The provisions, which are borne out of the Scottish Government's commitment to reduce emissions, will come into force via the Assessment of Energy Performance of Non-domestic Buildings (Scotland) Regulations 2016 and the current intention is for those to come into force on 1 September 2016.
Draft regulations were published in January 2016 which will place on the owners of certain Scottish properties an obligation either:
- to carry out certain energy efficiency improvement works within 3½ years or
- to accept an obligation annually to report energy consumption at the property and to keep a Display Energy Certificate (DEC) exhibited at the property.
What properties are affected?
The regulations will apply to any commercial building in Scotland with a floor area of more than 1000 square metres (or 10,764 sq ft), but the following are excluded:
- properties which comply with the 2002 (or more recent) Scottish building regulations as these buildings are already reasonably energy efficient
- properties to which qualifying energy improvements have been carried out under a Green Deal plan
- temporary buildings with an intended time of use of two years or less
- workshops, and
- properties with low energy demand which would include those which are not heated.
What are the obligations under the Regulations?
The owner of an affected building, after obtaining an EPC (on sale or rental), must undertake a further assessment to identify a target for improvement of the carbon and energy performance of the building and then identify, in an ‘Action Plan’, how this target would be met through physical improvements to the property.
Once an Action Plan is agreed the owner can choose to defer the timetable for the physical improvements by instead recording and reporting actual metered energy use via a DEC, on an annual basis. Where the owner chooses to carry out improvements, a period of 3½ years is allowed to do the physical work.
As is the case with an EPC, this Action Plan must be made available to prospective buyers or tenants.
What type of energy efficiency improvements are envisaged?
The improvements required to any particular building will be set by an "assessor". Such improvements can include any of the following as works in the Action Plan:
- 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 or installing insulation in an accessible roof space - if the reduction in cost of energy consumption over 7 years after such works are done would exceed the cost of doing the work
- replacement of a boiler if it is more than 15 years old, and
- any other works, measures or steps (1) to improve the energy performance of the property or (2) to reduce emissions of greenhouse gases produced by or otherwise associated with the property
Alternative to carrying out works
It would seem that once the assessor has inspected the property and produced his draft Action Plan, he would ask the owner whether or not they were prepared to accept the obligation to do the works or if they would rather accept an obligation:
- each year to report the energy consumption associated with the actual use of the property and
- to exhibit a current DEC in a prominent position in the property which will have to be renewed every year, updated to include the previous year's energy consumption data.
The obligation will apply to the owner who commissioned the Action Plan and to future owners.
The obligation to do the works will occur, at any time after the expiry of 3½ years after issue of the first Action Plan if there is no longer a valid DEC for the property. In that case, the deadline to complete the works is the day after the expiry of the last DEC for the property. Therefore, if the owner does not keep up compliance with reporting etc. they will have to do the works (and quickly).
Sale or lease - exceptions
The following will not trigger the obligations under the regulations:
- the renewal of a lease to an existing tenant
- the grant of a lease for 16 weeks or less (which contains no option or obligation to extend for a total period of longer than 16 weeks) in circumstances where the property has not been let by the owner during the preceding 36 weeks
- the grant of a sub lease - although this has still to be clarified by the Scottish Government
- a sale or lease of a property in the course of construction - although this exemption may never be relevant, as such a building would likely comply with the most recent building regulations and so not be affected by the regulations anyway.
Over the next few months, we are likely to see contracts and pre-contract enquiries being amended to take account of these impending new rules.