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Ratings and BEECs
Exceptions and exemptions
Ratings and BEECs
The CBD Program requires energy efficiency information to be provided in most cases when commercial office space of 1000 square metres or more is offered for sale or lease. The aim is to improve the energy efficiency of Australia's large office buildings and to ensure prospective buyers and tenants are informed. The CBD Program is an initiative of the Council of Australian Governments (COAG). It was established by the Building Energy Efficiency Disclosure Act 2010 (BEED Act) and is managed by the Australian Government.
Buildings are a major energy consumer, and account for almost one quarter of Australia’s emissions. Improving building energy efficiency is one of the quickest and most cost-effective ways to reduce Australia’s greenhouse gas emissions and help mitigate the effects of climate change.
Most sellers and lessors of commercial office space of 1000 square metres and more will be required to obtain a BEEC before their building goes on the market for sale, lease or sublease.
BEECs are valid for up to 12 months and include:
- A National Australian Built Environment Rating System (NABERS) Energy for offices star rating for the building
- A Tenancy Lighting Assessment (TLA) of the relevant area of the building.
Standard energy efficiency guidance information previously included on the last 6 pages of the BEEC is now provided online. This includes information on how building owners and tenants might improve a building's energy efficiency.
The CBD Program requires sellers and lessors of commercial office space to obtain a NABERS Energy for offices rating for their building. The NABERS Energy for offices rating can be either a whole building or a base building rating.
NABERS is a national rating system that measures the environmental performance of Australian buildings. The CBD Program integrates the NABERS Energy for offices rating into the information disclosed to prospective buyers and tenants of large commercial office spaces.
NABERS is managed by the NSW Office of Environment and Heritage on behalf of the Australian, state and territory governments.
For more information on NABERS, see www.nabers.gov.au.
A TLA is an important component of a BEEC. It is based on a methodical survey of the general lighting system reasonably expected to be left in place after the tenant leaves and the tenancy fit out is removed. Where appropriate, a TLA may also cover proposed lighting systems.
It measures the power density of the installed general lighting system of affected buildings by working out the:
- Nominal Lighting Power Density of the relevant functional space in the building
- Capacity of installed lighting control systems.
It may also include a performance comment if appropriate.
Lighting assessments are completed by CBD accredited assessors. For more details, see Tenancy lighting assessments.
Changes to the TLA validity period from one to five years took effect for all new TLAs submitted from 1 September 2016. This means that building owners will now enjoy extended validity for their TLAs, which reduces their regulatory burden.
On 21 June 2016, the Minister for Resources, Energy and Northern Australia, the Hon. Josh Frydenberg, announced changes to the CBD Program to lower the mandatory disclosure threshold on commercial buildings from 2000 square metres to 1000 square metres, and increase the TLA validity period from one to five years.
Changes to the program follow a comprehensive review of the CBD Program and public consultation in March 2016, which supported continuing the program and lowering the mandatory reporting threshold to include smaller buildings.
These changes will help inform purchasers and tenants of the building energy costs at the point of sale or lease. It is anticipated the program changes will deliver more than $50 million in energy savings and around 3.5 million tonnes of emission reductions over the next five years. Lowering the mandatory energy efficiency disclosure threshold to include smaller commercial office buildings of 1000 square metres and above came into effect from 1 July 2017, following a one year transition period. The extension of the TLA validity period from one to five years came into effect from 1 September 2016.
A BEEC is valid for up to 365 days and consists of a:
- certified NABERS Energy for offices rating (valid for 365 days or less)
- certified TLA (valid for five years from 1 September 2016).
Under the program changes, disclosure affected entities will be required to complete a NABERS rating and BEEC application annually to maintain BEEC constant coverage, while a TLA will last for five years and can be used for a number of BEEC applications in that period.
There is no requirement under the BEED Act to continuously maintain a valid BEEC. Under the Act, legal obligations in relation to sales, leases and sub-leases arise when:
- a constitutional corporation advertises a disclosure affected building or area of a building for sale, lease or sublease
- a constitutional corporation offers to sell, lease or sublease a disclosure affected building or area of a building, or invites offers for the sale, lease or sublease of a disclosure affected building or area of a building
- a constitutional corporation requests a BEEC for a disclosure affected building or area of a building that is being offered for sale or lease by another entity (whether or not that entity is also a constitutional corporation). See Quick guide to the application of the CBD program.
However, some building owners and lessors decide, as part of business planning, to have annual NABERS ratings and TLAs to continuously maintain a valid BEEC. Others may decide to maintain a valid and current BEEC if they are approaching the end of their current lease or sublease.
For more information, see Using and maintaining a BEEC
The cost varies depending on the requirements of the building or area of the building that is disclosure affected.
There is a cost to employ the services of a CBD Assessor to conduct the NABERS Energy for offices rating and TLA. The industry has advised that the approximate cost could be between $4,000 and $13,000, depending on the size and complexity of the building.
Certification fees for the NABERS Energy for offices rating can be found online. This is payable upon certification of the application, and the building owner must accept the application prior to the rating being certified.
For more information, see How to get a BEEC.
Disclosure affected entities are required to have a certified BEEC in place when selling or leasing a building with commercial office space larger than the disclosure threshold of 1000 square metres, unless the building has been granted an exemption or exception from disclosure obligations (see Exceptions and Exemptions).
The following information is needed to obtain a BEEC:
- Collect and file all energy (electricity, gas, diesel) bills for your building, as you will need at least 12 consecutive months of energy consumption data to complete a NABERS rating
- Confirm the metering setup for your building. Are tenants and base building power separated?
- Confirm if you have certified survey plans showing the Net Lettable Area (NLA) for office tenancies in your building
- Collect copies of leasing documentation for your tenant(s)
- Discuss your specific building/situation with an accredited CBD Assessor to obtain a quote.
Please note that completing a certified NABERS rating and a TLA, and then submitting a BEEC application, may take up to eight weeks (or more) from starting the process to certification, depending on the individual building circumstances.
All CBD-related applications are processed in order of receipt, acknowledging that different types of applications have different processing timeframes. Each application has its unique processing timeframe that may vary depending on the complexity of the application. As a guide:
- TLA applications have a 15 working day processing time frame
- BEEC applications have a 28 calendar-day processing time frame
- Exemption applications have a 15 working-day processing time frame
- Assessor applications have a 28 calendar-day processing time frame
- We aim to resolve enquiries within five (5) working days unless technical expert advice is required.
All these time frames are based on correctly-rendered applications and correct fees (where required) paid at the time the application is submitted. The CBD Program aim to certify 90% of all correctly submitted applications within 10 working days, but it depends on the volume and complexity of applications and enquiries.
You can search our Building Energy Efficiency Register by name and/or location of the building or browse existing ratings by street, suburb or state.
NABERS ratings are available from the NABERS website at http://www.nabers.gov.au/ and you can also enquire directly with the NABERS team on (02) 9995 5000 if you have any questions about a NABERS rating.
Section 15 of the BEED Act requires a valid NABERS Energy rating to be included in advertisements for the sale or lease of disclosure affected buildings or areas. Reference to the BEEC is not required in advertisements. All current BEECs are placed on the publicly available Building Energy Efficiency Register on the CBD website.
For more information, see Advertising.
The BEED Act requires that:
- BEECs must be provided to potential buyers or lessees when requested at the time of sale, lease or sublease
- BEECs must also be publicly accessible on the Building Energy Efficiency Register
- The building’s NABERS Energy star rating must also be included in any advertising material for the sale, lease or sublease. See Advertising for more information.
For more information, see How do I comply?
Office space is used (or capable of being used) as an office for administrative, clerical, professional or other information-based activities and includes any support facilities (such as break-out areas and rest rooms) for those activities. The phrase ‘capable of being used’ is intended to encompass office spaces that are vacant at the relevant time. For more details, see the guidance note on what is office space?'.
The Building Energy Efficiency Disclosure (Disclosure Affected Buildings) Determination 2016 provides that ‘disclosure affected area’ includes physically separate spaces within a building where those spaces share access to the outside of the building (including via internal access between spaces) and may be grouped together for the purposes of lease of sublease. A common example is an office tower offering multiple floors for lease or sublease, where each floor is accessible from the same ground floor foyer lift. These physically separate floors would be considered together as a single ‘disclosure affected area’ as they are all accessed through the common lift. The practical effect is that building owners considering leasing, or lessees considering subleasing more than one floor in such buildings simultaneously, should aggregate the net lettable area for office activities on each floor for the purpose of determining whether the area meets the minimum 1000 square metres threshold.
The definition of ‘disclosure affected area’ is also intended to clarify that physically separate spaces within a building that do not share access to the outside of the buildings are regarded as separate areas. The defining characteristic in these cases is the individual access to the outside of the building (i.e. no common access for each space being offered, unlike the previous office tower example that shared access). The practical effect is that building owners considering leasing, or lessees considering subleasing multiple units in such buildings simultaneously, need not aggregate the total space across the different areas. Each unit will only be a disclosure affected area if the net lettable area for office activities is greater than 1000 square metres on its own.
For more information, see What buildings are affected?
What if multiple spaces within a single building are for sale, lease or sublease, but the spaces individually are less-than the threshold amount?
Unless the building is considered an exception to the BEED Act or has been granted an exemption, a BEEC will be required for the combined area if it exceeds 1000 square metres, where an offer or advertisement to let multiple spaces within the one building:
- is stated to be for combined spaces that together exceed the 1000 square metres floor space threshold
- is for an undefined combination of the spaces that includes combining spaces that together would exceed the 1000 square metres floor space threshold
- might otherwise lead to spaces that in combination exceed the 1000 square metres floor space threshold being leased together under a single lease.
For more information, see What buildings are affected?
Exceptions and exemptions
The CBD Program requires most sellers and lessors of commercial office space of 1000 square metres or more to disclose the building’s energy efficiency. This is required by the BEED Act.
Exceptions to the legislation relate to either the type of building or the type of transaction and include:
- new buildings where a certificate of occupancy (or equivalent) has either not yet been issued or was issued less than two years earlier
- strata-titled buildings
- mixed use buildings where total office space comprises less than 75 per cent of the building by net lettable area (or gross lettable area if net lettable area is unavailable)
- where the sale of a building through the sale of shares or units or the sale of a partial interest in a building
- where leases and subleases of 12 months or less (including any option to extend), in accordance with section 11 of the Act.
Exemptions may be applied for and granted in certain circumstances. Applications are considered on a case-by-case basis. You may apply for an exemption from a disclosure obligation:
- where a building or area is used for police or security operations
- in cases where an energy efficiency rating cannot be assigned because of the current characteristics of the office.
The Department charges a processing fee for an exemption application. For more information, see Exceptions and Exemptions.
An Unsolicited Offer exemption is for the occasion when a building owner, who is not offering to sell or lease their building, is approached by another party wishing to purchase, lease or sublease their building and makes an offer to start negotiations. The building owner can apply for an unsolicited offer exemption from a disclosure obligation.
Unsolicited Offer exemptions can be applied for under the following conditions:
- the exemption facilitating negotiations are between two parties only
- the offer maker waiving their rights to be provided a current BEEC
- an Unsolicited Offer exemption has not been granted within the previous 3 months
- the building has not been advertised or offered for sale, lease or sublease within the previous 6 months
- other negotiations have not occurred within the previous 6 months with any other person.
There are no fees payable for this exemption application.
For more information, see Unsolicited offer exemptions.
If the total office space is less than 75 per cent of the building by net lettable area (or gross lettable area, if net lettable area is unavailable), then the building is not disclosure affected and does not contain disclosure affected areas. This means energy efficiency obligations do not apply to the sale, lease or sublease of all or part of the building, and action is not required to be taken at this time.
For more information, see What buildings are affected? and How to comply if you are selling, leasing or subleasing.
It is not the policy of the CBD Team to provide rulings or specific advice on whether potential or hypothetical transactions would be required to comply with the disclosure obligations of the BEED Act. This is because whether or not disclosure obligations are triggered depends on a range of factors which may only be able to be ascertained at the time a building or area of a building is actually offered for sale or lease. We recommend that you (or your client) seek independent legal advice if unsure of your disclosure obligations under the Act.
The CBD Program is currently developing online information that will provide guidance to building owners and tenants on how to improve the energy efficiency performance of their commercial buildings. To keep informed of the progress of this online information and receive updates about the program as they occur, you can subscribe to our newsletter.
Building owners are not required to perform upgrades to their building’s energy efficiency under the CBD Program. Any decision to upgrade the building or the services within the building to improve the building’s energy efficiency is a commercial decision to be made by the Building Owner.
The CBD Review highlighted options for expansion of the program to other building types. However, there are currently no plans to expand the scope of the program beyond commercial office buildings.
The CBD team can be contacted through the contact page.
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