Offices being sold or leased with 2,000 sqm or more must now obtain a BEEC - Building Energy Efficiency Certificate - before marketing the property. The BEEC will include a NABERS rating. Now, this is fine for commercial premises but what about our homes? Should energy efficient disclosure be mandated for the sale (and even for residential leases) of residential premises? This question is now being asked by key stakeholders.
The Property Law Commitee of the Law Society of NSW has submitted that should mandatory disclosure be introduced, it should be required at the marketing stage rather than as a required document for a contract for sale. They further submitted that currently there is no demand by parties to know the energy performance of residential property and thus no real demand for disclosure. In other words, the lack of awareness about the energy efficiency of houses and units is not currently a transparency/lack of information problem affecting the market.
So if mandatory energy disclosure was brought in for the marketing stage, what would it look like? Currently, the agent cannot market a residential property without having a draft contract available. If the energy disclosure became mandatory, then an agent would have to have both a contract and a energy efficiency certificate available to potential buyers. But the energy efficiency certificate (in whatever form that it would take) would not form part of the contract.
Energy disclosure is not currently required for residential properties. But should vendors still consider obtaining one as part of marketing their property? Interesting question.Well, it would be a bit like having a pest/strata/survey report available from the agent for prospective purchasers. The benefit is that you are making it easy for the purchaser to make the decision to buy; you are removing more of their doubts about the property and helping them arrive at a price that they are prepared to pay.
Energy prices over the last 12 months have increased significantly. One wonders whether energy disclosure might give purchasers some comfort into the future, knowing that they are aware of what their new house can do when it comes to energy usage. However, there is a fly in the ointment. What if your home's energy rating is terrible? Well, that may affect the price. It may not be in your interest to disclose your energy rating if you are in an older house that has no insulation, faces west, poor ventilation and has gaps for cold and hot air to escape in every wall and floor.
So you can see that there are two sides to the coin. Energy disclosure will benefit purchasers in giving them the information to make an appropriate offer but it will penalise vendors with poor performing properties. Vendors who improve their house design and energy performance will benefit from increased sales prices as energy usage becomes a more important factor in the buyer's mind. Energy disclosure is not mandatory, yet. But the astute home owner will be preparing now, in readiness for likely disclosure requirements in the future.
