How Energy Efficient Is Your Property? Mandatory Disclosure Is Coming

When you sell or lease a property in Australia, there are already many things you are legally required to disclose: zoning, encumbrances, defects in title, building work history. Within the next few years, energy efficiency is set to join that list for residential properties across the country including here in New South Wales.

The policy architecture is now in place. On 6 December 2024, Australia's Energy Ministers released the Home Energy Ratings Disclosure Framework Version 2, a nationally agreed framework setting out how home energy ratings will be measured, disclosed and used when residential properties are sold or leased across Australia. The Framework does not yet impose mandatory obligations in most jurisdictions. But it sets the terms on which mandatory disclosure will operate when it arrives, and the direction of travel is clear.

For property owners, sellers, buyers, landlords and tenants in the Sutherland Shire and across NSW, understanding what is coming and what already applies is not merely a matter of policy interest. It is a matter of practical preparation.

What the Framework Establishes

The Home Energy Ratings Disclosure Framework Version 2 is the product of collaboration between all Commonwealth, state and territory governments, alongside industry and community stakeholders. It builds on an earlier version released in July 2024, which addressed single dwellings, and extends the framework to include apartments and apartment buildings what the National Construction Code classifies as Class 2 buildings.

At its core, the Framework defines how a home's energy performance will be measured and communicated under any future disclosure scheme. The measurement tool is the Nationwide House Energy Rating Scheme, known as NatHERS which provides a star rating for a dwelling's thermal performance and whole-of-home energy use. A NatHERS rating estimates how much heating and cooling a home requires to maintain comfortable indoor temperatures in its local climate, with ratings expressed on a scale of zero to ten stars. The higher the star rating, the less energy required and the lower the expected running costs for occupants.

The Framework sets out the national parameters for disclosure: when ratings must be provided, how they are to be displayed in advertising materials, what form the assessment must take, and how disclosure data should be managed and used. It also addresses the development of a supportive market environment, meaning the training of assessors, the accreditation of assessment tools, and the infrastructure needed to support disclosure at scale.

Implementation, however, remains the responsibility of individual state and territory governments. The Framework does not mandate anything directly. What it does is create a nationally consistent blueprint so that when jurisdictions do legislate, the rules will be comparable and coherent across the country.

The Law That Already Exists: Commercial Buildings

While the residential energy disclosure framework is still developing, energy disclosure obligations for commercial buildings have been in place at the federal level for over a decade.

Under the Building Energy Efficiency Disclosure Act 2010 (Cth) administered through the Commercial Building Disclosure (CBD) Program, most sellers and lessors of commercial office space of 1,000 square metres or more are required to obtain and disclose a Building Energy Efficiency Certificate (BEEC) before the space is offered for sale, lease or sublease. The BEEC comprises two components: a NABERS Energy star rating for the building and a Tenancy Lighting Assessment of the relevant area. The NABERS rating must also be included in all advertising material for the space.

BEECs are valid for 12 months and must be publicly accessible on the government's online Building Energy Efficiency Register. Penalties apply for non-compliance. The threshold was reduced from 2,000 square metres to 1,000 square metres following a 2017 review, which brought a larger number of commercial buildings within the program's reach.

For owners, agents and solicitors involved in commercial property transactions, the BEEC obligation is already a well-established feature of the conveyancing process. For owners of large commercial office space in the Sutherland Shire, whether in Miranda, Caringbah, Sutherland or Cronulla, the obligation to disclose is not prospective. It applies now.

The Existing Model: What the ACT Has Done for 25 Years

The ACT has operated mandatory residential energy efficiency disclosure since March 1999 making it the longest-running scheme of its kind for residential property in Australia. Under the Civil Law (Sale of Residential Property) Act 2003 (ACT), sellers of residential properties in the Territory are required to provide an Energy Efficiency Rating (EER) as part of the sale contract. The EER must be prepared by a licensed building assessor and disclosed in all advertising material for the property.

The ACT scheme operates on a star rating scale and has, over a quarter of a century, produced a measurable shift in market behaviour. Research indicates that energy-efficient properties command a price premium in the ACT market: a study commissioned by the federal government found that a one-star improvement in a property's energy rating was associated with an average increase in market value of approximately three per cent. Compliance with the sale disclosure requirement has been consistently high estimated at around 98 per cent, though compliance in the rental market has been more variable.

The ACT model is the clearest evidence available of what a mature, functioning mandatory residential disclosure scheme looks like in the Australian context. The national Framework released in December 2024 draws explicitly on the ACT's 25 years of experience, and it is no coincidence that the pilot trials currently underway are designed to test how the ACT's lessons can be replicated across different jurisdictions and market conditions.

Where NSW Stands Now

In September 2025, the NSW Government commenced a live trial of home energy ratings with a select group of real estate agencies, in partnership with the Australian Government. The trial tested how NatHERS ratings could be integrated into the standard process of selling, buying and leasing properties, including what training real estate agents require, what information buyers and tenants find most useful, and what barriers exist to broad uptake of ratings in the market.

That trial concluded at the end of 2025. Its findings are informing the NSW Government's decisions about the next phase of the rollout. From mid-2026, the scheme will move into a voluntary disclosure phase, incorporating insights from the trial period. Under voluntary disclosure, property owners and landlords in NSW will be able to choose to include a home energy rating in their listing but will not be required to do so.

A future transition to mandatory disclosure is under consideration, subject to market readiness and evaluation outcomes. If implemented, this would require energy ratings to be publicly disclosed in property advertisements. The timing of that transition has not yet been determined. But the framework is in place, the trial has been conducted, and the policy direction is established. Mandatory disclosure of residential energy efficiency in NSW is a matter of when, not whether.

What this means in practical terms is that buyers and tenants who participate in early voluntary disclosure transactions will begin to develop an expectation that energy ratings are available. As those expectations embed in the market, the case for mandatory disclosure becomes self-reinforcing, and the window for property owners to make energy improvements before ratings become a prominent feature of every listing begins to close.

What a NatHERS Rating Assesses

For property owners who have not previously encountered a NatHERS assessment, it is worth understanding what the rating measures and what it does not.

A NatHERS assessment for an existing home evaluates the dwelling's thermal performance: how well its design, construction and materials maintain comfortable indoor temperatures across the seasons without excessive mechanical heating or cooling. It takes into account the orientation of the dwelling, ceiling and wall insulation, glazing, roof construction, flooring, and local climate data. The outcome is a star rating from zero to ten, where a higher rating indicates a more thermally efficient home.

The assessment does not measure the actual energy bills of previous occupants, which can vary significantly depending on behaviour, appliances and household size. Nor does it account for rooftop solar or battery storage, though a separate "Whole of Home" rating also being developed under NatHERS does incorporate major fixed appliances, solar panels and batteries to give a more comprehensive picture of whole-of-home energy performance.

An important practical point: NatHERS assessments for existing homes have been under development, with Stage 1 of the expanded scheme commencing in July 2025. The assessments must be conducted by an accredited NatHERS assessor. In NSW, ratings produced under the national scheme cannot yet be used to satisfy ACT disclosure requirements. The two schemes, while related in methodology, operate under different regulatory frameworks for now.

What This Means for Property Owners, Sellers and Landlords

For residential property owners in NSW, the immediate practical implication of the December 2024 Framework is that a voluntary disclosure market is forming. Properties with high energy ratings are likely to become increasingly attractive to buyers and tenants who are conscious of running costs, thermal comfort and environmental impact, particularly as energy prices remain a significant household expense and awareness of building performance grows.

Sellers who obtain a NatHERS rating and achieve a strong result have an opportunity to differentiate their property in a competitive market. Sellers whose properties rate poorly are not currently required to disclose that fact, but they should be aware that as market norms shift, the absence of a disclosed rating may itself become a signal that prompts buyers to ask questions.

For landlords and property investors, the direction of policy is particularly relevant. The national Framework and the updated Trajectory for Low Energy Buildings endorsed by Energy Ministers in August 2025 both expressly support mandatory disclosure for rental properties as a key lever for improving the energy performance of existing housing stock. Many renters live in homes that are too hot in summer and too cold in winter, and energy performance disclosure at the point of lease is increasingly understood as a mechanism for addressing that inequality. Landlords who choose to improve the energy performance of their rental properties before disclosure becomes mandatory through insulation, glazing upgrades, draught sealing, or efficient heating and cooling systems may find themselves ahead of the market rather than scrambling to comply.

For buyers, the development of the national Framework is an opportunity. Those currently in the market may wish to ask whether an energy rating is available for any property they are considering and to factor the likely running costs of a thermally inefficient property into their purchase analysis. In time, energy performance will be as standard a consideration in property due diligence as pest and building inspections. Getting into the habit of asking the question now is sound preparation for a market that is changing.

The Conveyancing Dimension

For solicitors and conveyancers, the development of mandatory energy disclosure frameworks raises questions about where disclosure obligations will sit within the contract of sale. The ACT model where the EER is required as part of the sale contract documentation is likely to be an influential precedent for how NSW frames its own obligations when mandatory disclosure is legislated.

In the commercial space, the obligation to provide a valid BEEC is already a standard item in the pre-contract checklist for large office transactions, and failure to comply is a matter of legal consequence, not merely administrative inconvenience. Residential disclosure when it arrives will similarly become a standard element of the conveyancing process that both vendors and their solicitors need to have in hand before a property goes to market.

The time to understand the framework is now, before it becomes mandatory. Properties that are prepared with assessments completed, ratings understood, and decisions made about whether and how to invest in energy improvements will be better positioned to transact efficiently when the compliance landscape shifts.

Shire Legal is a boutique law firm based in Miranda, NSW, specialising in property, business and estates law. This post is intended as general legal information only and does not constitute legal advice. The energy efficiency disclosure framework is evolving at both national and state level; readers should monitor developments through the NSW Department of Climate Change, Energy, the Environment and Water and seek legal advice specific to their circumstances before taking any action.