Companies need to consider reforms to energy performance certificates, writes SUZANNE SUTHERLAND
New energy performance certificate (EPC) regulations are coming into force in Scotland as part of the Energy Performance of Buildings (Scotland) Regulations 2025. Originally due to come into force on 31 October this year, the Scottish Government has recently announced a delay that aligns with the delay to the UK Government’s proposed EPC reforms for England and Wales, and the new regulations are now not likely to take effect until late 2027.
While all Scottish property types will be affected, the focus of this article is on commercial property.
The keys changes that the new regulations will bring are:
EPCs issued under existing regulations become invalid once new regulations are in force.
While a boon for EPC providers, this news will be less enthusiastically greeted by property owners as it means that, although existing EPCs have a 10-year lifespan, even an EPC prepared recently could be rendered obsolete once the new regulations come into force. However, there are grace periods intended to mitigate this cliff-edge in certain circumstances:
- Existing EPCs may continue to be used for properties sold or let within one year of the new regulations coming into force, which is a welcome concession that will enable property transactions that straddle the changeover date to proceed as planned without the requirement to produce one type of EPC at the time of advertising the property for sale/let and a new EPC at completion.
- Under both the existing and new EPC regulations, any property of more than 500 square metres’ floor area (or 250 square metres if occupied by a public authority) and which is frequently visited by the public, is required to continually display a valid EPC. Properties affected can continue to display their existing EPC for 5 years after the new regulations come into force or, if sooner, the date their existing EPC expires. For any such property sold or let during this grace period there is an assumption that the requirement to exhibit a new EPC would cut across this, although the point is not expressly made clear in the regulations
Introduction of a shorter validity period for new EPCs
EPCs prepared under the new regulations will be valid for 5 years, rather than 10 years under the existing regulations. This is to ensure that more up to date information is made available to prospective purchasers/tenants.
Changes to EPC content including ratings and related property report
Additionally, information contained in EPCs is also changing, with new certificates containing:
- An energy performance rating in line with the ratings used in England and Wales.
- An energy use rating based on the kilowatt-hours per square meter per year.
- A direct emissions rating based on the number of kilograms of carbon dioxide equivalent per square meter per year.
- A related property report which sets out information on the primary energy use (for example, gas boiler), measures which could be taken to improve the property’s energy performance and reduce emissions and the estimated costs of such measures.
Costs on the rise for EPCs
Although obtaining an EPC under the existing regulations is not hugely expensive, the need for sellers/landlords to pay for a fresh EPC to be prepared when their existing EPC is still in date, will nonetheless be frustrating. The shorter 5-year validity period will also increase costs for landlords as it’s less likely that a landlord would be able to use the same EPC for successive lettings of a property. There is also a question mark over EPC preparation costs under the new regulations but, given that the new certificates will contain more varied and detailed information than the existing ones, it’s safe to assume that costs are likely to increase.
Future considerations
Property owners will be relieved to hear that nothing in the new EPC regulations imposes additional pro-active requirements to make energy efficiency improvements, nor do the new regulations include any provisions which require properties to meet minimum energy efficiency standards to be sold or let, as is already the case in England and Wales.
However, with minimum energy efficiency standards starting to come into play for domestic properties in Scotland from 2028, it is likely that they will eventually be required for commercial properties too, so owners would be wise to build in energy efficiency improvements into any refurbishment works and ensure that their leases require that their tenants do the same.
For those likely to be impacted by these changes, there is now some additional time to review, plan and take any professional advice required.
Suzanne Sutherland is a legal director at Vialex
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