Property trusts capitalise on new finance for building retrofits

A change in Victorian legislation will allow property trusts to gain access to finance for environmental upgrades, significantly increasing opportunities to retrofit buildings in Melbourne’s city centre.

The amendment to the City of Melbourne Act will permit property trusts to enter into environmental upgrade agreements which link local government charging powers to the lending capacities of financial institutions. Melbourne’s property trusts can now secure capital from financial institutions at competitive rates, for up to 10 years, to be repaid through a council charge that stays with the retrofitted building.

While property trusts account for only 10% of commercial building owners within the City of Melbourne, they hold 42% of the city’s total lettable space. Lord Mayor Robert Doyle said this change in legislation provides enormous opportunity for property trusts to transform many of Melbourne’s commercial buildings.

“We want to ensure that as many buildings as possible have the chance to take up the opportunity to retrofit their buildings and reap the environmental and financial benefits. That is why we went back to the government and asked for further legislative change. I am delighted that the state government approved the amendment and that the Minister for Local Government, the Hon Jeanette Powell MP, shares our vision for the potential value it can deliver for the commercial building industry,” the Lord Mayor said.

“Property trusts are well equipped to undertake building retrofits and this legislative amendment will enable this group of sophisticated building owners to reduce energy and water use and lower carbon emissions in our city.

“When we signed our first agreement last year under the 1200 Buildings program, we demonstrated that Melbourne is committed to supporting the retrofitting market. This change in legislation is another important step forward in ensuring the environmental sustainability for our city well into the future.”

Sustainable Melbourne Fund administers environmental upgrade finance on behalf of the City of Melbourne. Sustainable Melbourne Fund Chief Executive Scott Bocskay said the change in legislation meant that all commercial building owners in the City of Melbourne could now take advantage of a world-leading financial mechanism.

City of Melbourne has a goal to become carbon neutral by 2020. The 1200 Buildings program targets 50% of the city’s greenhouse gas emissions, generated by the commercial sector.