What is the regulatory picture?
The Scottish Government’s 2021 Heat in Buildings Strategy introduced an ambitious set of goals. Currently, nothing is in force, though a new Heat in Buildings Bill Consultation has just been released. The results of the consultation will be debated in Parliament next year (2024).
The former 2021 Strategy stated requirements for:
Domestic Private Rented Accommodation: to achieve an EPC rating of C or better by 2025, with a backstop of 2028.
Owner/Occupied Housing: properties to achieve an EPC rating of C or better by 2033, with the proposed introduction of regulations sometime between 2023-25.
Social Housing: EPC rating B or better by December 2032
Mixed Tenure: EPC rating C or better by 2040-45 together with installation of a zero emissions heating supply.
Non-domestic: A looser, phased approach is stated with no fixed commitments.
The Heat in Buildings Bill consultation (2023):
The latest consultation places a lot less stress on the EPC rating, instead suggesting a list of ‘Energy Efficiency Measures’ which are in most cases achievable, though both the content of this list and how compliance will be assessed is going to be up for debate. Most of the focus of the Bill consultation is on phasing out ‘polluting heating systems’ (i.e. gas, oil & LPG):
Prohibition of the use of polluting heating from 2045
Local Authorities will publish Local Heat and Energy Efficiency Strategies (LHEES) identifying obvious Heat Network Opportunities.
Requirement of the owner/occupier to meet a minimum energy efficiency standard by the end of 2033.
Requirement for private domestic landlords to meet a minimum energy standard by the end of 2028.
Exemptions
Where not technically or financially feasible, the 2021 Strategy states ‘a minimum level of fabric energy performance through improvement to walls, roof, floor and windows, as recommended in the EPC, would apply.’ They also state they are working together with Historic Environment Scotland to develop an approach to historic buildings.
The latest Bill consultation suggests some buildings, owners and circumstances may be exempted from some or all Energy Efficiency Measures, and spending caps may be applicable, though compensatory measures may be made to apply (another matter for debate by Parliament). How these exemptions are qualified and regulated is to be seen.
Mortgage Lenders
Some banks are adopting a voluntary target to meet a portfolio average of EPC rating C by 2030. We can already see the impact of this on comparison sites, where EPC ratings are affecting the LTV ratio available on mortgages.
The current Bill Consultation suggests banks / building societies / building insurers may have a role to play in monitoring and enforcing compliance. This does seem to be the most feasible option as it will be the least costly to the government – and so, in our view, the most likely to be adopted.
Our concern with this is how the grey matter of exemptions are dealt with in the marketplace. Who /how/what procedure is responsible for qualifying exemptions in this case?
Affect on Property Values
The Bill consultation suggests the point of sale of a domestic property is when the requirement for transition to a non-polluting heating system may be made to apply, with a ‘grace period’ allowed for making the transition of a few years (yet to be decided upon). Inevitably, these costs are likely to be transferred to the seller during the sale negotiation.
In comparison to the 2021 Heat in Buildings Strategy, the Bill consultation suggests much less stringent energy efficiency measures which are more achievable. However, without first improving the energy efficiency of buildings, operational costs for any ‘non-polluting’ heating system are likely to be prohibitive.
This will impact most hard-to-insulate properties, in many cases our historic and traditional building stock.
Conclusions
In the Bill consultation, the Government seems to have shifted its focus away from energy efficiency towards implementation of low-carbon heating systems. This may be because it is a more achievable target and ticks the ‘lower carbon emissions’ box.
As Architects, we would still always recommend the ‘fabric first’ approach; from an ecological standpoint the primary focus should be on reducing energy consumption at source. Solutions like insulating your roof or floor are generally low-tech and won’t require renewal or maintenance. In any retrofit strategy a ‘whole building’ approach has to be taken: A knee-jerk response to compliance can lead to unintended consequences; causing building decay and health issues to inhabitants.
Regarding the Bill, we are hopeful that a clear energy efficiency measures strategy will be adopted together with a robust assessment process for implementation and/or application of exemptions, with qualified recognition that will filter through to the market place (and therefore be acknowledged by banks, insurers and building societies).
All the above is a matter of opinion, and to be taken as such! Baineach Architects LLP take no responsibility for any actions resulting from individual interpretations of what we write in our blog posts. If you need any specific advice on your site or building you are welcome to contact us.