How green was my building? The Commercial Building Disclosure Program
On 1 July 2017, the minimum size that certain commercial office spaces need to before falling under the Commercial Building Disclosure (CBD) Program will reduce from 2000 square metres to 1000 square metres, meaning that many more spaces up for lease or sale will now be subject to its obligations. But what are those obligations and what does a lessor or vendor need to know about this scheme?
The CBD Program was brought in with the Building Energy Efficiency Disclosure Act 2010 and has the objective of improving the energy efficiency of office buildings within Australia by ensuring that buyers and tenants are aware of the energy efficiency of prospective locations and that these factors can become a part of their consideration. The Act prohibits a corporation from offering (or inviting offers) to sell, lease or sublease an affected building or part of a building if a valid and current Building Energy Efficiency Certificate (BEEC) is registered. In addition, a corporation may not advertise to sell, lease or sublease an affected building or part of a building unless it also discloses the building’s National Australian Built Environment Rating System (NABERS) star rating. The penalty for breaching either of these obligations is maximum fine of $180,000.
As per the most recent determination made by the Federal Government, affected buildings are any building where at least 75% of the total lettable area in the building is for administrative, clerical, professional or similar information-based activities (which includes any support facilities for those activities) and such space is at least 2000 square metres, decreasing to only 1,000 square metres on 1 July 2017. The same requirement applies to a part of a building.
There are some exclusions to the scheme. A building (or an area within a building) will not be affected where the building is new and a Certificate of Occupancy has either not been issued or is less than 2 years old. Similarly, a building will be excluded if it has had a major refurbishment and the Certificate of Occupancy is less than 2 years old. Finally, the scheme does not affect buildings under strata-title. The prohibition against offering leasing or subleasing of a building or space with required accreditation will not apply where the offer is for a term of 12 months or less and that there is no proposal to extend that offer beyond 12 months.
If a building falls within the scheme then prior to any sale, lease or sublease it will need to be accredited by a CBD accredited assessor (a list of such assessors can be found here) who should then have the BEEC registered. The BEEC includes the NABERS star energy rating to be included on any advertising of the building or space. The star rating must be clearly visible, not obscured and should be the same size as the majority of the text in the advertisement. The CBD Program gives prospective buyers, lessees or sublessees the right to request (in writing) that the owner provide a copy of a current BEEC.
An owner wishing to improve the NABERS rating of their building work to improve their rating by incorporating the suggestions from the CBD Program here and here. Some common methods include:
- Replacement of light fixtures with energy efficient ones;
- Managing heating ventilation and air conditioning systems so they are not operating when not required;
- Installing temperature control measures such as shading, insulation and double glazing; and
- Co-operating with tenants and considering “green clauses” in future leases.
Paul Carroll, Partner
Alex Collie, Lawyer