NSW: How supporting sustainability can save your owners corporation money

NSW: How supporting sustainability can save your owners corporation money

 

Sustainability for commercial buildings has long been on the government’s agenda, with programs like NABERS being a legislative requirement since 2010. Now, NSW is making a significant push to encourage residential strata properties to implement greener infrastructure by reducing red tape and supporting sustainable programs.

Sustainability across Australia is something many people tend to lack the commitment to do something about. So, why should an owners corporation become more sustainable? According to NSW Fair Trading, smart owners corporations recognise the financial benefits in helping the environment with energy and water reduction measures. Many government-backed programs can help reduce energy consumption by 40%, leaving more money in the capital works fund and more money in the pockets of owners.

To help explain why an owners corporation should become more sustainable, PICA Group have put together everything you need to know, including understanding NSW’s new sustainable strata legislation:

  1. Understanding strata energy and water consumption and wastage

  2. New legislation is making it easier for strata to go green and save money 

  3. How to get started on going green 

1. Understanding strata energy and water consumption and wastage

Most people don’t think about the impact residential buildings have on the environment or about improving their building’s environmental impact to save them money and increase property value. What’s more, there are cost-effective measures that vary in complexity, meaning there are energy and water-reducing measures for all types of owners corporations.

Whether your committee is only willing to start with something simple, like lighting upgrades — replacing fluorescent, incandescent, and halogen lights with LEDs. Or, whether they are ready to install a full photovoltaic solar system, working on your building’s sustainability and performance will help save money in your administration fund and wallet.

While it’s all well and good to talk about energy and water reduction methods, it can be hard to get a snapshot of what this means within the specific context of the common property. Likewise, a regular issue for owners corporations is understanding what’s considered excessive water consumption, and how it can be reduced when it’s largely about individual owners. To explain why an owners corporation should become more sustainable, let’s look at energy and water consumption in strata and then breakdown the government’s new regulation.

 

Energy usage and common property

Common property usage depends on the size and type of the building, such as what kind of facilities the building has — lighting types, pools, lifts, gyms. However, up to 60% of an apartment building’s entire energy consumption can be attributed to common property areas. In contrast, simple energy-reducing measures have been found to reduce energy use by 40% or more.

There are multiple ways to reduce energy wastage on common property, including adding variable speed drives (VSD) to any motor or pump system. VSDs make sure that a motor’s electricity output matches the environment it’s trying to control, saving on excessive wastage. Other methods include solar, LED lighting upgrades, sensors and timers on assets requiring electricity, instantaneous gas for hot water systems, pool covers to retain heat and reduce evaporation, and PICA Group’s CommunityUtilities.

CommunityUtilities helps committees and owners reduce the cost of energy by finding competitive energy rates on the market. With an average saving of $3,628 per scheme and a total of $2.5 million saved on the program so far, it’s worth undertaking.

Understanding where most common property energy is used or possibly wasted allows us to identify where sustainable infrastructure can be implemented. The table below reflects average energy patterns and where energy in strata properties is most commonly used.

 

Low rise buildings
Common area asset Common area energy consumption  
Lighting 90%
Heating, ventilation and air conditioning 6%
Other 4%
Medium and high rise buildings
Common area asset Common area energy consumption
Heating, ventilation and air conditioning and pumps 47%
Lighting 27%
Pool 12%
Lifts 8%
Other 6%

Source: NSW Fair Trading & Smart Green Apartments audit

 


Water wastage, an issue for the owners corporation  

Owners also tend to struggle with the question of why an owners corporation should become more sustainable when it comes to water because it’s hard to recognise when usage is excessive. To solve this, Sydney Water now provides the figures to benchmark water usage on properties. Giving owners corporations an indication of how much water usage and wastage is happening.

Sydney Water’s benchmark for water consumption
Category Litres per bedroom per day
High use 300 and higher
Typical 200 to 300
Best practice Less than 200
Unachieved target Less than 130

Source: NSW Fair Trading & Sydney Water

 

 

Water wastage is perceived as something owners corporations can’t control because apartments built in NSW before 2014 don’t have individual meters. Rather, water is paid through the administrative fund and owners then pay via levies which are proportionate to unit entitlement. With 86% of water use occurring in private apartments (and 51.7% being attributed to showers — the single biggest water consumer), it’s seen as a strata variable.

However, there are great initiatives like WaterFix Strata and NABERS that look to incentivise and reduce wastage across the property, including within private lots. WaterFix Strata works by analysing the building’s water history, the number of bedrooms to usage, fixing leaks both on the common property and in private apartments, and installing water efficiency devices. The results can be astounding.

For example, WaterFix Strata assessed a 138-lot building in Sydney’s CBD, the Cassia Garden Residential Apartments, and saved its owners 35 million litres of water; a combined saving of $74,000. WaterFix isn’t just for large strata complexes though. WaterFix Strata also takes on small strata properties, such as a smaller block in Sydney’s Chatswood, where it saved the owners corporation $6,000 a year.

The WaterFix team often finds savings by installing monitors on the tap that connects the property to the main water supply. Here, they can see and access water activity. In the case of the Chatswood apartments, the monitor showed the water supply to the building never dipped to zero, indicating a leak. Then, using a leak detection team, they discovered five substantial leaks: two behind concrete walls inside private lots, two common property tap leaks, and a leaking toilet in a vacant apartment.

2. New legislation is making it easier for strata to go green and save money  

If you’re starting to see why an owners corporation should become more sustainable, now is the best time to get behind it. The NSW Government is making legislative changes to make it easier for an owners corporation to implement sustainability infrastructure and energy reduction methods by amending the Strata Schemes Management Act 2015 (the ‘Act’). The Act is being amended by passing the Strata Schemes Management Amendment (Sustainability Infrastructure) Act 2020 (the ‘Amendment’).

Traditionally, when an owners corporation wanted to introduce a piece of sustainability infrastructure — such as solar panels or something that physically changes part of the common property —  it required a special resolution (no more than 25% votes – by unit entitlement – voting against the motion). It also required the registration of a section 108 and 143 by-law.

The Amendment now, however, allows an owners corporation to vote via a “sustainability infrastructure resolution” which only requires a simple majority vote (50%) from the eligible voters at the general meeting. The new resolution might also have a broad meaning, so that it also relates to financing sustainability infrastructure, or changing the by-laws of the property to benefit the sustainable asset.

 

Legislatively defining sustainable infrastructure

To determine what infrastructure can and cannot be passed under the new sustainability resolution, the Amendment defines sustainable infrastructure as a change to common property that:

  • Increases the efficiency of energy consumption
  • Reduces the use of energy
  • Increases the efficiency and consumption of water
  • Reduces the use of water
  • Reduces or prevents pollution
  • Reduces waste or landfill
  • Increases the recovery of recycling material
  • Reduces greenhouse gas emissions
  • Facilitates the use of sustainable transport, including electric vehicle charging stations.
  • A change to common property includes anything that replaces, modifies, removes, or is installed on the common property allowing the above.

 

Key steps that owners must take to action the new resolutions   

Before an owners corporation vote on the new green-resolution, the Amendment stipulates four key steps and considerations that must be undertaken before its approval.

  1. Ownership of the infrastructure must be clearly defined and identified, including who will own, install, and maintain the asset. For example, will it be part of the common property, or will it belong to a particular owner? The by-law should identify who the owner is and who is responsible for installation and maintenance costs.
  2. The extent to which the infrastructure will be accessible by all or some owners within the owners corporation. This may include setting up a register of how has approved access and when.
  3. The cost of the asset, including any running or maintenance costs, who it impacts, and who pays for it must be decided. For example, if an owners corporation was to implement a sustainable energy-saving device but the device itself requires energy, how will the energy costs of running the device be proportionately shared according to who uses it.
  4. Owners will also have to consider any matters prescribed under the Strata Schemes Management Regulations 2016.

In addition to the Amendment to the Act, the Strata Schemes Management Amendment (Sustainability Infrastructure) Bill 2020 will also include clarifications regarding inspections of records, information for tenants, meeting procedures and adjournments, and proxies. Further amendments are also tabled below.

Further amendments of the Act

 

Section 182 Will be amended to include a provision that the owners corporation is not to make available for inspection any record that would disclose how an owner voted in a secret ballot, unless ordered to do so by the Tribunal or a Court.
Section 186 Clarify section 186 that a lessor or sub-lessor is not required to give the by-laws to a tenant if that tenant has already been given the scheme’s by-laws in accordance with the Residential Tenancies Act 2010.
Section 226 Will be amended to confirm that the owners corporation is a party to Tribunal proceedings in any application made under the Act.
Schedule 1 Will be amended at clause 26 to include provisions confirming that a person who owns more than 1 lot in a strata scheme may appoint a single proxy in respect of all the lots, and that a proxy for a meeting is not rendered invalid merely because the meeting is adjourned to a later date.

Source: Information taken from Bannermans – Sustainability Infrastructure Amendment  

3. How to get started on going green

While implementing sustainability and cost-saving measures can seem daunting and hard work for an owners corporation, there are lots of specialist programs that can help to make the process easy, like NABERS for Apartment Buildings.

NABERS stands for the National Australian Built Environment Rating System and is similar to the mandatory rating system for commercial buildings that became compulsory in 2010. At PICA Group, we are government certified assessors who can walk you through the process of benchmarking your building, identifying areas to save on energy and water wastage, and help to unlock potential savings and increase market value.

What’s more, support for sustainability by the government is heating up and becoming a priority. In August, for example, the NSW Department of Planning, Industry and Environment ran a strata and sustainability infrastructure survey to better understand owners’ experiences when considering sustainability measures. Between legislation changes and the dire environmental need for change, there is talk that measures will eventually become compulsory, making it easier for owners corporations to be on the front foot while also benefiting financially from the process.

So, why should an owners corporation become more sustainable? Because the world desperately needs it, it’s financially rewarding, and because the times they are a-changing.

If you’d like to find out more on maximising savings and driving energy efficiencies, our CommunityUtilities team can help you. Or, for more on how we are supporting sustainability see our CommunityGreen program.

Originally published on 24 August 2020

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