The Assessment of Energy Performance of Non-Domestic Buildings (Scotland) Regulations 2016 (the Regulations) will come into force in Scotland on 1 September 2016. The Regulations are in pursuance of the Government's target to reduce greenhouse gas emissions by 42% by 2020 and by 80% by 2050.

From 1 September, where an owner of a non-domestic building, or building unit (building), which exceeds 1,000 sq m engages in the sale or lease of that building, that owner will (subject to the exemptions below) be required to have the energy efficiency of that building assessed by a "section 63 advisor", at a cost still to be determined.

The exempted properties are:

  1. buildings constructed in accordance with Schedule 5 to the Building (Scotland) Regulations 2004, the Building Standards (Scotland) Regulations 1990) or later,
  2. any green deal improved properties,
  3. temporary buildings with a planned time of use of two years or less, and
  4. workshops and non-residential agricultural buildings with low energy demand.

The exempt transactions are:

  1. the sale or lease of a building at any time before the construction of that building has been completed;
  2. short term leases (not more than 16 weeks where there is no option to extend or renew), and
  3. the renewal of an existing lease with the same tenant.

Action plan

Once assessed, the section 63 advisor will issue a certificate to be known as an "action plan" which will contain a programme for the implementation of measures to improve its energy efficiency and reduce its greenhouse gas emissions. This will be in addition to the requirement on the owner to have a valid Energy Performance Certificate (EPC).

The Regulations state that improvement measures specified in an action plan may include:-

  1. installing draught stripping to doors and windows;
  2. upgrading lighting controls;
  3. upgrading heating controls;
  4. installing an insulation jacket to a hot water tank;
  5. upgrading low energy lighting;
  6. installation of insulation in an accessible roof space; and
  7. replacement of a boiler (where the boiler to be replaced is more than 15 years old).

The Regulations provide that measures (c) to (f) should only be identified in the action plan where the estimated reduction in the cost of the energy consumed in the building over a period of 7 years after the date on which the measure is carried out would be greater than the cost of carrying out the measure: this is Green Deal mentality.

Where a section 63 advisor in his assessment of a building does not identify any necessary improvement measures, the action plan must contain a statement to this effect. If the action plan prepared does identify improvement measures, the owner must choose whether to complete the improvement works or defer the works and adopt an operational ratings regime.

Deferral

Where an owner decides to defer the works, they must report operational energy ratings (which will be the retrospective energy use measured) by obtaining, registering and displaying in the premises a valid Display Energy Certificate (DEC). A DEC will be valid for a period of one year: should an owner decide to defer works at the end of that year they will need to obtain a fresh DEC. If an owner fails to obtain a DEC on an annual basis, they will lose the right to defer the works.

When issued to an owner, a DEC will be accompanied with an advisory report which will include advice on and cost effective and technically feasible recommendations for the reduction of gas emissions and improvement of energy performance of the building/building unit.

Carrying out works

Where an owner decides to complete the works they must do so within 42 months (the deadline will be on the action plan). Where the improvement measures are completed prior to the expiry of the compliance period, the owner will then need to obtain both an EPC and a document of confirmation of improvement from a section 63 advisor.

Compliance

Local Authorities have been charged with the responsibility of policing owners' compliance with the Regulations.

Click here to view the table.

Where a Local Authority believes that an owner has failed to produce an action plan to a prospective tenant or buyer when required to do so, the Local Authority will only have the power to require the production of an action plan within six months of the last day on which the owner concerned appeared to be subject to the duty to produce the action plan.

Public register

The Regulations state that the energy improvement data from action plans, DECs, advisory reports and documents of confirmation of improvement must be lodged with the Scottish EPC Register. Any energy improvement data compiled by a section 63 advisor must also be lodged with the Register before the relevant document is issued. The registered data will be accessible publicly if the property details and reference number for the document sought are searched against.

Conclusion

In a real estate market which is already suffering from regulation and the effects of the Brexit debate, these additional costs and administrative burdens are unlikely to be welcomed. The Government does however need to be seen politically to be tackling carbon emissions in the business world. Given the arguably low penalties for non-compliance, it is possible that Scottish property owners will try to ignore the Regulations and instead assume the risk of receiving a fine of £1,000 from the Local Authority. Scottish property owners may, however, take some comfort in the fact that the Regulations impose much less onerous obligations than the Minimum Energy Efficiency Regulations due to hit England & Wales shortly (which will make dealing with properties with a sub E EPC rating very difficult).

Detailed guidance on how these Regulations will be applied in practice have been produced by Building Standards, however we would be happy to answer any of your questions in relation to the Regulations or assist you in assessing how these Regulations might affect you from 1 September 2016.