New changes to the energy performance of buildings regime (and more to follow)

On 1 October 2012, regulations amending the Energy Performance of Buildings (Scotland) Regulations 2008 (the 2008 Regulations) will come into force.  These amendment regulations are being introduced to implement provisions of Directive 2010/31/EU (the Directive) on the energy performance of buildings and will result in changes to the regime applicable to Energy Performance Certificates (EPCs).

Changes being introduced

From 1 October 2012:
Square Building Units: the 2008 Regulations will be amended to cover both "buildings" and "building units" in accordance with the Directive.  A building unit is defined in the Directive as "a section, floor or apartment within a building which is designed or altered to be used separately".
Square Actual Buyer or Tenant: a copy of the EPC and recommendations report will need to be provided to the actual buyer or tenant when a building or building unit is sold or let, in addition to making it available for inspection for prospective purchasers and tenants.  The amendments also make it clear that an EPC is not required for a renewal of an existing lease with the same tenant although they are silent in respect of assignations.
Square Contents of EPCs: EPCs must also now include (i) energy performance indicators (an indication of energy efficiency on a sliding scale of A to G), (ii) an indicator of primary energy use and (iii) cost effective and technically feasible recommendations for improving energy performance.
Square Recommendations Report: a recommendations report must also be produced, and registered along with the data in the EPC, which includes detailed information on the cost effectiveness of the recommendations in the EPC and the steps to be taken to implement those recommendations.
Square Approval to Issue EPCs: EPCs are to be issued by a qualified member of an organisation approved by the Scottish Ministers to issue EPCs for the category of building or building unit – the alternative of having the EPC accepted by a verifier following submission of a completion certificate is no longer available.
Square Representative Building Units and Houses: an EPC for a building unit may be based on the assessment of another building unit in the same building with the same "energy-relevant characteristics".  An EPC for a house may be based on the assessment of an alternative house of "similar design, size and actual energy performance quality" where the member of an approved organisation issuing the EPC has confirmed in writing that this is the case.
Square Registration Fees: fees will be introduced for the registration of data from which EPCs and recommendations reports can be produced.  The fees will be set at £1.15 for dwellings and £5.36 for oter buildings.
From 9 January 2013:
Square Marketing Property: when a building or building unit is offered for sale or let, the owner of that building or building unit must ensure that the advertisement states the energy performance indicator.
Square Displaying EPCs: the owner or occupier of a building frequently visited by the public with a floor area greater than 500m2 must ensure that an EPC, if one has been issued, is displayed within the building in a prominent place clearly visible to visiting members of the public.  The requirements for buildings occupied public authorities are slightly different; where the floor area is greater than 500m2 the EPC must be displayed before 9 July 2015, and where the floor area is greater than 250m2 the EPC must be displayed on or after 9 July 2015.
Square Penalties: penalties will be introduced for a failure to state the energy performance indicator when advertising a property and for a failure to display an EPC when required.  The penalties are £500 for dwellings, or buildings or building units attached to dwellings, and £1,000 in any other case.
The Scottish Ministers are also required to approve a methodology of calculation of the energy performance of buildings based on the framework set out in the Directive although no timescale is provided for this.

There are other issues which are notable for their absence in the amendment regulations.  Perhaps most notably, there is no requirement to implement the steps set out in the recommendations report.  We also understand that there no imminent plans to introduce regulations under section 63 or 64 of the Climate Change (Scotland) Act 2009 requiring owners to take steps, identified by energy performance assessments, to improve energy performance, or under section 55 or 61 of the Energy Act 2011 requiring landlords to make energy efficiency improvements to a property before that property can be let.

Regulations under the provisions mentioned above would give more force to the recommendations report but the Scottish Ministers are understandably reluctant to over-burden property owners in the current market.

There are still plans to introduce regulations under section 63 of the Climate Change (Scotland) Act 2009, as highlighted in our January edition of Public Aye, although it is likely to be some point next year before they are introduced.  The proposals in their current form will require an EPC, recommendations report and action plan to be exhibited to the purchaser or tenant on a sale, lease or lease renewal for a non-domestic property.  It will be interesting to see whether the proposals will be amended to include an exception to this requirement, similar to the one in the amended 2008 Regulations, where there is a renewal of an existing lease with the same tenant.

It is intended that the measures in the action plan will be optional but if improvement works are not undertaken there will be an option to measure, report and display an operational rating.  Full mandatory implementation is likely to be included at some point in the future, although there are no timescales as yet.

Exemptions from the section 63 regulations are expected for owners participating in the Green Deal and for buildings which are constructed to 2002 or later building standards, or can demonstrate equivalence with 2002 energy standards.

With additional requirements relating to the energy performance of buildings likely to be introduced in a phased manner, the amendments to the 2008 Regulations are only likely to be the latest in what will be a steady stream of energy performance legislation in the forthcoming years.