20 December 2016

Section 63 of the Climate Change (Scotland) Act 2009 provides for regulations to be made for (1) the assessment of the energy performance of existing non-domestic buildings and (2) building owners to take steps to improve the energy performance of affected buildings.

Relevant regulations were eventually introduced earlier this year in the form of The Assessment of Energy Performance of Non-domestic Buildings (Scotland) Regulations 2016 (“the Regulations”) which came into effect on 1 September 2016. From that date, owners of affected buildings, on sale or lease, are required to instruct the preparation of an "Action Plan" of measures to improve energy and carbon performance and reduce emissions of greenhouse gases.

The new rules will affect non domestic buildings in Scotland erected prior to 2002 with a floor area greater than 1000 m².

What steps are required?

A new type of building professional, or otherwise “Section 63 Assessor”, must attend the property to prepare the Action Plan. The Assessor will set out in the Plan the prescribed measures required to improve the energy performance of the building. The Action Plan which will be available publically and the recommended measures could include:

• 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
• insulation in an accessible roof space and
• replacement of a boiler. 

Implementing the measures identified in the Action Plan can come at a significant cost and the Regulations provide set timeframes by which these must be addressed by the owner. The building owner’s options are:

• to carry out the improvement measures within 42 months
• to monitor energy consumption 

If opting to monitor energy consumption, the building owner must report on the building's efficiency by producing Display Energy Certificates (DEC). The purpose of this alternative is to provide the building owner with the opportunity to demonstrate improved energy performance through changes other than immediate building improvements. The DEC certificate must be displayed in a clearly visible place at the property and renewed every year. In the first year, the DEC will estimate the energy consumption and emissions from the building and thereafter, record actual consumption and emissions. Failure to renew the DEC annually will result in the owner losing the right to defer and the owner will then be required to carry out the necessary works.

Buildings exempt from the Regulations:

• Buildings constructed to 2002 building standards or more recent standards
• Temporary buildings with a planned time of use of 2 years or less
• Workshops and non-residential agricultural buildings with low energy demand
• Green deal improved properties

Transactions exempt from the Regulations:

• The sale or lease of a building at any time before the construction of the building has been completed.
• The renewal of an existing lease with the same tenant.
• The grant of a "short term lease" (defined as a lease for a period of not more than 16 weeks which does not include any option to extend its duration) where the building has not been let by the owner during the preceding 36 weeks.

If the owner of an affected building fails to provide an Action Plan on sale or rental or complete improvement works, within the required timescale, they will be liable to be issued a penalty charge of £1000. Non-compliance will also hold up transactions involving affected buildings as the purchaser’s or tenant’s representatives will require the Plan to be exhibited at the outset. It is important, therefore, to ensure that in preparation of the marketing of larger buildings or premises, due consideration is given to whether the Regulations apply and if so, to commission an Action Plan.

Further information can be found on the Scottish Government’s website: click here.

Contacts
Scott Buchan, Partner, jsb@bto.co.uk T. 0141 221 8012
Siobhan Agosti, Solicitor, sra@bto.co.uk T. 0141 221 8012