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New commercial requirements

Do you have commercial clients responsible for office space of 2,000 square metres or more? If so, you and your clients need to know about the new Commercial Building Disclosure (CBD) program which aims to improve the energy efficiency of Australia’s large office buildings.

The Department of Climate Change and Energy Efficiency explains the program.

Obligations for commercial building owners and tenants who sublease
Under the CBD program, most sellers or lessors of office space of 2,000 square metres or more will be required to obtain and disclose an up-to-date energy efficiency rating. The start date for disclosure is 1 November 2010, with a 12 month transition period. During that transition period, building owners and lessors will need to disclose a valid NABERS Energy star rating before the sale, lease or sublease of commercial office space with a net lettable area of 2,000 square metres or more.

After the transition period, from 1 November 2011 building owners and lessors selling, leasing or subleasing commercial office space of 2,000 square metres or more will need a valid Building Energy Efficiency Certificate. The Certificates will include a NABERS Energy star rating, tenancy lighting information, and general energy efficiency guidance. The NABERS Energy star rating must be a base or whole building rating. It must be registered on the CBD program’s publicly accessible website, and it must also be included in any advertising.

Advertising
To comply with section 15 of the Building Energy Efficiency Disclosure Act 2010, an energy efficiency rating for a building must be expressed by using the rating from 0 to 5 worked out for the building under the NABERS Energy rating rules, and by adding the words ‘-star NABERS Energy rating’ after the number. For example, ‘4.5-star NABERS Energy rating’ or ‘3-star NABERS Energy rating’.

The rating must be displayed prominently within an advertisement so that it is clearly visible and not obscured. The number and the text included in the rating must be at least as large as the majority of the text contained in the advertisement. The requirements for how star ratings must be disclosed in advertisements are specified in the Building Energy Efficiency Disclosure Determination 2010.

Risks of not complying
“Owners and lessors who don’t comply risk delays in the sale or lease of the building if they are not ready for mandatory disclosure.” If they proceed without disclosure, they risk a fine or prosecution. Civil penalties of up to $110,000 for the first day and $11,000 for each subsequent day may be imposed by a Court for each breach of a disclosure obligation. Alternatively, the Secretary of the Department of Climate Change and Energy Efficiency can issue an infringement notice of up to $11,000 for the first day and $1,100 for each subsequent day of non-compliance.

Getting a NABERS rating
The first step to comply with the CBD program is to get a NABERS rating done. Obtaining a building’s first NABERS Energy rating can take several months and requires access to 12 months worth of energy use data. While around a third of Australia’s total building stock has been NABERS rated, many of the smaller private owners of second tier buildings have not yet had their buildings rated.

It would be good advice for all your commercial property clients to familiarise themselves with the NABERS Energy rating process now and start preparing well in advance of any planned sale or lease.

How often energy efficiency ratings need to be obtained
The required information only needs to be disclosed at the point of sale, lease or sublease to potential buyers or tenants. How often a building owner needs to obtain a certificate will depend on the frequency of sale, lease or sublease transactions. NABERS ratings are valid for 12 months.

How the CBD program will affect the cost of selling or renting an office building
For office buildings over 2,000 square metres, costs of complying with the CBD program are low in comparison to the total value of sale and lease transactions.The economic analysis of the program indicated that the average cost of a Building Energy Efficiency Certificate would be around $6,000. The cost of assessments could be affected by fluctuations in market pricing as well as the size, complexity and location of the building.

Exemptions
New office buildings that are less than two years old, strata titled offices and offices offered for short term lease of up to 12 months are exempt from the program. Affected parties may also apply for exemptions in situations where a building is used for police or security operations or where it is not possible to obtain a valid NABERS Energy rating or tenancy lighting assessment.

The benefits
For every one-star increase in an office building’s NABERS Energy rating, there is an estimated 15 per cent saving in energy costs. Depending on local energy prices, this equates to a saving of around $3 per square metre annually which would mean that an average office building of 9,000 square meters would save around $27,000 per year.

Disclosing energy efficiency also creates a more informed market that rewards better performing buildings and stimulates greater investment in energy efficiency, as buyers and tenants demand buildings that are more efficient.

Resulting greener offices have the potential to deliver savings of 20 to 40 per cent on energy bills. They can also be more comfortable to work in, improve staff wellbeing and productivity, reduce sick leave and support green building industry jobs. Most offices can be cost-effectively improved to a high level of energy efficiency through good building management practices and appropriate equipment replacement cycles.

The CBD program
The CBD program has been developed by the Australian, state and territory governments, as part of a broad package of measures to encourage building energy efficiency. The program is managed by the Australian Department of Climate Change and Energy Efficiency. More information is available at www.cbd.gov.au.

The Australian Government Department of Climate Change and Energy Efficiency develops and implements national policy, programs and legislation to assist Australia to reduce carbon emissions, improve energy efficiency, adapt to the unavoidable effects of climate change and play our part in helping to shape a global solution. More information about the Department is available at www.climatechange.gov.au.

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