Examining the pros and cons of overhaul of EPC system in Scotland
In the quest for a greener and more sustainable future, the Scottish Government’s ongoing consultation on Domestic Energy Performance Certificates (EPC) reform is a welcome step.
At present, one fifth of Scotland’s greenhouse gas emissions comes from our buildings so improving the efficiency of these buildings is vital if we are to achieve net zero by 2045.
Retrofitting our homes to be more efficient not only lowers emissions but also makes them more comfortable and affordable to heat. However, there is a significant monetary cost required to do this and any retrofit must be thought out and assessed to future proof the building.
As our clients and their tenants closely follow these developments, let’s examine why reform is needed and the pros and cons for both parties.
Why is reform needed?
The current RdSAP methodology that determines an EPC score is undoubtedly flawed. Presently, the EPC score is modelled on running costs meaning a property heated via oil fired central heating scores higher than a property heated via efficient electric heaters. If EPCs are to be used to benchmark efficiency to help reach net zero, they must first improve accuracy and make relevant and suitable recommendations. RdSAP 10 will be released in early 2024 and will be introducing changes to the methodology to improve accuracy.
What do the Scottish Government propose?
The Scottish Government proposes to revise the information on domestic EPCs and expand the current metrics. This would separate the certificate into a Fabric Rating, Cost Rating and Heating System Type along with a separate section consisting of the Emissions Rating and Energy Indicator. This would allow for more accuracy while presenting clearer information. Another important aspect to note is that the proposals include reducing the validity of an EPC from 10 years to 5 years.
Pros for Landlords
Increased Property Value: Stricter EPC standards and an accurate methodology would allow properties to be more energy efficient and cheaper to run. Properties being heated correctly could limit maintenance requirements in regard to condensation issues such as mould and damp.
Compliance with Regulations: In the next few years, there will be a minimum EPC requirement to let residential properties. Though dates have not yet been confirmed having a proactive stance could mitigate any potential penalties in the future.
Cons for Landlords
Upfront Costs: Undertaking energy-efficient improvements requires a financial investment. Landlords might face challenges in covering the initial expenses of retrofitting properties with more efficient technologies.
Tenant Resistance: Installing insulation and new heating systems can be disruptive and may require properties to be vacant while improvements are being carried out. Tenants may be hesitant due to potential disruption during renovation periods.
Pros for Tenants
Reduced Energy Bills: Stricter EPC standards would lead to more energy efficient properties, leading to lower utility bills.
Enhanced Comfort: Being able to heat properties correctly and affordably would reduce the risk of mould and condensation issues in the winter months. This reform could contribute to healthier, cosier home for tenants.
Cons for Tenants
Rent Increases: Due to the significant costs required to retrofit properties, it is likely that rents would need to be increased to help cover the upfront costs.
Limited Choices: Not all landlords will be able to or desire to improve the efficiency of their properties which could see a decline in available properties on the rental market. Rural, stone-built properties may never be able to achieve a high scoring EPC which could lead to an even scarcer supply of rural homes available to rent.
Reforming EPCs could be a significant stride towards creating a more energy efficient future. While the pros and cons are clear for both landlords and tenants, it is crucial to recognise that that retrofitting properties is essential for combating climate change and advancing sustainable living. Though we have focused on residential properties, the consultation also covers commercial buildings.
Home Energy Scotland can provide financial support in some cases for both landlords and tenants. Scotland’s Domestic EPC reform consultation closes on 10th October 2023. If you would like to discuss any of the proposals, please contact Bell Ingram and we will be happy to assist you.
Tel: 01463 717 799
About: Hamish is an experienced RICS Chartered Surveyor and Registered Valuer, working across the Highlands with a focus on rural estate management from traditional sporting estates to diversifications. He is a graduate of Edinburgh Napier University with MSc Real Estate Management and Investment. Interests: Estate Management, Sales & Lettings, Valuations, Domestic Energy Assessments.