Section 63 Action Plans

Section 63 Action Plans are a new requirement for some buildings in Scotland offered for sale or rent on or after 1st September 2016.  Unlike EPC's, they are a service requiring ongoing professional advice and consultation between the energy assessor and the client.

Costs for Section 63 Action Plans vary significantly depending upon the complexity of the building, the complexity of the heating, cooling and lighting systems contained within them, the assessments already in place and the current energy performance of the building fabric.  The process involved is also different depending on the results of the building's EPC and the intentions of the client for making the necessary improvements.

We are in a position to provide support with this process.  If you are subject to this legislation and require a Section 63 Action Plan please contact us to discuss your requirements and to obtain details of our pricing structure.

FAQ: Section 63 Action Plan

There is a lot of confusion about exemptions relating to listed buildings and buildings within a formally designated conservation area.  Firstly, the exemptions that exist appear to vary between administrations in the UK and are different for different forms of assessment.  Secondly, the supporting guidance, particularly in England & Wales, is regularly updated and can appear inconsistent or incomprehensable.

Air Conditioning Energy Assessments & Display Energy Certificates

Dealing first with these two assessments, the need for compliance is not affected by the historic nature or otherwise of the building.  As such, no exemptions from the requirements for these assessments exist specifically for buildings that are listed or in formally designated conservation areas.

Listed buildings and those in formally designated conservation areas are treated as any other building is treated and require Air Conditioning Energy Assessments (ACEAs) and Display Energy Certfificates (DECs) if they meet the other qualifying criteria.

Buildings in Scotland

The Scottish Government has not attempted to exempt listed buildings or buildings in formally designated conservation areas from their regulations for energy efficiency.  Instead, they have taken an approach where an assessor is required to consider the impact of improvement measures and their appropriateness for the specific building in question.   As such, no exemptions from the requirement for an Energy Performance Certificate exist specifically for buildings that are listed or in formally designated conservation areas. [Click here to see guidance]

Listed buildings and those in formally designated conservation areas in Scotland require Energy Performance Certificates (EPCs) and Section 63 Action Plans if they meet the other qualifying criteria.

Buildings in England & Wales

Put politely, the situation for buildings in England and Wales is about as clear as mud.  The wording in the current regulations is taken directly from the European Directive and says “buildings officially protected as part of a designated environment or because of their special architectural or historical merit, in so far as compliance with certain minimum energy performance requirements would unacceptably alter their character or appearance.”

When these regulations were enacted on 9th January 2013, it was generally accepted that listed buildings were exempt from the requirement for an EPC for sale or let although it was acknowledged that they would still require an EPC in other circumstances (e.g. Green Deal).  This belief was re-enforced by guidance published by Historic England which includes the statement “An Energy Performance Certificate (EPC) is a legal requirement when building, selling or renting a property. However, there are exemptions for certain types of building and since January 2013 listed buildings have been exempted from the need to have an EPC.”  However, Historic England’s Terms and Conditions include the usual disclaimers regarding their interpretation of the law in that the position stated was just their interpretation and that they accept no liability for its accuracy.  In the absence of enforcement action or legal precedents being set, much discussion has continued both in and out of the legal community with differing interpretations resulting.

Moving forward to the latest guidance to come from The Department of Business, Energy and Industrial Strategy, the UK Government Department which now has responsibility for EPCs.  Issued in February 2017, this update is contained within the guidance for landlords and enforcement authorities on the minimum level of energy efficiency required to let non-domestic property under the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015.  The advice, published in Chapter 1 on page 19 is shown below:

“There is a common misunderstanding relating to listed buildings and whether they are exempt from the requirement to obtain an EPC. Listed properties, and buildings within a conservation area, will not necessarily be exempt from the requirement to have a valid EPC and it will be up to the owner of a listed building to understand whether or not their property is required to have an EPC. Where a listed privately rented non-domestic property, or a property within a conservation area, is required to have an EPC, that property will be within scope of the minimum energy efficiency standards.

“As noted at 1.3.3 above, an EPC is not currently required for a listed property or building within a conservation area when it is sold or rented in so far as compliance with minimum energy performance requirements would unacceptably alter its character or appearance. Examples of energy performance measures which may alter character or appearance (or as a minimum are likely to require local authority planning permission to install on a listed building) include external solid wall insulation, replacement glazing, solar panels, or an external wall mounted air source heat pump. Where character or appearance would not be altered by compliance with energy performance requirements, an EPC may be legally required.

“If an owner or occupier of a listed building is unsure about whether their particular property is or is not required to have an EPC, appropriate advice should be sought at the earliest opportunity.”

This guidance would seem to suggest that the UK Government believes the exemption for listed buildings is much more restricted than had previously become accepted.  Indeed, it would appear to be more compatible with the Scottish Government’s interpretation that the exemption is solely from making improvements that would unacceptably alter the protected building’s character or appearance and not from the entirety of the process.  Similarly, it would appear to reflect an expectation that reasonable improvements, particularly where these would improve the energy efficiency of a building whose performance is currently very poor, should be carried out.  Many councils provided guidance on improving historic buildings with Westminster City Council providing some of the most extensive we have found. This includes a document titled “Energy Efficiency in Conservation Areas” which discusses improvements that can be made without damaging historic structures.

The background to this issue is also explored in a recent article by The Residential Landlords Association.  They make the following observation in relation to the exemption of Listed Buildings from EPCs:

“So in reality, in terms of an EPC, the caveat is meaningless. Therefore, a landlord cannot know if an EPC is needed before they have an EPC for the property”

This article continues to draw the following overall conclusion:

“Regrettably, we simply do not know the answer to whether or not an EPC is required for a listed building; nor whether landlords who have rented out listed buildings will have to comply with Minimum Energy Efficiency Standards (subject to any other available exemption, e.g. limiting the amount they have to spend); or whether you need an EPC for a listed building in order to be able to rely on regaining possession under Section 21 of the Housing Act 1988. What is clear is that if you have no EPC then you do not have to comply with Minimum Energy Efficiency Standards from 2018 onwards. You could be liable for a penalty for not having an EPC and equally you might not be able to get possession back relying on Section 21. This is a wholly unsatisfactory state of affairs which needs to be addressed by the Government.”

Unfortunately, as energy assessors, we are not in a position to provide legal advice but present this information to help you form your own opinion.  However, we would point out that there is currently nothing to stop an EPC being completed on a voluntary basis even when one is not required by law.  This may have its own implications and so building owners and occupiers should seek their own legal advice but voluntary compliance may provide a suitable solution.

Some listed buildings in England & Wales may be exempt from some or all of the Energy Performance Certificate (EPC) and Minimum Energy Efficiency Standards (MEES) requirements.  However, specific legal advice should be sought on a case by case basis.

Buildings within formally designated conservation areas are less likely to be subject to exemptions.

Regulation 20 identifies Local Authorities as responsible for enforcing the Section 63 regulations. This matches the approach taken on the production of energy performance certificates (EPCs) under the Energy Performance of Buildings (Scotland) Regulations 2008.

Regulations 22 and 24 set out the penalties for failure to provide an Action Plan on sale or rental or failure to complete improvement works within the required timescale. This will result in issue of a penalty charge notice to the owner of the building.

The level of charge for each failure is £1,000 – the same as for failure to provide a valid EPC where one is required for a non-domestic building.

As is the case with the current Energy Performance of Buildings (Scotland) Regulations, building owners may offer defence, seek review or appeal such notices as set out in regulations 23, 25 and 26.

Once a Section 63 Action Plan is finalised, the building owner can chose to either make the improvements or to defer the improvements by reporting operational energy ratings via a Display Energy Certificate (DEC) on an annual basis.

If you choose to complete the improvements immediately you will have a period of 42 months (three and a half years) from the date of the Action Plan to complete the works.  This period allows for the processes involved in obtaining any necessary Building Warrant.  Once complete your action plan must be updated by an accredited Section 63 Assessor to confirm the work has been completed.

If you choose to defer you must continue to obtain a DEC annually until the the works are completed.  If you miss a renewal deadline or fail to obtain a DEC then the action plan must be completed within the initial 42 month period.  If you have already deferred 42 months you may immediately be in default and subject to a penalty charge notice from the local authority.

Where the regulations introduced by Section 63 of The Climate Change (Scotland) Act 2009 apply, the owner of the building must undertake further assessment to produce an ‘Action Plan’.  This plan identifies targets for improvement of the carbon and energy performance of the building and sets out how the owner will meet these targets by making physical improvements to the property.

The requirements are discussed in detail in the document “Improving Energy Performance and Emissions in existing Non-Domestic Buildings– a guide for owners“.

The regulations apply from 1 September 2016 to buildings in Scotland.

Initially Section 63 Action Plans will only be required for larger buildings; those with a floor area of more than 1,000 m².  The requirement is triggered by either sale or by lease to a new tenant.

Generally, owners of such buildings are also required to provide a valid Energy Performance Certificate (EPC) in such situations  We would advise clients to ensure that the assessor whose services they contract is capable of producing both the EPC and a Section 63 Action Plan if required, otherwise additional expenses may be incurred.

Buildings that meet energy standards equivalent to those introduced by the 2002 building regulations in Scotland or are already improved via a Green Deal funding agreement are exempted from the regulations.

You may have heard about the Green Deal initiative or seen reference to it on your Energy Performance Certificate.  Green Deal was a government backed scheme to help fund improvements that would bring about savings to your energy bills.  Under the scheme the government would fund loans to help meet the initial cost of the improvements which you would then pay back as part of your future energy bills.  The idea was that the repayment costs would be offset by the savings in your bill so you would not have to find the extra money to pay for the improvement.  However, the government has stopped funding the Green Deal Finance Company which was set up to lend money to Green Deal providers to fund improvements under the scheme.

The scheme is now operating in a new format and is funding some projects.  A full relaunch is expected soon and Green Deal assessments are still available.  You can find out about the scheme by visiting the Green Deal Finance Company website.

However, Green Deal finance is not the only way you can fund improvements and other financial packages are available.  In addition to normal loans there are specialist financial packages and grants available.  Some of these take the form of more traditional loans and mortgages which could still be repaid from savings in the energy bill and may offer lower interest rates.  We make no recommendation in relation to any of the financial packages available and advise that you seek your own independent financial advice.

Other providers include:

Major banks and building societies

Ecology Building Society – Sustainable savings and mortgages

Portman Asset Finance – Finance for businesses to install renewable technologies

Carbon Trust Financing – General information, grants and loans

Salix Finance – Funding for the public sector

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