By Tina Perinotto
30 November 2010
– The federal government has bowed to industry pressure and agreed to a temporary reprieve over the more complex requirements of the new mandatory disclosure regime for some categories of buildings.

From 29 November mixed use buildings, such as industrial buildings that have less than 75 per cent offices and those that have undergone major upgrades will be exempt from the disclosure obligations, the federal government’s Department of Climate Change and Energy Efficiency said on Tuesday.

“These buildings often share energy metering and as a result, it can be difficult to provide an accurate energy rating for the separate spaces,” the DCCEE said.

It said that buildings that have undergone major retrofits will also be exempted for two years.

Mandatory disclosure, also known as the Commercial Building Disclosure program, requires all offices of 2000 square metres or more to disclose a NABERS Energy certificate at the time of sale or lease, or sub-lease.

Property council of Australia chief executive officer Peter Verwer welcomed the announcement by the DEECC, which he said had required changes to the subordinate legislation.

“It’s a positive move by the government recognises the difficulty created by the mandatory disclosure regime when it was introduced,” Mr Verwer told The Fifth Estate.

But the reprieve applying to mixed-use buildings may be only temporary, unless the property industry lobby groups, such as the PCA, convince the government otherwise.

The DEECC said that the change will apply only for the transition year of the program and will be subject to review by an industry panel of experts.

“This panel will report back to the government before the end of July 2011 on their recommendations,” the DEECC said.

“Industry will be given clear advice and an appropriate timeframe to adapt to any changes, recognising the possible need for metering changes and collection of 12 months data for a NABERS Energy rating.”

But the PCA would prefer that the legislation in relation to mixed-use buildings be scrapped outright because it was not the original intention of the disclosure regime to bring them under the net.

Mr Verwer said accurate metering which would enable a NABERS rating to be applied  was often very difficult in these situations.

“Our position is that if there was a fit-for-purpose rating tool for mixed use buildings then it would be legitimate and appropriate to include [mixed use buildings] in mandatory disclosure.”

Mr Verwer said the suggestion that separate metering could be installed was a “red herring”.

“The whole point of mixed use premises is that the owner has no control over the use of the space. It would need a whole lot of meters to deal with all the contingencies.

“The issue is that there could be multiple tenants and, say with industrial buildings, the user might just change things – they could change a loading dock and put in some office space for instance.

“Putting in meters for what might be an admin purpose today doesn’t mean it would be relevant tomorrow.

“Our argument was never over how this applies to office buildings;  that’s a huge job that will change market behaviour. If you want to extend it to other uses, go conduct the RIS [regulatory impact statement].”

Other issues
But mixed use buildings was not the only issue still outstanding with the disclosure regime.

Mr Verwer said there were still grey areas that needed to be worked out.

Unsolicited offers to buy a property, for instance.

According to Mr Verwer any response to an unsolicited offer to buy a property caught in the net would immediately trigger CBD requirements.

The same could apply to lease renewals when they included options to increase rent to market levels for instance, he said.

“There is a lack of clarity about it and it needs to be clarified,” Mr Verwer said.

“The legal view is that if there was an amount [of rent increase] in a lease and there was no argy-bargy it’s not likely be disclosure affected but many leases have alternative formulas, and if you start to negotiate and put in a proposal it instantly becomes affected.”

Mr Verwer said the “next big thing” was a NABERS lighting energy tool, which would be needed to comply with one of the main planks of the CBD disclosure requirements, which has also been deferred.

“That’s work in progress, [which was] way behind schedule given that the transition phase ends on 30 October next year.”

A media statement from the DEECC made the following key points:

  • Mixed use buildings that combine office space with other functions such as warehouses, medical centres, hotels or retail outlets, often share energy metering and as a result, it can be difficult to provide an accurate energy rating for the separate spaces.
  • The Government has worked with industry stakeholders to address these complex issues and decided as an interim approach that buildings with less than 75 per cent office space (of the net lettable area1), will not be required to disclose a NABERS Energy rating. For example: a 100,000 sq m building with office space of 90,000 sq m and retail space of 10,000 sq m would need to disclose an energy efficiency rating.  A 100,000 sq m building with office space of 60,000 sq m and warehouse space of 40,000 sq m would not need to disclose an energy efficiency rating.
  • This approach to mixed use buildings is an interim measure during the transition year of the program and will be subject to review by a panel of industry experts. This panel will report back to the government before the end of July 2011 on their recommendations.
  • Industry will be given clear advice and an appropriate timeframe to adapt to any changes, recognising the possible need for metering changes and collection of 12 months data for a NABERS Energy rating.
  • For some buildings, such as mixed office/warehouses, gross lettable area may be the industry standard. Where this is the case, and net lettable area is not available for this calculation, gross
    lettable area may be used.
  • Buildings with less than 75 per cent office space are classed as exceptions to the CBD program and no action is necessary.
  • Assessment of office and building measurement need to be in accordance with the Method of Measurement for Lettable Area’ published by the Property Council of Australia.  www.propertyoz.com.au.
  • Owners of buildings that are below the 75 per cent threshold, but wish to voluntarily comply with the legislation, may lodge their NABERS ratings on the Building Energy Efficiency Register at https://www.cbd.gov.au/RatingRequestForm.aspx
  • Refurbishment – Buildings which have had major refurbishments that will have a substantial effect on the energy performance of the base building, will not be required to disclose a NABERS Energy rating for two years from when the certificate of occupancy is issued.
  • Major refurbishments are those that involve substantial changes being made to the fabric, plant or equipment in the building and require a certificate of occupancy issued under a law of a State or Territory, prior to the building being occupied or reoccupied.
  • If your building has undergone a major refurbishment it is classed as an exception to the CBD program for two years after the issue of the certificate of occupancy and no action needs to be taken during this time. However, after two years of occupancy it is assumed that energy data can reasonably be assessed and from this point most building owners will need to comply with the legislation and disclose an energy efficiency rating.

See the CBD website www.cbd.gov.au