Energy Efficiency Standards for Scottish Rentals | Glaze & Save

With new Minimum Energy Efficiency Standards (MEES) for privately rented properties having been set out by the Scottish Government to come into effect for private properties that are let or re-let on or after the 1st of April 2020, this seems like the perfect opportunity to get some information and advice from an EPC expert to find out just what the new MEES are about, and what impact this will have on the Scottish Private rental sector. We are happy to have Shirley Paterson, founder and energy adviser at NextGenergy, and two times VIBES Award finalist, guest blogging for us this week giving her perspective on the effects we are about to see from MEES in Scotland.

As part of the Scottish Government’s Route Map to Energy Efficiency, landlords must ensure that their properties meet a minimum of Band E on their Energy Performance Certificate (EPC) - from 1st April 2020 this is to apply to new tenancies, and by 31st March 2022 applicable for continuing tenancies.

As someone with a lifelong interest in energy efficiency, this is something of a welcome improvement to Scottish Energy Efficiency standards, bringing us into line with the standards introduced in England and Wales in April 2018.

The introduction of MEES will kick off a progressive series of increases in the standards of rented stock, which will see the Scottish rented sector progressively improving on energy efficiency. The MEES are set to achieve EPC Band D for new tenancies from April 2022, and Band D for continuing tenancies by 2025. Standards will continue to rise with Band C being the minimum by 2040, though there are proposals being consulted on, to bring this goal forward by a decade, to 2030! We will all find out more when the draft regulations are published in 2019. Landlords need not wait for regulation to force the implementation of energy-saving improvements: they can be preparing and acting on this now. The benefits of being ahead of the curve means that compliance is ensured, penalties are avoided, and new tenancies are not prevented from commencing!

The legislation establishing EPCs in Scotland, The Energy Performance of Buildings (Scotland) Regulations 2008, means that EPCs exist for all residential property transactions since 4th January 2009. So, from next year, properties with those early EPCs certified in 2009, will be coming up for renewal, many of which will have been carried out to be compliant for letting purposes. There has also been some discussion about shortening the validity period of EPCs to 5 years, perhaps to even just 3 years. The message is getting stronger, that we must tackle climate change, and reduce our use of energy. MEES is another means to ensure we will be held to account. In future, new tenants and property buyers will be paying much more attention to EPC ratings prior to signing on the dotted line.

I certainly know the benefits of raising the energy efficiency standards of Scottish homes. Long before I even kicked off my career as an Energy Adviser, I embarked on an extensive conversion and improvement of my own property. Having invested in energy efficiency measures and renewable technologies, my family home now sits comfortably with a high B rating on its EPC, with 88 points. The financial result is that my own energy bills are now reduced by 42% per annum: a saving of more than £3,000 per year compared with where they were in 2011! This was achieved through a combination of energy-saving improvements being made to the property which has now also become such a convenient ‘fuel-station’ for our transport too (I’ve been driving an electric car since 2014: together we’ve travelled 64,000 miles!).

For me, investing in energy efficiency and renewable technologies and innovation in my home was a choice, but many private landlords will have their hands forced by the MEES to improve the energy ratings of their properties. For properties which have the lowest standards, Band F or Band G, Scottish landlords could have just a 6-month period in which they are required to bring their property up to the minimum standard. Six months is not a long time in the world of property retrofitting, so the time for landlords to take this seriously is really from now!

For those failing to comply with the deadlines, there will be fines. What those fines will be set at for Scotland, we are yet to find out. They are currently set at up to £5,000 for non-compliance with the law in England and Wales and it is expected that Scotland will introduce similar levels of fine, which can be enforced by local authorities, through their Trading Standards or Environmental Health departments. Landlords will also be obliged to leave their property standing empty if it is in breach of the law, so this is no joke! There are going to be serious repercussions for non-compliance when these regulations are introduced: the time to take action is now!

Since these new standards will apply to most of the homes in the private rented sector, we can expect this to impart some sweeping changes across the country. There will likely be some exceptions, as there are in England and Wales regarding legal, technical or cost implications; but what those exceptions are, and how they are expected to work in practice, will remain a mystery until the draft regulations for Scotland are made available in 2019.

The specific measures which will need to be introduced into your rental property will depend entirely on your EPC. The most common measures tend to be insulations, secondary or double glazing, upgrades to the heating system, and renewables can be applicable of course, which clients can often be dismissive of, without firstly weighing up the costs versus benefits of what those improvements would mean for their unique property, and potentially of financial benefit for them given the Renewable Heat Incentive (RHI). I rarely find a landlord aware of what the Renewable Heat Incentive means: it provides an index-linked incentive income for transitioning off fossil fuel and onto a heat-generating renewable heating system.

So what do landlords need to know about making the biggest impact on your EPC to meet the MEES? As it so often goes, it comes down to implementing the recommendations set out in your EPC. An EPC survey by a Domestic Energy Assessor, and the resulting EPC certificate listing recommendations, can help you form your action plan.

One of my personal bugbears about the EPC in its current form is that it does not list recommendations in any priority order for the client. Recommendations can actually be implemented in any order, and I often need to explain this to clients. An assessor/adviser, upon finding out more about the occupants’ lifestyles and their heating systems, thermostat settings, and appliance use, could offer further advice on which improvements would likely make the greatest impact to their bills and level of comfort in the shortest time. This is something I do myself when working with clients: I can create a scenario of their proposed implementation plan on a copy of their EPC and demonstrate different scenarios with measures that often appear further down the list of EPC recommendations. It is a frustrating thing: often implementing measures which are typically close to the bottom of the list, such as glazing improvements or solar PV, could in fact make the greatest impact on energy bills going forward. I receive plenty of feedback from clients after they have implemented improvements, with them keeping me posted on their energy-saving journeys (of which more than a few have said I’ve inspired!). I also know how much benefit Solar PV Panels, generating electricity, has made to my own home – absolutely nothing to do with the 20-year feed-in tariff income, which is still current and available to apply for until the scheme closes in March 2019. Here I use our solar-generated electricity as car fuel, to help with heating, and for the usual domestic appliances: we use 92% of what our home generates, supplying the grid with our surplus 8% and that likely then gets used by our neighbours!

While we wait for the MEES deadline to come into effect, we can watch and learn from early experience in England and Wales. As matters progress down south, the EPC accreditation bodies will be feeding back their insights and recommendations to us Scottish assessors, and the way forward will become clearer. However one thing that is already obvious is the massive scope for improvements across the board: from property upgrades and energy efficiency ratings, to the tools we assessors currently use in our reporting. I am certainly evidencing examples of innovation in properties, which as yet don’t get reflected in an EPC. Some properties are even storing energy now too, in the form or heat and electricity stationary storage batteries, and even the way I do at home, using my hot water tank to store solar-generated electricity in the form of heated water, reducing my use of fossil fuel to heat water in that tank! These are all innovations that could be better evidenced in the EPC.

MEES could provide an opportunity to elevate the position of energy efficiency in the public’s mind, with the added benefit of improving EPC uptake. This is where landlords can see real added value in using the services of an experienced assessor/adviser. The benefits are all worth looking forward to: my own home story is a testament to that!