Building Upgrade Finance in South Australia

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 South Australia.

Building Upgrade Finance is a type of private finance, and a Building Upgrade Agreement is the contract that facilitates the repayment of the finance through the local council. A template Building Upgrade Agreement contract has been prepared for transactions in South Australia (available under Support and resources).

Did you know that Building Upgrade Finance can be used on eligible heritage upgrades?
Find out more here.

Building Upgrade Finance is currently available in the following council areas:

  • City of Adelaide
  • Rural Town of Gawler
  • Light Regional Council
  • City of Marion
  • City of Onkaparinga
  • City of Salisbury
  • City of Playford
  • Whyalla City Council
  • Alexandrina
  • Rural City of Murray Bridge
  • Yorke Peninsula Council

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

Eligible works are those that improve the energy, water or environmental efficiency or sustainability of a building. The building must be an existing, non-residential building, located in a participating council area. Learn more

In South Australia, heritage upgrades are also eligible (see Heritage upgrades below).

The following also applies in South Australia:

  • Buildings must have been built two years before entering into a Building Upgrade Agreement.
  • A building does not have to be located on rateable land to be eligible.
  • A building located on Crown land may enter into a Building Upgrade Finance agreement if the building owner has received consent from the appropriate Minister (in accordance with the Crown Land Management Act 2009).
  • Buildings subject to a strata or community scheme are technically eligible in South Australia, however the Building Upgrade Agreement template is not designed to facilitate strata agreements so may need further investigation. Contact us to discuss further.

Heritage upgrades to non-residential state or local heritage listed buildings are available in South Australia, including:

  • Maintaining, updating or reinstating heritage significance; or
  • Compliance with the Building Rules or the Disability Discrimination Act 1992; or
  • Facilitating the ongoing occupation of the building.

For further information refer to the Heritage brochure.

In South Australia, building owners have two pathways for collecting contributions from tenants.

  • Consent Pathway
    The tenant and building owner negotiate and the tenant agrees to pay a contribution to the Building Upgrade Finance repayments; or
  • ‘No worse off’ pathway
    Where upgrade works deliver financial benefits to the tenant (i.e. through utility bill savings), the building owner may be able to collect a contribution to the Building Upgrade Finance repayments from the tenant without their explicit consent. This is only an option if the contribution doesn’t exceed the utility bill savings to be made by the tenant from the upgrade works.

Note that tenant contributions can be recovered without having to renegotiate existing lease agreements, and are considered to be an outgoing expense in a lease. Tenant contributions to Building Upgrade Finance do not have to match the length of a lease.

If the ‘No Worse Off’ pathway is followed, a government-approved methodology (government gazette) for estimating tenant cost savings is required to be used, to ensure tenants are not financially disadvantaged. It is recommended that suitably qualified individuals with relevant experience be engaged to undertake these calculations.

The ‘No Worse Off’ Methodology for Estimating Tenant Cost Savings provides for a robust pathway to estimate tenant cost savings whilst minimising the costs associated with its application. A guide has also been developed to help property stakeholders, consulting engineers and/or service providers understand the purpose, eligibility and application of the approved methodology.

Download the frequently asked questions on tenant contributions.

If you are a building owner and you’d like to make improvements to your building, but you’re not sure you can cover the cost or you don’t want it to impact your capital budget – Building Upgrade Finance may help. 

Building Upgrade Finance offers a range of benefits for Building Owners, including:

  • No upfront capital required – up to 100% project finance is available, so there is no impact on capital budgets.
  • Option for long term (10-20 year), fixed* rate finance – fixed, lower repayments and potential for neutral/positive cash flows. The operating savings from upgrades can help to repay the finance (Note – some finance providers may offer variable rates).
  • Pass on the finance – when selling, remaining repayments can be passed to the new owner or discharged on settlement, if agreed by parties.
  • Attract and retain tenants – landlords can remain competitive by offering efficiency, cost savings and upgraded premises to tenants
  • No encumbrance on title – the charge against the land is not registered on the land title.

How to get started

Do you already have plans for the upgrades you want to make? If not, talk to a service provider to help you scope and cost your upgrade works. You can find service providers who have previously been involved in Building Upgrade Finance on the Success page.

You will also need to check to see if Building Upgrade Finance is available in your council area, or what to do if it’s not yet available. Whether you do this before or after you plan your upgrades depends on your timeframes and needs.

Once you’ve confirmed it is available, you can check out the Building Owner Process Document for an example of what to do next.

Building Owner Considerations

Some elements that you will need to consider as a building owner when looking into Building Upgrade Finance include the following:

  • There is a limit to the amount that can be borrowed, based on the value of your property and existing debts. 
  • All mortgagees are required to be notified of the building upgrades.
  • For environmental upgrade works, a report on cost and resource savings is required within 15 months of completion of the project.

The Building Owner Process Document covers these in more detail, as well as the resources available to help with this.

If you’re a tenant in a non-residential building and you’d like your tenancy to be upgraded to lower costs and provide better working conditions, talk to your landlord about Building Upgrade Finance. Don’t leave your workplace, upgrade it!

Building Upgrade Finance has the potential to provide many benefits to tenants. Depending on the upgrade works, these could include:

  • Improved facilities i.e. bike storage facilities;
  • Upgraded fixed equipment and lighting;
  • Improved working conditions and amenity which can increase staff productivity and wellbeing;
  • Reduced utility and / or operating costs;
  • Contributions towards corporate social responsibility goals.

To help the conversation with your landlord, consider what upgrades you’d like to see at your tenancy and whether you’d be willing to contribute financially. Building Upgrade Finance arrangements don’t need to align with existing lease arrangements, so can be discussed at any point during your tenancy.

You will also need to know if Building Upgrade Finance is available in your council area, or what to do if it’s not yet available.

A Tenant is not a party to an agreement under Building Upgrade Finance, but to understand the process required from a building owner’s perspective, you can check out the example Building Owner Process Document.

Please note – in South Australia building owners can require tenants to contribute to upgrade works under Building Upgrade Finance, as long as they can prove that the savings made to tenants will outweigh the costs, i.e. savings from a reduced energy bill are greater than the contributions made by that tenant. See the Tenant Contributions section for more information.

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 – consultants, companies who install solar PV, LED, or battery storage, energy efficiency experts and so on.

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.

To assist Service Providers to offer Building Upgrade Finance as a product, a series of resources have been developed:

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 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.

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 economic development and sustainability objectives;
  • Potential activation and rejuvenation of business and community precincts;
  • Encouraging heritage building reactivation.

For more information on local council’s role and the benefits of being involved, see the Local Government Association of South Australia’s Building Upgrade Finance Guide for South Australian Councils.

Council Service Providers

A Council may wish to engage a Council Service Provider to support the administration of Building Upgrade Finance. The Council Service Provider may offer services such as confirming eligibility, processing forms and establishing the repayment process.

The council service provider may also be the primary contact for Building Upgrade Finance for local councils that use their services. A council service provider will usually charge the building owner a fee for their service, which may be instead of or in addition to a local council’s administration fee, depending on the level of involvement by the council.

For current known Council Service Providers, see the Providers webpage.

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