How a NABERS rating affects a commercial property loan: valuation, green loans, disclosure rules, and whether to upgrade before you refinance.
Property Lending Hub
NABERS Rating · Green Loans · Refinance
Does the star rating on your building change what a lender will offer? Rarely on its own, but it shapes the valuation, the leasing story and whether a green loan is on the table. Here is how lenders read it, and when to upgrade before you refinance.
Quick Answer
A NABERS rating rarely makes or breaks a commercial property loan on its own, but valuers and lenders read it as evidence of how easy the building is to lease and how costly it is to run. A strong rating can open green loan pricing where a lender offers it. A weak one can weigh on valuation and refinance, which is why the order of upgrade and refinancing matters.
Also called: NABERS energy rating, green commercial property loan. The first is the rating on the building; the second is the loan product some lenders tie to it.
What is a NABERS rating and which buildings can get one?
A NABERS rating is a government-run star rating of how a building actually performs on energy, water, waste or indoor environment, measured from real operating data rather than from the design drawings. NABERS ratings run from one to six stars, where three stars is average and six is market leading, according to the NABERS Sustainable Finance Criteria (2025, read November 2026).
The program is not only for city office towers. The criteria cover offices, shopping centres, hotels, warehouses and cold stores, apartment buildings and other building types. For a business owner, the rating that matters most in a lending conversation is usually the energy rating, because energy is the running cost a tenant and a valuer both notice first.
Which NABERS rating does a lender care about?
Energy comes first in almost every file. Water, waste and indoor environment ratings exist and can support a leasing campaign, but a lender's credit team rarely asks for them unless a specific green loan product names them as a criterion.
Do lenders check a NABERS rating on a commercial property loan?
Most lenders do not make a NABERS rating a condition of a standard commercial property loan, but the valuer often records it, and its weight grows as the building gets larger and the tenants get more corporate. It is a rating the valuer and the tenant both read, so it feeds the two things a credit team leans on: the value of the security and the reliability of the rent.
A rating works less like a pass mark and more like a ladder. Roughly, this is how each band tends to read:
- One to two stars. Below average. Expect questions about upcoming capital works, how long the tenants are likely to stay and whether the valuer has allowed for obsolescence.
- Three stars. Average. Usually neutral in a standard credit assessment.
- Four to five stars. Above average. Supports the leasing story. Four stars is the floor an upgraded building must reach to use the NABERS upgrade route; the top-15% benchmark for an existing building is higher, 5.5 stars for offices and 4.9 for warehouses and cold stores.
- Six stars. Market leading. More common on newer, larger assets than on the buildings most business owners hold.
For smaller strata offices, warehouses and shops, the rating is often absent altogether, and that is not a problem for a standard loan. The commercial property valuation still turns on the lease, the location and comparable sales. The broader loan mechanics sit in how commercial property loans work.
How do green commercial property loans work?
A green commercial property loan is a standard secured loan with a pricing or term benefit attached, on the condition that the building meets, or is upgraded to meet, a defined sustainability standard, and many lenders use the NABERS criteria to set that standard. They come in two broad shapes.
What counts as a green building for a loan?
The first shape funds a building that already performs well. Under the NABERS Sustainable Finance Criteria (2025, read November 2026), highly sustainable buildings are those in the top 15 per cent of their sector. A lender's green product may reference that band, a minimum star rating, or a mix of both.
What counts as a green upgrade for a loan?
The second shape funds an improvement. A building upgrade qualifies under the criteria with at least a 30 per cent reduction in emissions or water use and a rating of 4.0 stars or more after the upgrade. The criteria also recommend the target be reached within five years, with a NABERS rating each year of the loan, and the lender usually wants evidence of both before the benefit applies.
Three things catch owners out. Green loan pricing, where offered, varies by lender and by building, so the benefit is not a published discount you can count on. The lender typically asks for the rating to be renewed and reported over the loan term, and the benefit can fall away if it lapses (varies by lender). And smaller buildings often sit outside green loan products (varies by lender), because many of them are built around larger assets. If your building is in that group, a well-structured standard commercial property loan is usually the better starting point.
When does an office building have to disclose its energy rating?
Under the Commercial Building Disclosure program, larger office space generally has to disclose its energy rating when it is offered for sale or lease. The floor area threshold and the building types in scope are set by the program and can change, so check its current coverage before you list, buy or lease.
For a lender this matters in two ways. A disclosure requirement means the rating is public, so a buyer or tenant will see it before they commit. And if the program widens to cover more buildings, a rating that nobody looked at before can start to show up in the leasing campaign and the valuation. Owners of smaller office space, such as a strata office or shop, usually sit outside the requirement today, but it is worth knowing where the line is when you plan a hold of several years.
Does a low NABERS rating affect valuation and refinance?
A low NABERS rating can weigh on valuation and refinance when it signals higher running costs, harder leasing or upcoming capital works, and the market calls that gap a brown discount. It is rarely a line item in the valuation report. It tends to show up as a softer rent assumption, a longer allowance for vacancy, or a capital expenditure allowance that pulls the value down.
Because the loan is sized against that value, a lower valuation flows straight into the loan to value ratio. Where a refinance stalls, the rating itself is seldom the reason. The reason is a major tenant who has told the landlord they want a better-performing building at renewal, and the rating is the evidence behind that conversation.
Where a rating tends to help
- Rating at or above average, renewed on time
- Tenants with sustainability targets of their own
- Recent upgrade works with invoices and before and after data
- Valuer notes the rating as supporting rent
Where a low rating tends to stall the file
- Major lease expiring with the tenant asking for upgrades
- Ageing plant and no costed plan to replace it
- Valuer applies a capital works allowance
- Rating lapsed or never obtained on a larger office
If you are already planning a move, the steps in how to refinance a commercial property loan apply here too. The rating simply adds one more piece of evidence the lender and valuer will weigh.
Should you upgrade the rating before you refinance?
Whether you upgrade before you refinance, or refinance and then upgrade, depends on whether the upgrade would change the valuation or the lease position enough to matter to the new lender. Lenders weigh the rent and the tenant first, so the question is whether the upgrade improves either of those before the valuer walks through.
| Situation | What a lender may do | Upgrade-first case | Refinance-as-is case |
|---|---|---|---|
| High rating | Treat it as a positive, and possibly offer a green product where one exists | Rarely needed; keep the rating current | Usually the simple path; ask whether a green product applies |
| Average rating | Usually neutral in the credit assessment | Worth it if works would meet a green product's upgrade test or help a lease renewal | Fine where the lease is long and the tenant is settled |
| Low rating with a costed plan | May accept the plan, may hold back part of the loan or fund the works | Stronger where the works land before a lease renewal or valuation | Useful where the new loan itself funds the works and the valuer sees the plan |
| Low rating without a plan | May apply a capital works allowance or ask hard questions on the tenant | Often the better order if a key lease is close to expiry | Possible, but expect a more conservative valuation |
The cost of borrowing is a separate question from the rating, and it moves with the lender, the loan size and the lease. The commercial property loan rates insight covers what drives that price.
How do owners pay for solar, lighting and HVAC upgrades?
Owners usually pay for solar, lighting and HVAC upgrades through cash reserves, extra borrowing against the property, equipment finance on the plant itself, or a green upgrade loan where the building fits the criteria. Each has a different effect on the main loan:
- Cash or business reserves. The simplest route, and it leaves the property loan untouched.
- Equity from the property. A top-up or commercial property equity release can fund the works, subject to the new valuation and the lender's serviceability test. See equity release for the basics.
- Equipment finance. Solar systems, batteries and some plant can often be financed as equipment, secured on the asset rather than the building, so the property loan stays as it is.
- Environmental upgrade agreements. In some states and councils, works can be funded through an agreement repaid by a charge on the property. Availability, terms and whether your existing lender must consent all vary, so ask before you sign.
- Green upgrade loans. Where the works would meet the upgrade test above, a green product may fund them, typically with evidence of the before and after ratings.
In our own files, the cleanest upgrades are the ones costed before the refinance conversation starts, so the valuer and the lender see one plan rather than two separate requests.
How do you get a NABERS rating, and what about Green Star?
You get a NABERS rating by engaging an accredited assessor, who typically uses around twelve months of utility data and details of the building to calculate the rating, which NABERS then certifies and which generally needs renewing each year. The NABERS criteria set out how those ratings are used for finance.
Green Star is a different scheme, run by the Green Building Council of Australia, and it rates a building's design, construction and operation more broadly. Some green loan products accept either scheme, others name one (varies by lender). For a business owner deciding where to start, the NABERS energy rating is usually the faster and cheaper evidence, because it measures how the building already runs.
If you own your premises and want to know how a rating, a planned upgrade or a refinance fits your wider position, the Business Owners Hub and the Property Lending Hub link the rest of the commercial property guides.
A NABERS rating is evidence, not a verdict. Lenders rarely require one on a standard commercial property loan, but valuers and tenants read it, and that flows into value, rent and refinance. Strong ratings can open green loan products where offered; weak ones can carry a brown discount, most of all near a major lease renewal. The real decision is the order: upgrade first when the works would change the valuation or the lease, refinance first when the new loan can fund a costed plan.
Key takeaway: cost the upgrade before you start the refinance, so the valuer and the lender assess one plan.Frequently Asked Questions
Some banks and other lenders give a pricing benefit for NABERS rated buildings, but usually only through a specific green loan product and only where the building meets that product's criteria. The size of any benefit varies by lender and by building, and it is not a published discount you can rely on. Smaller buildings often sit outside these products, so a standard commercial property loan is often the better comparison.
A NABERS rating can apply to warehouses, because the program covers warehouses and cold stores alongside offices, shopping centres and hotels. Most lenders do not ask for one on a standard warehouse loan, where the lease and location carry more weight. The lending side of these assets is covered in industrial and warehouse property finance.
A brown discount is the lower value a building can carry when its energy performance is poor, because buyers and tenants expect higher running costs or upgrade works. It rarely appears as a single line in a valuation and usually shows up as softer rent, a longer vacancy allowance or a capital works allowance. See what a commercial valuation tests for how those assumptions are set.
A NABERS energy rating is generally mandatory to disclose when larger office space is offered for lease or sale, under the Commercial Building Disclosure program. Smaller office space usually sits outside the requirement today, and the scope can change, so check the program's current coverage. Smaller owners can start with buying a strata office or shop.
You can refinance a commercial building with a low NABERS rating, and most refinances turn on the lease, the tenant and the valuation rather than the rating itself. A low rating matters most when a major lease is close to renewal or the valuer allows for upgrade works. A costed upgrade plan helps, and the process is set out in how to refinance a commercial property loan.
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