Section 63 Legislation
In addition to the current EPC regulations, as of the 1st September 2016, the new energy regulations require further action to assess and improve energy efficiency and reduce the associated greenhouse gases for buildings in excess of 1,000 sqm.
The owner will be targeted to reduce emissions through identifying and carrying out improvement works agreed in an Action Plan (Section 63). The Action Plan is in addition to the EPC assessment and there is a legal requirement to carry out the specified improvement measures within three and half years or defer the improvements annually by use of a Display Energy Certificate (DEC).
These new regulations will have implications when selling and letting property, one of which is the transfer of responsibility of the Action Plan to the new Owner or Tenant.
What do the regulations require?
The owner of the building must undertake a further assessment to produce an ‘Action Plan’ which identifies targets for improvement of the carbon and energy performance of the building and how these targets would be met through physical improvements to the property. Once an Action Plan is finalised, the owner can choose to improve or to defer the improvements by reporting operational energy ratings (actual measured energy use via a Display Energy Certificate or ‘DEC’) on an annual basis. All Action Plans and DECs are lodged to the Scottish EPC Register.
As is the case with an EPC, the Action Plan must be made available to prospective buyers or tenants and provided to the new owner or tenant. Provision of the Action Plan is all that is required to enable marketing of the property.
Who is responsible for the Section 63 Action Plan?
The regulations require ‘owners’ of such buildings to take steps identified by such assessments. Interpretation of this will evolve and it may be that where a lease refers to the tenant being responsible for statutory regulations then they may be liable for dealing with the result of an Action Plan through improvements or carrying out an annual Display Energy Certificate (DEC).
What buildings are not in the scope of the legislation?
- Action to assess and improve/report will not apply to buildings <1,000 sqm
- If the buildings meets the 2002 Buildings Energy Standards
- If the Building is temporary or has a remaining lifespan of <2 years
- If the Building is not conditioned for Heating or Cooling
- Prisons and young offenders institutions are also exempt
The Section 63 Action Plan
The Section 63 Action Plan document identifies targets in 7 areas to reduce the carbon consumption and energy performance and how these targets would be met through physical improvements to the property. There are two types of Action Plans, ‘Prescriptive and Alternative’ the Section 63 Advisor will highlight where these will be applicable and provide cost implications and if required look for alternative measure
Display Energy Certificates (DEC)
The operational rating is a numeric indicator of the amount of energy consumed during the occupation of the building over a period of 12 months, based on meter readings. The indicators of operational performance are annual carbon dioxide emission per unit of area of the building caused by its consumption of energy, compared to a value that would be considered typical for the particular type of building.
- The issue of a DEC will allow the owner to defer making the physical improvements outlined in the Action Plan indefinitely.
- The DEC is only valid for 12 months from the date of issue and therefore, will need to be revised every year.
- Once the DEC lapses the Action plan will automatically come into effect and the Physical Improvements must be made in the remainder of the 3.5year plan.
What must the Owner do?
The owner of the building, after obtaining an EPC and the if the EPC highlights the property is subject to the ‘Section 63 Legislation’ must undertake a further assessment to identify CO2 and Energy Performance targets for the Section 63 Action Plan, and how the targets can be met through physical improvements to the property.
Once the Action Plan is agreed the owner has the option to defer the physical improvements by arranging to record and report the Operational Rating of the property by use of a Display Energy Certificate (DEC) this option is only available in the first year for Action Plan.
As with an EPC, the Action Plan is also lodged with the Energy Savings Trust (EST), the Action Plan must then be made available to the prospective Buyers or Tenants as part of the marketing of the property.
Where the owner chooses to carry out the improvements, a period of 3.5 years (42 weeks) is allowed to complete the physical improvements.
If the owner carries out the necessary improvement the Section 63 Advisor is required to update the record with the improvements against the Action Plan and re-lodge the completed Action Plan on the Scottish EST Database.