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HG Alert: New Exceptions to Mandatory Disclosure Obligations for Mixed-use and Refurbished Buildings - 8 Dec 2010

The Building Energy Efficiency Disclosure (Disclosure Affected Buildings) Determination 2010 (No. 2), issued by the Minister for Climate Change and Energy Efficiency, Greg Combet, on 26 November 2010, clarifies certain definitions and amends the specified kinds of building (and areas of a building) that are 'disclosure affected' under the Building Energy Efficiency Disclosure Act 2010.

The Determination follows substantial industry feedback about the broad scope and uncertain application of the disclosure obligations under the Act, which applies to corporate owners.

Disclosure affected buildings

Effective from 29 November 2011, a building is disclosure affected if:

  • at least 75 percent of the space in the building (by net lettable area, or gross lettable area if net lettable area is not available) is for administrative, clerical, professional or similar information-based activities, including any support facilities for those activities; and
  • the net lettable area (or gross lettable area if net lettable area is not available) of the space in the building that is for administrative, clerical, professional or similar information-based activities, including any support facilities for those activities, is at least 2000 square metres.

The example supplied by the Department of Climate Change and Energy Efficiency is as follows:

  • A 100,000m2 building with office space of 90,000m2 and retail space of 10,000m2 would need to disclose an energy efficiency rating.
  • A 100,000m2 building with office space of 60,000m2 and retail space of 40,000m2 would not need to disclose an energy efficiency rating.

How the Determination changes the Building Energy Efficiency Disclosure Act

Previously, mixed-use buildings (for example, a building with retail and commercial office space) fell within the scope of the disclosure obligations under the Act if the commercial office space component was greater than 2000 square metres. The Determination means that many mixed-use buildings now fall outside the scope of the Act.

The Determination provides that a building is not disclosure affected if:

  • it is new or has had a major refurbishment; and
  • a certificate of occupancy indicating that the building is safe for occupancy (that is, a Certificate of Classification) is required to be issued by a local authority, and the certificate has not yet been issued, or was issued less than two years before the particular day under consideration.

A 'major refurbishment' means a refurbishment that has a substantial effect on the energy performance of the base building or whole building.

According to the Explanatory Statement issued by the Department, the intention of the Determination is to exclude these buildings during and after construction, as well as up to two years after the Certificate of Classification is issued, presumably to ensure that sufficient data is available to obtain a NABERS Energy rating and qualify for a Building Energy Efficiency Certificate that accurately reflects actual energy consumption. Importantly, if the refurbishment is major, but energy performance is not substantially affected, the disclosure obligations apply. This is interesting considering that energy performance cannot be measured until the building is up and operating after refurbishment, and means that if the refurbishment does not result in a 'substantial effect' on energy performance after the fact (despite the intention), the owner may go through a period where the Act is not being complied with.

Similar amendments apply to disclosure affected areas in buildings. However, a new definition of 'area of building' has been inserted, so that it includes physically separate spaces within the building that share access to the outside of the building, or that are linked internally to a space that provides external access. If an owner of a commercial office building is offering to let a number of separate areas (for example, floors) in the building, the area to be considered is the combined area of those floors. If that area falls within the parameters in the Determination, the area will be disclosure affected. The exception for strata titled buildings remains.

Transition period

Commercial office building owners and occupiers must note that these are interim amendments, which will be reviewed during the transition period (to 1 November 2011). If the review panel decides that the amendments are not necessary, the Determination may revert back to the more onerous disclosure obligations. There is a possibility, therefore, that mixed-use buildings will require Building Energy Efficiency Certificates in the near future, and owners might err on the side of caution and obtain these Certificates despite the Determination.

The Department will accept voluntary submissions of disclosure ratings on the Building Energy Efficiency Register.

For more information about the disclosure obligations of building owners and occupiers under the Building Energy Efficiency Disclosure Act, please contact HopgoodGanim's Commercial Property practice.