The Building Energy Efficiency Disclosure Act 2010 (“the Act”) commenced operation on 1 November 2010 as part of the National Strategy on Energy Efficiency to make buildings more energy efficient. The Act’s impact is far-reaching and the penalties (including financial penalties) for non-compliance are severe. It is important for building owners, tenants and prospective purchasers to be aware of the requirements and obligations imposed by the Act.
Who is affected?
Any corporation that proposes to sell, lease or sub-lease a disclosure affected building or part of that building must comply with the Act.
Currently, all commercial office buildings (or part of such buildings) with a net lettable area of 2000 square meters or more are prescribed as ‘disclosure affected’ buildings or areas.
When does it apply?
During the transitional period (being from 1 November 2010 to 31 October 2011), if the Act applies, disclosure affected buildings or areas of a building must have a valid National Australian Built Environment Rating System (“NABERS”) Rating, which must be registered online.
From 1 November 2011, when the transitional period ends, the NABERS rating will need to be replaced by a full Building Energy Efficiency Certificate (“BEEC”).
What are the key obligations?
There are three key obligations under the Act.
- A corporation must not sell, lease or sublease or offer to sell lease or sublease a disclosure affected building or part of a disclosure affected building without a current, registered NABERS rating or a BEEC.
- A disclosure affected building or part of a disclosure affected building must not be advertised for sale or lease or continue to be advertised for sale or lease without a valid, current energy efficiency rating for the building prominently displayed in the advertisement.
- A corporation must provide all prospective purchasers or tenants with a copy of the current, registered BEEC as soon as reasonably practicable upon written request.
What is a BEEC?
A BEEC is a comprehensive statement of a building’s energy efficiency which is valid for 12 months from its date of issue and must be registered on the Building Energy Efficiency Register.
How is a BEEC obtained?
In order to get a BEEC, a disclosure affected building or area must be assessed by an accredited assessor. Twelve (12) consecutivemonths of metered fuel data is required in order to make an assessment. The most recent data must be no more than 4 months old.
Disclosure of energy efficiency information is not required for the following:
- Leases of 12 months or less
- Strata-titled buildings
- Newly constructed buildings or areas with such buildings (less than 2 years old)
- Buildings or areas of buildings which have been granted an exemption by the Secretary
- The sale of units in a trust or shares in a company that owns a building
- Mixed-use buildings (until 31 October 2011)
- Major new refurbishments are exempt for two years from the date of refurbishment.
Requirements for owners and landlords
Owners and landlords of disclosure affected buildings and parts of buildings will need to:
- make arrangements to renew their BEEC annually and incorporate this cost into outgoings budgets;
- ensure that the BEEC is valid and given to prospective tenants or purchasers before a lease or sale of a building is effected;
- review standard lease documents to reflect the requirements of the Act and compliance, in particular, consider:
- the ability to recover costs associated with BEECs;
- establishing policies and procedures for collecting and maintaining data required for obtaining an annual BEEC;
- imposing obligations on tenants regarding access and provision of information;
- expanding landlord’s rights in order to carry out any works required to comply with the Act and if possible to recover the cost of any environmental upgrade works in the outgoings;
- incorporating provisions which stipulate that any alterations to premises must be undertaken with energy efficient or recyclable materials.
Issues for prospective purchasers of a disclosure affected building
- Review the BEEC or NABERS rating and check registration.
- Prospective purchasers should ensure that if a disclosure affected building does not have a current NABERS rating, to contractually secure the data required to obtain a rating in the future.
- In reviewing tenancy documents where a purchaser proposes to purchase a tenanted building, consider whether the documents enable the landlord to comply with the Act and identify procedures and risk management strategies to implement following the acquisition.
Actions for owners and landlords of disclosure affected buildings
- ensure there is a current NABERs rating for their building.
- take active steps to prepare for the 31 October 2011 deadline to obtain a BEEC.
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