Building Upgrade Finance in NSW

Building Upgrade Finance legislation is largely the same in New South Wales, Victoria and South Australia. There are, however, some key differences. Information provided here relates to NSW.

Building Upgrade Finance is the type of finance, and an Environmental Upgrade Agreement (EUA) is the contract that facilitates the repayment of the finance through the local council. A template EUA contract has been prepared for transactions in NSW.

Building Upgrade Finance is available for all local NSW councils to offer to building owners and businesses in their local government area. To participate, a council has to pass a formal resolution of Council.

The following council’s offer Building Upgrade Finance in NSW:

  • Blacktown City Council
  • Lake Macquarie City Council
  • Newcastle City Council
  • North Sydney Council
  • City of Parramatta Council
  • City of Sydney Council

If your building is located in a council area not listed above OR you are from a council wanting to participate please contact us.

To be eligible the building must be an existing, non-residential building, located in a participating council area.

Eligible works are those that improve the energy, water or environmental efficiency or sustainability of a building. Some upgrades to heritage buildings may be eligible, such as façade or lighting upgrades, that result in an environmental benefit. Building Upgrade Finance has been used to finance environmental upgrades to heritage buildings in NSW.

The following also applies in New South Wales:

  • A building does not have to be located on rateable land to be eligible.
  • Strata (>20 lots) building upgrades are eligible under the legislation in NSW. The current template EUA contract is for single title/ownership property EUAs, and is not designed to facilitate strata EUAs. A contract for strata EUAs would need to be developed to facilitate strata transactions in NSW through Building Upgrade Finance.
  • Under the NSW legislation, the EUA is entered into by the owner of the land on which the building is located. This means that an EUA for buildings owned under leasehold (i.e. crown land, under a 99-year lease) would have to be entered into by the owner of the land, predominantly being the Government.

In NSW tenant contributions can be recovered through:

  • existing lease provisions without tenant consent; where the tenant already contributes to outgoings as a part of their lease, or
  • a specific agreement; where the building owner and tenants negotiate and agree to contributions to be made.

The tenant contribution is based on the utility bill savings they are estimated to receive as a result of the project. The contribution is calculated by a suitably qualified consultant using engineering methodologies. Tenants can’t be financially worse off under an EUA financed upgrade, meaning that their contributions must be equal to or less than their utility bill savings.

Download the Tenant Contributions Guidance for building owners and tenants here, and the Tenant Contributions Technical Guidance for service providers . here.

Service providers can assist building owners to scope potential upgrade works and advise on finance options for the works they recommend. In the context of Building Upgrade Finance, a service provider is considered to be any organisation who is involved in the building upgrade process, including consultants, companies who install solar PV, LED, or battery storage and energy efficiency experts.

To help building owners with this decision, it’s best to understand the benefits for building owners and the difference between Building Upgrade Finance and traditional finance options.

Contributions from tenants towards upgrade costs is a key benefit of Building Upgrade Finance to building owners. The Tenant Contribution Technical Guidance will help you to understand the technical requirements for your clients.

Local council involvement is essential to making Building Upgrade Finance available to local businesses and building owners.

Building Upgrade Finance can be administered by councils as part of their day-to-day business, and complements existing operational processes such as processing applications and agreements, setting up charges, issuing notices and enforcement for non-payment.

Councils are able to charge a service fee for administrative costs related to the Building Upgrade Finance process, and are not liable for non-payment of repayments by building owners.

Changes to the NSW Local Government Amendment 1993 (Part 2A – Environmental Upgrade Agreements) enables all NSW councils to enter into EUAs.

Why would a local council participate in Building Upgrade Finance?

There are a number of benefits to local councils enabling Building Upgrade Finance in their local area. These include:

  • Providing an opportunity to support non-residential property owners and business tenants to upgrade their buildings to operate more efficiently, helping to reduce operating costs and improve business competitiveness.
  • Aligning with Council’s economic development and sustainability targets.
  • Facilitating activation and rejuvenation of business and community precincts.

For more information on the benefits, council’s role, sample documents and council contacts, see the NSW Local Councils Building Upgrade Finance Guide.

There are no legislative requirements for finance providers offering Building Upgrade Finance, other than agreeing to using the NSW Environmental Upgrade Agreement (EUA) contract.

The EUA contract was developed by Baker McKenzie for the NSW Government, in consultation with the finance, property and local government sectors.

The most impressive template youll find.

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