South Australia’s new Building Upgrade Finance (BUF) mechanism is designed to help stimulate investment and jobs in South Australia, while also helping Adelaide to become the world’s first carbon neutral city.
The enabling legislation for the mechanism and the supporting regulations came into operation on 1 August 2017.
The ‘no worse off’ methodology for estimating tenant cost savings was approved by the Minister for Climate Change, the Hon. Ian Hunter by notice in the gazette on 8 August 2017.
The ‘no worse off’ Methodology for Estimating Tenant Cost Savings is to be used for building upgrade projects where the lessee/s of a building are requested to provide a contribution to the building upgrade charge without the tenant’s explicit consent. The methodology makes sure that tenants are not financially disadvantaged and any contribution they make to the building upgrade charge does not exceed the money they save on their utility outgoings as a result of the upgrade.
The State Government has developed the Building Upgrade Agreement template in consultation with the local government, property and finance sectors to assist the parties to use the mechanism. The Minister has designated clauses 12-14 of the Building Upgrade Agreement template to be mandatory for all building upgrade agreements.
The South Australian Government has committed to establishing a Building Upgrade Finance mechanism in South Australia.
On 11 February 2015, the Local Government (Building Upgrade Agreements) Amendment Bill 2015 was introduced to the Legislative Council, and on 10 December 2015, the Bill was passed through the South Australian Parliament.
Building Upgrade Finance (formerly referred to as Environmental Upgrade Finance) is a mechanism which helps building owners to access loans to improve the energy, water and environmental efficiency of existing commercial buildings.
The Building Upgrade Finance mechanism is designed to tackle market barriers that often impede commercial building upgrades from going ahead. These barriers include access to the capital to fund upgrade projects, and the split incentive between landlords and tenants in leased buildings, where the building owner incurs the cost of the upgrade, but the tenant receives the benefits through reduced utility bills and improved accommodation. The Building Upgrade Finance mechanism thereby helps to unlock retrofitting activity and realise the associated environmental and economic benefits.
Building Upgrade Finance Scheme Lunch
An event was held on 30 August 2016 to educate the property sector about the Building Upgrade Finance scheme. The event was presented by the Property Council of Australia and supported by the Department of Environment, Water and Natural Resources.
Watch Premier Jay Weatherill’s talk about the Building Upgrade Finance Scheme where he explains what BUF is and where it fits in the broader economic and policy context in South Australia.
Watch the panel discussion below.
The panel featured Martin Haese, Lord Mayor, City of Adelaide, Sandy Pitcher, Chief Executive, Department of Environment, Water and Natural Resources, Scott Bocskay, Chief Executive, Sustainable Melbourne Fund, and Rachael Scott, Treasury Analyst, Eureka Funds Management.
Find out more