Senate-approved changes to the Commercial Building Disclosure Program (CBD) have been hailed by members of industry as improving the efficiency and convenience of the scheme.
The Senate has ratified key changes to the Commercial Building Disclosure (CBD) program that are expected to streamline disclosures of the energy performance of office buildings and prevent them from gumming up market transactions.
The Building Energy Efficiency Disclosure Amendment Bill 2014 which was passed by the Senate on 12 February outlines a raft of key amendments to the CBD program that are expected to reduce much of the bureaucratic hassle that had previously encumbered disclosure efforts.
Chief amongst them is the granting of exemptions from disclosure obligations to building owners when prospective buyers make unsolicited offers for the purchase of office space, as well as exemptions for transactions between wholly-owned subsidiaries. Each of these amendments is expected to reduce transaction costs by as much as $300,000.
Other key measures include allowing Building Energy Efficiency Certificates to have commencement dates after their date of issuance, and removal of the requirement that new owners or lessors reapply for potentially costly new exemptions should effective ones already exist.
Under the CBD program prior to amendment building owners were unable to partake of sale or lease negotiations unless lengthy performance assessments had been implemented in advance, even if the transaction were between a parent company and one of its wholly owned subsidiaries.
While acknowledging the importance of disclosure mechanisms for the energy performance of built assets, the Property Council of Australia hailed the changes as curing flaws in the original design of the CBD scheme that resulted in bureaucratic inefficiencies and potential impediments to market transactions.
"We all benefit from better energy efficiency in our buildings and the disclosure of energy efficiency ratings is an important mechanism for achieving this," said Ken Morrison, chief executive of the Property Council of Australia. " However, the way the CBD scheme has been operating since its introduction in 2010 has created costly and inefficient red tape.
"Flaws in the original design of the scheme have created a major barrier to transactions for the sale and lease of office space in certain circumstances."
The amendments to the CBD program received the support of both sides of politics, and are expected to come into effect on 1 July 2015.
Despite complaints about flaws in the CBD program, the Energy Efficiency Council (EEC) has touted the success of the scheme so far, with Luke Menzel, acting chief executive of the EEC stating last year that it had proven "incredibly effective at informing prospective buyers and tenants on the energy performance of larger buildings, giving them the information they need to make better decisions."
The CBD program still remains subject to a review by the federal government of its overall objectives, which has raised concerns amongst sustainability and efficiency advocates that the program could be axed, particularly given phrases in the review's mission statement about providing "recommendations on the merits for continuing the program and any options for its future funding."