NABERS Energy ratings

Major change to the Commercial Building Disclosure Program is fast approaching on 1st July 2017

shutterstocMelbourne - Australia. 03.08.12Following the announcement made by the Australian Government last year, the mandatory disclosure threshold on commercial office buildings will reduce from 2000 square metres to 1000 square metres starting the 1st July 2017.

From 1st July 2017, this expansion of the CBD program will require most sellers and lessors of office space of 1000 square metres or more to obtain a Building Energy Efficiency Certificate (BEEC) before the building goes on the market for sale, lease or sublease.

BEECs include a Part 1 – the building’s National Australian Built Environment Rating System (NABERS) Energy for offices star rating which is valid for 1 year, and a Part 2 – Tenancy Lighting Assessment (TLA) of the relevant area of the building which is now valid for 5 years (since September 2016).
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Muscle up and wrestle your tax back…

It’s here again, the end of the financial year, a time for collating all of the financial happenings over the past 12 months and thinking about new beginnings from 1st July.  Or as is the case for many in the property industry, preparing accounts and reports for share holders, as it is just the beginning of the reporting period.

Napier & Blakeley are the original experts in property depreciation deductions – we will make sure that you do muscle up and receive the maximum benefits available to you through depreciation and capital allowances.  Our experience is second to none in the market place and our track record speaks for itself.  So let us wrestle on your behalf.

It’s at this time every year that we provide an update of the legislative goings on in the accounting area of property depreciation and over the past 12 months there have been a few. Continue reading

CBD Legislation Update – Exclusion for Mixed Use Buildings

 

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Today the Australian government announced that mixed use buildings will be excluded from the CBD legislation for a period of twelve months and major new refurbishments will have a two year exclusion from date of refurbishment.

Following industry consultation the Australian Government Department of Energy Efficiency  and Climate Change set up an industry forum to review the implementation of the Commercial Building Disclosure legislation (mandatory rating legislation).

This group includes Roger Walker, Head of Sustainability at Napier &  Blakeley. We are pleased to advise that Roger’s advice that the legislation should exclude buildings which do not have a minimum of 75% office use has been accepted by the Hon Minister Combet.

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Green Building Funding Available for Hotels

A part of the Green Building Funds $30M Grant program is available for Hotels but what will you be required to do to access the funds?

Formal guidelines have not been established but in line with the previous Green Building Fund you will be required to demonstrate greenhouse gas savings. A NABERS Energy assessment is a sure way to demonstrate existing property performance so you can then measure the improvements being targeted through upgrades.

If you are considering upgrading and applying for a Green Building Fund Grant for your Hotel then we can assist you in this process. Napier & Blakeley have been successful in obtaining over $5M in funding for our clients in the previous Green Building Fund rounds.

The Hotel NABERS Energy rating is not applicable for all hotels and you should consider the following when reviewing the requirements to obtain a rating.

 

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Recent Trends in Technical Due Diligence

Is your ‘too good to be true’ deal really sustainable ?

Lack of Capital post GFC has lead to a significant neglect of R&M and Capex spend.

Having worked on property due diligence valued over $10B since the GFC, Napier & Blakeley have seen only nominal spend on upkeep compared with previous years.

Risk of Non-Compliance (i)

During this period the increasing trend has been a notable reduction of Repair and Maintenance (R&M) and Capital Expenditure (Capex)  budgets. Whilst this strategy may have been necessary in some circumstances e.g. postponement of non-essential Capex, we have found too commonly evidence of non-compliance regarding statutory maintenance such as testing, auditing and reporting of essential safety measures and fire safety systems.

Reduced Life Expectancy and Premature Capex 

Recent technical due diligence and condition assessments have also found that the lack of R&M and Capex budgets for economic life driven plant and equipment overhauls and refurbishments has resulted in increased short and medium term Capex.

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How the energy disclosure is to impact on the Aussie property market

Australia will start requiring landlords to disclose energy efficiency ratings for their office buildings when leasing or selling from the start of November.  Nearly a third of the Australian office market is currently rated for energy efficiency by the government and the new legislation will likely have an impact on valuations and create a push for upgrading efficiency.  Here are some questions and answers on how the new regulation works, how foreign investors and REITs will be affected, and what implications the new rules could have on the property market.

How do the new rules work ?

Sellers or lessors of office space of 2,000 sq metre (21,530 sq ft) or more will have to disclose an up-to-date energy efficiency rating. Starting from Nov. 1, owners will need an energy rating from the National Australian Built Environment Rating System (NABERS) when leasing or selling. When putting properties on the market, advertisments should include the ratings. The NABERS rating measures energy performance on a scale of 1 to 5 stars with the median market performance currently at 2.5 stars.

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Does the election outcome create further opportunity for greening your office building, retail centre or hotel ?

 

The short answer is yes it does, with direct financial support for improvements in emission reductions for commercial buildings.

Election promises impacting the commercial property industry were:

  • Green Building Fund extension (now office, retail and hotels that can be NABERS Energy rated) with $30Million dollars available for funding for new application rounds from now until July 2011.
  • Tax allowance bonus for Green building improvements, for office buildings, Retail Centres (over 10,000sqm) and Hotels. Conditions will apply, but if you meet them then this is a 14.5% reduction in project costs for improving energy efficiency.

With the details yet to be defined by the responsible departments we assume that the green building fund mark 2 will be delivered fairly quickly and with their previous rounds offering around $15million per round then another two rounds should be undertaken. Perhaps one for January and one for April 2011, which allows for time to set up and then for all funding agreements to be finalised before the tax allowance bonus commences in the following financial year.
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