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Important changes to the Commercial Building Disclosure Program

This information was produced by Napier & Blakeley and published on our blog with their approval.

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Following a comprehensive review of the Commercial Building Disclosure (CBD) Program earlier this year, and public consultation on the proposed changes to the program, the Australian Government announced this week that the mandatory disclosure threshold on commercial office buildings will reduce from 2000 square metres to 1000 square metres starting 1st July 2017.

Importantly, this impending expansion of the regulatory requirements of the CBD program to include additional commercial office buildings, also comes with the announcement of reducing the regulatory requirements for the Tenancy Lighting Assessment (TLA) component by increasing the TLA validity period from 1 to 5 years from 1st September 2016.

What does that mean?

If you own / manage a building, or an area of a building, that is: 

 

  • Now greater than 1,000 square metres;
  • For administrative, clerical, professional or other information-based activities, including any support facilities of those activities (i.e. office space); and
  • For sale, lease or sublease.

 

… then it could be disclosure affected from 1st July 2017. If you have a disclosure affected building, it will need a valid Building Energy Efficiency Certificate (BEEC) before it is put to the market for sale or lease. 

 

A BEEC comprises two parts that need assessment by an Accredited Assessor, these are: 

 

  1. A National Australian Built Environment Rating System (NABERS) Energy star rating for the building; and
  2. An assessment of the energy efficiency of tenancy lighting in the area of the building that is being sold or leased, called a Tenancy Lighting Assessment (TLA).

 

A BEEC is valid for up to 1 year, but is no longer valid when either of the two parts listed above reach their respective expiry dates (currently both assessment parts have 1 year validity periods).

By lowering the mandatory threshold, the upcoming changes to the CBD program effectively increases the number of commercial office buildings that are expected to require BEEC’s, and hence increase the requirement for the Part 1 - NABERS Energy ratings to be conducted on those disclosure affected buildings.

The increase of the validity period from 1 year to 5 years of the Part 2 - Tenancy Lighting Assessment (TLA) from 1st September 2016, reduces the potential burden of having to re-assess the TLA component for the tenancy lease spaces each time a BEEC requires renewal in the future. 

While maintaining a constantly valid BEEC is not required by the CBD program, most savvy building owners / managers have already realised conducting an annual NABERS rating for their building achieves benefits beyond simply complying with the CBD mandatory requirements. 

Maintaining a valid NABERS rating 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.

What do I do now?

The documentation required to be gathered by the building owner / manager to conduct a NABERS performance rating, is over at least a 12 month operational period. Therefore, if you think you may need a BEEC from 1st July 2017, then you need to start assembling the correct documentation and records from 1st July 2016.

Some office buildings or areas of buildings are not disclosure affected if they are: 

 

  • Mixed use buildings with less than 75% office space by net lettable area;
  • New buildings, where there is a certificate of occupancy less than 2 years old;
  • Strata-titled buildings;
  • Transferred through the sale of shares or units of interest;
  • Leased in a short term lease, (i.e. for a period of less than 12 months); or
  • Leased by exercising an option to renew or extend an existing lease.

 

However, if you think you may have a disclosure affected building from 2017, and have never previously had an accredited assessment for a NABERS rating or TLA, then we recommend discussing your situation with a CBD Accredited Assessor. The CBD website also has a number of fact sheets and guides available (www.cbd.gov.au).

Napier & Blakeley has CBD Accredited Assessors within each of its Sydney, Melbourne and Brisbane offices, if you have any enquiries or need to engage a NABERS or CBD Accredited Assessor.

 

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