Market barriers that have previously prevented owners from improving their buildings' green credentials have been removed with new laws allowing for environmental upgrade agreements.

If you are a building owner, the opportunity may be there for you to improve the energy efficiency of your building through the newly introduced environmental upgrade agreements (EUAs). The agreements can relate to nonresidential or multi-residential strata buildings with 20 or more lots.

Businesses can make use of EUAs to take concrete practical action on climate change that could be consistent with your long- and short-term business plans and corporate social responsibility.

The EUA is a financing mechanism that allows money borrowed for environmental upgrades to be considered as a council charge. This charge becomes a debt that will run with the land, providing additional security for lenders.

An EUA must specify the works to be carried out, the amount to be advanced, and the repayment structure.

The works must reduce energy or water consumption, reduce greenhouse gas emissions, enable the monitoring of environmental quality or encourage alternative methods of transportation.

Parties to the EUA need to work out how they want the charge to be levied – either by a single annual instalment or quarterly instalments or other means.

Strata lot owners will pay increased strata levies, representing their proportion of the charge. The charge may be passed on to tenants depending on whether the lease already allows recovery of any council charge.

Eventual sale of the land with an environmental upgrade charge should also be dealt with in the EUA.

Councils can bring legal proceedings to recover unpaid money and can also sell the affected land if the charges remain outstanding for more than five years.

For advice on entering an EUA, contact Paul Clark


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