After a long gap, the Scottish Government has recently released
the Energy Performance Regulations introduced under Section 63 of
the Climate Change Act 2009. There has been much speculation in the
commercial property sector as to what the effect of the Regulations
will be on property owners.
The Regulations are in addition to the current requirements to
provide an Energy Performance Certificate (EPC) on the sale or
lease of a building and will come into force on 1 September 2016.
At least initially, they will apply only to larger commercial
buildings (or units within a building) with a floor area of 1,000
m² or more.
There are also a number of exemptions:
Buildings that meet energy standards equivalent to those
introduced by the 2002 Building Regulations
Buildings which do not require an EPC
Buildings that have already undergone improvements via a Green
Deal, a government funding mechanism, are also exempted
The Regulations will apply when such a building is sold or
leased to a new tenant (but not to lease renewals or short leases
of less than 16 weeks) and adopt a different and, arguably softer,
approach to that to be introduced in England (where buildings with
an EPC rating of F or lower will become unlettable). It is
important to note that there is no exemption from these provisions
on the basis that a building is listed.
From September, in addition to an EPC, a property owner must
undertake a further assessment to produce an energy action plan
(EAP) which identifies a programme of measures to improve the
carbon and energy performance of the building. The assessment will
be carried out by a "Section 63 advisor" who will
determine the improvement targets for the building. The targets are
set by reference to seven set measures (currently contained in
Installing draught-stripping to windows and doors
Upgrading lighting controls to include occupancy or
Adding central timer controls to the heating system
Installing an insulation jacket to a hot water tank
Upgrading low energy lighting
Installing insulation in an accessible roof space
Replacing the boiler if it is older than 15 years
The owner cannot be asked to make any improvements which are not
specified on this list. They can however volunteer to make
improvements by taking alternative measures in substitution for
those on the list. Any improvement measures must (in the opinion of
the advisor) be able to pay back the initial cost, through the
reduction of energy consumption, within 7 years. This period is
extended to 15 years in the case of a replacement boiler. Once the
action plan is finalised, the owner can elect either to carry out
the improvements, or may defer them by choosing to formally report
annual energy use, via a Display Energy Certificate or
All action plans and DECs are to be accessible on the Scottish
EPC register, and, as is the case with an EPC, action plans must be
made available to all prospective buyers or tenants. The action
plan must be completed within three and a half years, unless it is
delayed by obtaining a DEC.
Failure to undertake an EAP or to implement its improvements or
display a DEC will result in a penalty charge of £1,000.
While the new Regulations will have an adverse effect on
landlords of older large buildings which may have been constructed
with dated materials, poor insulation and single glazing, they are
not as draconian as some had feared, with landlords being given an
extended period to monitor the energy performance of their
buildings and implement staged improvements.
The material contained in this article is of the nature of
general comment only and does not give advice on any particular
matter. Recipients should not act on the basis of the information
in this e-update without taking appropriate professional advice
upon their own particular circumstances.
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