Compulsory energy efficiency improvements for Scottish commercial property
New regulations are to be issued in Scotland (under the Climate Change (Scotland) Act 2009), designed to improve the energy efficiency of older Scottish commercial properties. Until last month, we had no confirmed date for when these regulations would be operational. The Scottish Government's March 2015 announcement sets out their timetable; the current intention is to bring the new regulations into force in June 2016.
The Inter UK Law Comparison section of our website includes a section on these proposed new regulations - which will apply to commercial property with a floor area of more than 1000 sq m (or 10,764 sq ft) which do not comply, at minimum, with the 2002 Scottish building regulations.
In a nutshell the regulations provide that:
- Any property that does not comply cannot be sold or let until an action plan is in place for energy efficiency improvements - and the owner has chosen whether to carry out the improvement works or to take on the obligation annually to report certain energy data relative to the property.
- If the owner opts to carry out the works, they must be done within 3½ years.
- If the owner opts to report the data, the obligation to do this will continue until the works are done.
More detail will be available once the draft Scottish climate change regulations are published in August/September 2015.
At the moment, the Scottish Government intend that these regulations will be used instead of the powers available to Holyrood under the Energy Act 2011 to prohibit the letting of buildings with an EPC rating of F or G. This prohibition will apply in England from 1 April 2018 - as explained in our Inter UK Law Comparison section on EPCs.
Similar climate change regulations are also to be put in place by the Scottish Government for residential property (under S64 of the Act) - but no timetable has yet been published for this.
Flood Re insurance scheme
Last year, Steven Thomson discussed various flood risk issues, including the proposed new Flood Re insurance scheme which will cover domestic property. This is the scheme that will replace the existing arrangements that are in place between the UK Government and the Association of British Insurers, to ensure that those whose homes are at high risk of flooding can still (generally) obtain flood risk insurance at a tolerable cost.
Draft regulations for the new Flood Re scheme were issued last month. The explanatory memorandum that accompanies the two draft instruments is an easier read than the regulations themselves.
The scheme will come into force on 1 April 2016. Some important points to keep in mind are:
- As with the current arrangements, Flood Re will apply only to residential or domestic property - not to commercial property. Buy to let property and blocks of 4 or more flats are considered to be commercial property for these purposes.
- In addition to the commercial property exclusion, homes built after 1 January 2009 and those that are let out will not be covered. The owners and tenants of such excluded property, situated in any area that is at a high risk of flooding, could find it increasingly difficult and/or expensive to obtain insurance against the risk of damage or other loss caused by flooding. This might have an impact on the market value of such property. In severe cases, the property could be unsellable.
- The previous proposed exclusion of homes in the top council tax band (H) has been dropped, but the premiums charged to insure such homes may be higher than those for properties in the lower bands.
- Contrary to expectations there will be no limit on the excesses that insurers might apply to flood claims or on the conditions that insurance companies might impose on flood cover (including obligations to install flood protection measures). So, although flood risk insurance should still be able to be secured (at a bearable premium) for qualifying at risk properties, there could be extra costs associated with getting the cover and a lower pay out if there is a claim.