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Barnett Waddingham
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Energy performance of Scottish properties

Why you need to review SIPP and SSAS commercial properties now

There is renewed focus on the energy performance of commercial properties across most of the UK.  The Scottish government, using its ability to introduce its own laws and following on from its stance on leading Europe in terms of carbon reduction, has set its own new regime.  

Forthcoming legislative changes

“The Scottish government hope that the new regulations will help to build a picture of whether (and how) buildings in Scotland are becoming more energy efficient … or not.”

Section 63 Legislation, which is being brought in under the Climate Change (Scotland) Act 2009, will apply from 1 September 2016.  It applies to commercial properties with a floor area of more than 1,000m2 and will be triggered by either a sale or a lease to a new tenant.

What if I also own commercial property in England or Wales?

New minimum energy efficiency standards apply in England and Wales, based around energy performance certificates (EPCs) and a property’s rating.  You can read more about that regime and what you need to do here.  The intent is broadly similar to Scotland’s but the regime has notable differences.  Northern Ireland is currently out of scope.

What you have to do

Where the regulations apply*, the property owner must undertake further assessments to produce an ‘Action Plan’, which identifies targets for improvement of the carbon and energy performance through physical improvements to the property.  Action plans have to be produced by a registered Section 63 Adviser.  Assessors on the Chartered Institute of Building Services Engineers’ (CIBSE) and the Low Carbon Energy Assessors’ Scottish registers will qualify.

Fix or defer

Once the Action Plan has been produced the property owner can choose to either carry out the improvements within the mandatory timeframe or to defer these by reporting the actual energy used, which must be recorded via a Display Energy Certificate (DEC).  All Action Plans and DECs must be lodged on the Scottish EPC Register and copies made available to prospective buyers or tenants of the property free of charge.  The new rules will be enforced by local authorities with a system of fines for non-compliance. 

“The results of this are likely to determine whether further legislation is introduced to require building owners to take a more active role in improving their property’s energy efficiency rating.”

The Scottish government hope that the new regulations will help to build a picture of whether (and how) buildings in Scotland are becoming more energy efficient … or not.  The results of this are likely to determine whether further legislation is introduced to require building owners to take a more active role in improving their property’s energy efficiency rating.

How will I know?

For an EPC to be valid it must be stored on the appropriate EPC Register for the property’s location and type.  These registers can be searched using the property’s postcode so the easiest way to determine whether or not a valid EPC exists for your property is to check online:

EPC Register for Scotland

While you’ve got the drains up

It is worth taking a moment to review the property in general.  It is possible, for instance, that the property has never been revalued, which may be a problem on a number of fronts.  For instance, if its reinstatement value for insurance purposes is too low then, were disaster to strike the property, it could have an equally devastating effect on retirement plans. 

It would also be sensible to review the commercial property insurance to check that this provides adequate cover and value for money.  Using our experience in commercial property matters and our buying power, we have arranged a block insurance policy.  Please contact your usual client manager if you would like further details and a quote.

This article was written by Andy Leggett

There are only limited exemptions.  In simplified terms, they are for:

  • properties with a floor area of 1,000m2 or less
  • properties that meet or exceed building standards from 2002 onwards
  • sale or lease prior to finishing initial construction
  • certain short-term leases
  • renewing an existing lease with the same tenant

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