New Regulations require owners of non-domestic buildings to assess and improve energy efficiency 

The Assessment of Energy Performance of Non-domestic Buildings (Scotland) Regulations 2016 have been published in draft form requiring certain owners of non-domestic buildings to assess and improve energy performance efficiency and reduce greenhouse gas emissions. Guidance notes are awaited but meantime what can owners of affected properties expect if the Regulations come into force on 1 September 2016 as drafted? 

QUALIFYING PROPERTIES 

Initially, the Regulations will apply only to larger non-domestic buildings (minimum floor area of 1000 m²), which do not already comply with at least the 2002 building regulations. Green Deal properties and properties excluded under The Energy Performance of Buildings (Scotland) Regulations 2008 will not be affected. 

QUALIFYING EVENTS 

On the sale or let of an affected building, the owner must produce an action plan for improving the energy efficiency of the property and make this available to buyers and tenants. Uncompleted buildings, short term lets (term less than 16 weeks) and lease renewals are not trigger events.

ACTION PLAN IMPROVEMENTS

Following an assessment by a “section 63 adviser”, the agreed action plan will identify physical improvements which need to be made from a list set down in the Regulations e.g. upgrading heating, lighting and roof insulation. To be included in the action plan the advisor must be satisfied that the cost of those improvements will be recouped (via reduced energy costs) over a 7 year period. The advisor can alternatively or in addition include “alternative improvements” in the action plan, provided they can calculate the reduction in energy consumption and greenhouse emissions if these are carried out. It is hoped guidance will clarify what these improvements can be and will ensure that they are only included where the cost can be recouped in a 7 year period, as the regulations themselves provide no comfort in this regard.

COMPLIANCE PERIOD 

Owners will have 42 months to complete the improvements unless the action plan allows them to defer by monitoring and reporting annually on the operational energy rating of the building. We understand guidance will confirm that it will be the owner’s decision whether to defer and the advisor will simply record this decision in the action plan. The full roles and responsibilities of advisors await clarification in the guidance.

ENFORCEMENT

Local authorities will have powers to impose £1000 penalty charges for failure to provide an action plan or implement improvements.

PRACTICAL ISSUES 

In sales, incoming owners of affected buildings can have a new action plan prepared but the compliance period remains the same as the first action plan. 

In leases, whether the tenant will carry out and/or fund improvements is something which might be negotiated. Landlords should consider whether reserved rights are wide enough to carry out works remembering that, regardless of the contract, the owner is ultimately responsible for the implementation of the action plan.