With the introduction of new rules from September the Scottish Government is using powers set out in the Climate Change (Scotland) Act 2009 to start to enforce the improvement of energy efficiency in non-residential buildings. There will be an immediate impact for those seeking to sell or lease affected buildings from 1st September.
The approach taken in Scotland is somewhat different to the equivalent arrangements in England and Wales and is also being introduced a little quicker, with the England and Wales provisions intended to be introduced on 1 April 2018.
Action plans for non-domestic buildings
The Assessment of Energy Performance of Non-domestic Buildings (Scotland) Regulations 2016 introduce the requirement for an "action plan" for any non-domestic building of over 1,000 square metres which is to be sold or leased and which does not comply with 2002 or later building standards.
The owner of any building covered by the Regulations who intends to sell or lease the building must get a "Section 63 Assessor" – a specially qualified building professional – to prepare an action plan. The action plan will include the prescribed improvement measures set out in the Regulations and may include alternative measures provided by the assessor. The prescribed improvement measures are:
- installing draught-stripping to doors and windows;
- upgrading lighting controls;
- upgrading heating controls;
- installing an insulation jacket to a hot water tank;
- upgrading low energy lighting;
- installation of insulation in an accessible roof space; and
- replacement of a boiler.
These measures will be recommended if it is estimated, using the approved methodology, that the cost of the works would be paid back within seven years or (in the case of a boiler replacement) if the boiler is more than 15 years old.
The action plan will be publicly available at https://www.scottishepcregister.org.uk/ and must be made available to any prospective purchaser or tenant and then supplied to them if the sale or lease goes ahead.
Once the action plan is prepared the owner of the building has two options. They can either carry out the identified measures within 42 months, or they can opt to monitor energy consumption in the building and publish a "Display Energy Certificate" each year giving this information. The Display Energy Certificate will be publicly available via the website. The intention in introducing this alternative was that the property industry would be able to demonstrate a reduction in energy consumption through behavioural change as an alternative to carrying out building improvements.
When buildings which fall under the Regulations are sold or leased the action plan and Display Energy Certificate will form a key part of due diligence. Lawyers for purchasers will have to consider whether the occupational leases give the owner of the building the necessary powers to implement the action plan or collect the information for the Display Energy Certificate. When new l eases are granted, as well as this triggering the need for an action plan, leases will have to be carefully drafted to take account of the requirements of the Regulations. In some cases the Regulations will undoubtedly create a conflict between landlords, who have to pay for improvements, and tenants, who will benefit from reduced utility bills.
Get in touch
If you would like to discuss the issues raised by the introduction of Assessment of Energy Performance please get in touch with a member of our Real Estate team.
The small print: This blog is for information purposes only and should not be construed in any way as providing legal advice.