The Assessment of Energy Performance of Non-domestic Buildings (Scotland) Regulations 2016 comes in to force on 1 September 2016.
Current legislation requires owners, prior to the sale or lease of their property, to obtain an Energy Performance Certificate (EPC) and exhibit this to the purchaser or a new tenant. From 1 September, owners will also need to provide an Action Plan before selling or leasing the property.
The 2016 Regulations will affect owners of large commercial properties in Scotland (properties with a floor area of over 1000m2 which do not comply with the 2002 and later Scottish Building Standards legislation and which have not been improved under the Green Deal). The Action Plan is to be obtained from a registered advisor and is to be provided by the seller or landlord, to the purchaser or new tenant, free of charge. It should include a programme of improvement measures to reduce energy consumption and greenhouse gases from the buildings. It should also set energy improvement targets for the building.
The 2016 Regulations provide the owner with two options:-
- They can choose to defer carrying out the improvement measures and instead monitor the energy efficiency of the property and annually report on it. If an owner chooses to implement operational rating measures, they must obtain a display energy certificate in a clearly visible place at the property and renew it every year. In the first year, the certificate will estimate the energy consumption and emissions from the building and thereafter record actual consumption and emissions. Although there is no time limit on how long works may be deferred, failure to renew the certificate annually will result in the owner losing the right to defer carrying out the improvement measures and being forced to carry out the necessary works.
- They can choose to carry out the works to the property to improve energy efficiency and reduce emissions. These are only enforced where the energy savings, over a period of 7 years, would exceed the initial cost of the works or where a boiler is more than 15 years old. The works must be completed in 42 months (3 and a half years), and on completion, a document of confirmation of improvement must be registered and a new EPC obtained.
Failure to provide an Action Plan on the sale or rental of the property (or failure to complete improvement works within the required timescale) will result in issue of a penalty charge notice to the owner.
It should be stressed that to allow a sale or lease transaction to progress the only duty on the owner is to produce the Action Plan. Any suggested improvement works do not need to be carried out as a requirement of the transaction proceeding. Where ownership of the property changes, the responsibility under the 2016 Regulations for improvement or reporting will transfer with the interest in the property.
Those considering buying, selling, leasing or funding a building affected by the regulations should take into account the costs of assessing the property and producing an Action Plan. Further consideration also needs to be given to the costs to be incurred in either carrying out the improvement measures or implementing annual reporting of the operational rating.
Nicola McCafferty is a Partner in our Commercial Real Estate team. If you would like further information on this or any other commercial property matter please contact Nicola on 01382 229111, email nmccafferty@thorntons-law.co.uk or contact a member of our Commercial Real Estate team.
