COP29

How is energy efficiency being mandated across the different UK jurisdictions?

COP29 is a reminder of the importance of taking action to tackle climate change. Ensuring that properties are energy efficient is one step that all owners and occupiers can take on this journey. But the legal requirements across the UK jurisdictions differ, leaving portfolio owners having to implement different regimes across their properties.

England and Wales

In England and Wales, since 1 April 2018, under The Energy Efficiency (Private Rented Property)(England and Wales) Regulations 2015 (the MEES Regulations), it has been unlawful to grant a new tenancy of a non-domestic property with an EPC rating of below E, unless an exemption applies and has been registered. This prohibition was extended to encompass existing tenancies of non-domestic properties from 1 April 2023. The expectation is that the minimum EPC rating will increase – to C in 2027, and then B in 2030 – although the response to the consultation proposing these increased minimum standards is still awaited.

Scotland

In Scotland, there is no equivalent to the MEES Regulations, and there is no minimum standard for ECP ratings in Scotland. Whilst the Scottish Government have committed to achieving net zero efficiency by 2045 through the enactment of the Climate Change (Emissions Reduction Targets) (Scotland) Act 2019, this does not specify steps to be taken in respect of energy efficiency for buildings.

The closest approximation to MEES in Scotland is in section 63 of the Climate Change (Scotland) Act 2009, and the Assessment of Energy Performance of Non-Domestic Buildings (Scotland) Regulations 2016, which are applicable to commercial buildings which exceed 1000m2 in size. Whilst no minimum EPC rating is prescribed by this Scottish legislation, unless a qualifying building is compliant with standards set by the 2002 (or later) Scottish Buildings Regulations, or is otherwise classed as exempt (for example because the building is a temporary one, or because it forms part of a green deal scheme), then an Action Plan is required to accompany an EPC.

The Action Plan sets out recommended improvement measures which then must be implemented within a 42 month window. Following implementation of such measures, a new EPC can be applied for which will show the building’s improved energy efficiency rating. However, for buildings which were constructed before 2016, if a Display Energy Certificate (DEC) is obtained and renewed annually, recommended improvement measures do not have to be carried out, which offers owners an alternative to carrying out recommended improvement measures. Whilst noting that financial penalties may be incurred for failing to adhere with the DEC rules, the ability for owners to choose between displaying a DEC and carrying out recommended improvement measures may of course reduce the effectiveness of the 2045 commitment, and it is well understood that this is something that the Scottish Government wishes to address

Next steps to the regulatory framework are anticipated through the introduction of the Heat in Buildings Bill. It is anticipated that this Bill will introduce a Scottish specific form of MEES. The Scottish Government have stated that it intends to introduce the Bill to the Scottish Parliament in this parliamentary year.

Northern Ireland

Northern Ireland does not yet have an equivalent of the MEES Regulations which means, as in Scotland, there is no minimum standard for EPC ratings.

In the Energy Strategy, published in 2021, the Department for the Economy committed the region to net-zero and improving energy efficiency. Many of the recommendations mentioned in the Strategy are already starting to take shape, for example, the recent consultation on a Renewable Electricity Support Scheme. Another of the key proposed policy changes noted in the Strategy (and again in the later their Action Plan) is a requirement to legislate minimum energy efficiency standards. The strategy states that “New standards will initially focus on buildings, sectors and tenures which we see as the greatest priority before extending further across both domestic and non-domestic buildings… We intend to begin this work using existing available measures to set standards, including Energy Performance Certificates and Display Energy Certificates. We will, however, review our metrics for energy use in domestic and non-domestic buildings to identify alternative measures if appropriate. A system of regulation, enforcement, appeals and exemptions will be established and embedded at the outset.”

MEES legislation for Northern Ireland is now clearly coming into focus, particularly following the welcome return of the Northern Ireland assembly. Pressures are mounting to align the position in with that of the rest of the UK and it is only a matter of time before standards are formally introduced.

Given the likelihood that an NI specific version of MEES will be brought in, investors, developers and funders should be aware of the potential impact the introduction of regulations would have.

Consistency across the jurisdictions in terms of minimum energy efficiency standards would make compliance simpler for those who own properties across the UK. However, legislative compliance is only part of the story. Energy efficiency is about much more than doing what is required by law. And even if you have a property with a good EPC rating, you can use it inefficiently. Ensuring that owners and occupiers think about the property, and its use, in the round, rather than just looking at the EPC rating, is the key to reducing carbon emissions.

TLT has real estate experts across all UK jurisdictions. We pride ourselves on innovative solutions, and have won awards for our horizon scanning service. Sustainability is a key area of focus, and we are active participants in The Chancery Lane Project, collaborating to create freely-available climate conscious drafting.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at November 2024. Specific advice should be sought for specific cases. For more information see our terms & conditions.

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