How Building Upgrade Finance Works
Enabling Building Upgrade Finance is the Environmental Upgrade Agreement (EUA) contract between the building owner, finance provider and council, where the:
- finance provider provides the finance to the building owner
- Building owner agrees to complete the upgrade works
- Council secures the finance to the land and facilitates repayment to the finance provider through the rates collection processes.
Beneficial finance terms
Council’s involvement in Building Upgrade Finance provides the finance provider with a high level of security. This security enables the finance provider to offer finance with terms more suited to these types of upgrades - long tenor (10-20 years), fixed, competitive interest rate finance. The longer finance tenor increases the likelihood that the savings generated will be greater than the repayments and better match the life of the upgraded equipment.
Under Building Upgrade Finance, the building owner can recover tenant’s savings in outgoings resulting from the upgrade over the life of the finance, without having to re-negotiate leases. These tenant contributions can be used to service the repayments, significantly improving the return on investment.
Tenants in turn benefit from leasing an upgraded building with improved amenity at no additional cost. Once the finance is repaid the tenant receives the direct benefit of reduced outgoings.
The NSW Government has produced two guides for tenant contributions: