New Energy Efficiency Disclosure Requirements

Background

On 28 June 2010 the Building Energy Efficiency Disclosure Act 2010 was enacted in Parliament. This Act had been under consideration in Parliament since March and is part of the National Strategy on Energy Efficiency. It is designed to give purchasers, lessees, and sub-lessees more information about the efficiency of large commercial office spaces they are considering acquiring or leasing.

1) An energy efficiency star rating based on the National Australian Built Environment Rating System (NABERS) scheme

2) An energy efficiency assessment of the building lighting

3) An energy efficiency assessment report giving guidance on how building efficiency could be improved

Any advertisement for the sale or lease of such office space must include the star rating. All BEECs will be registered in a Building Energy Efficiency Register, which will also be accessible online. A copy of the BEEC must also must be provided to potential purchasers/lessees upon request.

BEECs will be current for 12 months, with the exception of the energy efficiency guidance only needing to be updated every seven years.

Disclosure requirements will come into effect on 1 July 2010. It is also important to note that the Act will not alter your disclosure requirements under state or territory law.

Exemptions from the building energy efficiency disclosure requirement

All leases or subleases of 12 months or less (including any options to extend) will be automatically exempt from the BEEC requirements (provided certain requirements are met). Other exemptions will be available by making an application, accompanied by the payment of a fee. Exemption may be granted for:

1) Building used for police or security operations

2) Buildings with characteristics that make assessing the energy efficiency or lighting impossible under standard assessment methods

3) Any other exemptions deemed appropriate at the discretion of the Secretary

All exemptions must be obtained prior to the point at which disclosure would be required.

Preparing to comply with the building energy efficiency disclosure requirement

The disclosure requirements came into effect on 1 July 2010 so you should act now to get a NABERS rating. Assessment costs are likely to increase to the greatest degree in the early stages of the Act’s application given the increased demand for assessors. If you have an existing NABERS rating prior to October it can be used for up to 12 months in place of a BEEC to satisfy the disclosure requirements.

It is also important to start preparing now because getting a NABERS star rating requires 12 months of consecutive metered fuel data, with the most recent data being no more that 4 months old. Many lessors will need to work with their tenants to collect this data.

If existing leases do not contain provisions requiring tenants to provide required information, the act gives NABERS assessors the ability to compel tenants to provide what is needed. Going forward, all leases should contain provisions for landlords to obtain the needed information. Another thing to consider in making compliance with disclosure requirements easier would be establishing an organisational structure for collecting and maintaining data required for obtaining an annual BEEC.

What It Means for Sellers and Lessors

The success of the Act relies on market-sensitivity to green information. The explanatory memorandum outlines that for the Government to consider the Act successful a minimum of 3.9% of buyers or tenants must utilise the information in their property decisions.