06 September 2016

Changes to Energy Disclosure Laws for Commercial Buildings

In 2010, the Commonwealth Government implemented the Commercial Building Disclosure Program (“Disclosure Program”).  The Disclosure Program mandates the disclosure of energy efficiency for commercial spaces and was introduced to provide incentive for commercial building owners to improve their energy efficiency.

Pursuant to the Disclosure Program, corporate sellers and lessors of certain commercial spaces are required to obtain a Building Energy Efficiency Certificate (“Efficiency Certificate”) before putting the property on the market.  The Efficiency Certificate must be provided to the prospective buyer or lessee at the time of the sale or lease.  To obtain an Efficiency Certificate, the seller or lessor must engage a Commercial Building Disclosure accredited assessor.

Currently, an Efficiency Certificate is required by a seller or lessor when:

  1. the total area for sale or lease is 2,000 square metres or more; and
  2. the total office space in the building comprises at least 75 per cent of the space by net lettable area.

Recently, the Commonwealth Government has announced that the scope of the Disclosure Program will be expanded.

As of 1 July 2017, an Efficiency Certificate will be required if the total area for sale or lease is 1,000 square metres or more, as opposed to the current 2,000 square metres.

As a result of the change, a number of lessors and sellers who were not required to obtain an Efficiency Certificate, will be.  Indeed, the Commonwealth Government, in its media release announcing the change, has estimated that an additional 1,000 commercial buildings will require an Efficiency Certificate a result of the change.

It is particularly important to be aware of the change to the Disclosure Program because failure to comply can result in hefty penalties.  A court may impose penalties of up to $180,000.00 for the first day of non-compliance and up to $18,000.00 for each subsequent day of non-compliance.  Alternatively, the Department of the Environment and Energy may issue an infringement notice of up to $18,000.00 for the first day of non-compliance and up to $1,800.00 for each subsequent day.

Owners of buildings with more than 1,000 square metres of lettable space, and which are predominantly office buildings, will need to prepare for the change by obtaining an Efficiency Certificate before the Disclosure Program changes on 1 July next year.

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