Major change to the Commercial Building Disclosure Program

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Following the announcement made by Government last year, the mandatory disclosure threshold on commercial office buildings will reduce from 2,000 square metres to 1,000 square metres.

From 1 July 2017, this expansion of the Commercial Building Disclosure (CBD) Program will require most sellers and lessors of office space 1,000 square metres or more to obtain a Building Energy Efficiency Certificate (BEEC) before the building goes on the market for sale, lease or sublease.

BEECs include a Part 1 – the building’s National Australian Built Environment Rating System (NABERS) Energy for offices star rating, which is valid for 1 year, and a Part 2 – Tenancy Lighting Assessment (TLA) of the relevant area of the building, which is now valid for 5 years (since September 2016).

What won’t change?

As the owner or lessor of a disclosure affected building you must still:

  • Provide a current, valid BEEC to potential buyers or lessees free of charge, as early as possible in the transaction enquiry process and when requested
  • Make BEECs publicly accessible on the Building Energy Efficiency Register
  • Include the building’s NABERS Energy star rating, Part 1 from the BEEC, in any advertising material for the sale, lease or sublease of the building or office space

What will change?

By lowering the mandatory threshold to 1,000 square metres, the upcoming changes will effectively increase the number of commercial office buildings that will require a BEEC when going up for sale or lease.

Simultaneously, leasing more than one floor space in a commercial office building (which may require adding together the net lettable area for those spaces), is more likely to now be over the 1,000 square metre threshold.

What are the consequences?

Owners should be aware that significant penalties apply for non-compliance. An owner may be fined up to:

  • $180,000 for failing to register a BEEC prior to offering to sell or lease Disclosure Affected Space, and a further $18,000 per day for as long as it continues to do so
  • $180,000 if an owner does not provide a BEEC to a prospective purchaser or tenant within a reasonable time of request
  • $180,000 for failing to include the building’s energy efficiency rating in an advertisement to sell or lease Disclosure Affected Office Space, and a further $18,000 per day for as long as it continues to do so

What do I do now?

While maintaining a constantly valid BEEC is not required by the CBD Program, most savvy building owners or managers conduct an annual NABERS rating for their building. This achieves benefits beyond simply complying with the CBD mandatory requirements.

Maintaining a valid NABERS rating each year makes the process of applying for a BEEC significantly easier and quicker should a mandatory disclosure trigger event (i.e. sale, lease or sublease) occur.

The documentation to be gathered by the building manager and provided to the NABERS Accredited Assessor falls over at least a 12-month operational period. Therefore, if you think you may need a BEEC from July 2017, you will need to have the correct building documentation and records dating back to at least July 2016.

The CBD website has a number of self-help fact sheets and guides available (www.cbd.gov.au).

If you think you may have a disclosure affected building this year and have never previously had an accredited NABERS rating, we recommend discussing your particular situation with a CBD Accredited Assessor who can explain the relevant CBD and NABERS requirements.

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