Affected building owners will need to engage an accredited assessor to undertake the assessments and lodge the application for a BEEC on their behalf. The assessor will seek the previous year’s electricity and gas bills for the building. 

The NABERS Energy star rating must appear on all forms of advertising material for the building. 

Compliance with the program is monitored and penalties apply to sellers, lessors and their agents who do not comply with their disclosure obligations under the Act. 

Building owners are encouraged to seek independent legal advice to understand their disclosure obligations under the CBD Program. Some owners and lessors of smaller commercial office buildings may not have heard of the program, and may not be aware of their obligations.

More information on the changes to the program can be found at cbd.gov.au.

The CBD program requires the collection and disclosure of energy efficiency information at the point of lease or sale. The goal of this program is to inform purchasers and tenants of the efficiency and, therefore, the running cost of large office buildings before they take up tenancy.

The CBD program allows building owners and managers to improve the marketability and returns of their asset. This gives a competitive advantage to more efficient buildings which are easier to lease and sell. The market has demonstrated that efficient buildings with lower energy bills also fetch higher lease rates, leading to increased returns for owners.  

NABERS and CBD Disclosure in South Australia

There is already widespread participation in NABERS across the property sector in South Australia. NABERS has rated 155 office buildings here, which equates to more than 1.2 million sqm of NLA.

Energy intensity of non-participants is generally higher; however, there is rapid improvement seen in buildings once they participate.

All building grades are reducing their energy intensity, including B and C grade buildings, with efficiency not limited to just Premium and A grade assets.

Documentation requirements for obtaining data must be adhered to for a NABERS rating to maintain a robust rating system to fairly compare building to building. First ratings can often take longer, so engaging an Assessor early in the process is advised.

There is processing time with both NABERS and CBD and this should be factored into your timeline. NABERS processing time is up to 10 working days.

Building Upgrade Finance

As members would be aware, the State Government partnered with the Property Council to establish the Building Upgrade Finance (BUF) mechanism to help unlock building retrofitting potential and associated economic and environmental benefits.

BUF is a voluntary mechanism designed to help owners of existing commercial buildings overcome barriers to making their assets more energy and water efficient. In an Australian first, heritage works to or within commercial heritage buildings will also be eligible under the mechanism.

The enabling legislation passed through South Australia’s Parliament in December 2015.  This makes South Australia the third jurisdiction to introduce the mechanism following NSW and Victoria. 

The State Government is currently finalising the remaining elements of the BUF legislative framework, which comprises the regulations, a building upgrade agreement template and a ‘no worse off’ methodology for estimating tenant cost savings.

The mechanism is expected to become operational in the coming months.

With the upcoming changes to the Commonwealth Government’s CBD program, the BUF mechanism may assist property owners to fund works to improve the environmental performance and ratings of their buildings.

Changes to the CBD program and the forthcoming commencement of the BUF mechanism offer a great opportunity for building owners to find out what their building rating is and what can be done to improve it, as well as work with tenants to implement the solutions and achieve mutual financial savings and win-win outcomes. 

For more information about the mechanism go to the website of the Department of Environment, Water and Natural Resources.