Building Upgrade Finance
Building Upgrade Finance is a finance product to assist building owners with environmental upgrades to non-residential buildings, and with restoration and upgrades to heritage buildings.
Under Building Upgrade Finance, an agreement between the building owner, finance provider and local council is entered into, where a:
- building owner seeks finance for a building upgrade;
- finance provider lends finance to the building owner;
- council collects repayments from the building owner and transfers them to the finance provider.
The finance structure, including local councils, provides finance providers with additional security that enables unique product benefits, such as:
- long term loans (10-20 years),
- option for fixed interest rates,
- ability to transfer the repayments on sale of land (if all parties agree), and
- the ability to share costs and benefits with tenants.
This is due to the loan being tied to the property, rather than the building owner, through the local government charge (Building Upgrade Charge) used to collect repayments. This means in the event of default this charge is ranked senior to mortgages, taxes and other charges.
More information on Building Upgrade Finance, including successful projects, is on the Building Upgrade Finance website.
Click here to find out which South Australian councils have Building Upgrade Finance available in their local area.For further information please contact: email@example.com.
Building Upgrade Finance is designed to tackle market barriers that often impede non-residential 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. Building Upgrade Finance addresses these barriers by providing 100% project finance for upgrades and enabling tenant contributions to the costs.
The enabling legislation for Building Upgrade Finance in South Australia and the supporting regulations came into operation on 1 August 2017. Similar schemes are established in Victoria (known as Environmental Upgrade Finance) and New South Wales.
There are a number of templates and resources that can assist interested parties to use Building Upgrade Finance. Visit the website for more information.