Scotland’s commercial property market is
about to be hit with stringent requirements as compulsion looms on
energy efficiency. Sometimes the effects of property legislation only
becomes apparent many years down the line – this is certainly the case
for the EU Energy Performance of Buildings Directive. Whilst legislation
has already been enacted in England, Scotland is somewhat lagging
behind as the deadline for compliance gets closer. The Scottish Energy
Performance Certificate (EPC) regulations are soon to reach consultation
stage and it is vital that property owners understand the implications.
EPCs have been with us for six years and are now entrenched in
commercial property transactions. In 2011 the assessment was reviewed
and tightened up making a greater contribution in requiring property
owners and occupiers to consider energy efficiency when buying, selling
and letting commercial property space. The Scottish Government has
driven the message that property professionals need to embrace the
principles behind EPCs and the first regulatory requirements to do so
are imminent.
Embedded in the Climate Change (Scotland) Act 2009 are provisions
that require the Scottish Government to regulate the assessment and
improvement of energy efficiency within commercial buildings. The
decision to adopt earlier and broader legislation, in contrast to the
enabling legislation contained within the Energy Act for England and
Wales, is notable.
The approach adopted in England will see a property with an EPC
rating of F or below be deemed energy inefficient and will be
unlettable. In Scotland a different approach has been taken. If enacted,
properties that fail to attain energy efficiency standards in line with
2002 building regulations will be required to be improved through the
implementation of Energy Action Plans (EAP). The EAP will require
property owners to carry out the energy efficiency recommendations
contained within the EPC.
There are some exemptions: at first, buildings of less than 1000 sq m
would not be required to be assessed and improved initially although
the size is expected to be decreased over time. EPCs would still be
required for sale or letting for smaller properties. Buildings that
currently meet energy standards equivalent to those introduced by the
2002 Building Regulations will also be granted an exemption as they are
deemed to be efficient and buildings which have implemented the Green
Deal improvements would also be exempt.
The regulations are scheduled for introduction in June 2016, but have
not been fully drafted nor published by the Scottish Government. Due to
this, there remains some uncertainty as to how this will be managed in
practice. An EPC will still be required at the point of sale or lease,
but owners will also be required to prepare the action plan which will
identify a target and set out how the objective will be achieved. It is
expected that the improvements will be undertaken in full over a set
period of time – expected to be three and a half years – or deferred
during which time annual records of actual energy use will be taken.
The timetable for implementation is currently expected to see
parliamentary approval in the autumn of 2015 with implementation in June
2016 at which point the Scottish Government plans to introduce Energy
Action Plans (EAPs) for commercial premises. The implementation of the
regulations will have an immediate impact on the property sector and the
property owners and occupiers who operate in that sector. Whilst the
regulations will initially only affect larger buildings, it is widely
anticipated that the scope of the regulations will be widened to enable
delivery of the Scottish Government’s overarching aim to dramatically
decrease the country’s carbon emissions.
Much of the commercial stock in Scotland was constructed prior to
2002 and as such will currently fall short of the energy efficiency
standards required under the building regulations. The concern
is landlords of buildings constructed with dated building materials,
poor or non-existent insulation, single glazing and obsolete heating
plant would not find it financially viable to spend the capital required
to bring the building up to the new regulatory standards which will
lead to many properties becoming unmarketable. With some of the earliest
EPCs coming up for renewal in less than four years and the new
regulations imposing improvement to buildings due next summer, property
owners must take action now to make sure that their assets do not fall
below the minimum standard.
Information Credit - www.energylegislation.co.uk
