Important changes to the Commercial Building Disclosure Program
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.
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‘Make Good’ Planning Makes Good Sense For Leased Property
Fortunately, only a few Make Good disputes end up in the Courts. However, the potential for protracted arguments is on the rise.
Some of the drivers include:
- Changing conditions in the resources sector seeing engineering firms and the like, downsize;
- Large corporates relocating to new developments;
- An increasing demand for smaller spaces generally, through improved efficiencies and flexible work environments.
When it comes to handing back tenancy space the Lessee will need to comply with obligations to ‘yield up’. This is typically where the arguments start. Differences of opinion in who owns what; what work needs to be done to return the property to a condition ‘as at commencement’; whether current condition falls under the exception of ‘fair wear and tear’; and whether the extent of partial repair requires full replacement – to mention a few.
Disputes that run beyond the lease term are settled by ‘damages’ – a financial settlement following a claim. These not only include the costs associated with the physical works (typically $200 – $300/sqm for offices) but also legal costs, loss of rent and outgoings.
The good news is that such arguments (and additional costs) can be avoided – through good planning. Continue reading
