Draft Energy Efficiency (Domestic Private Rented Property) (Scotland) Regulations: consultation

2. Introduction

2.1 Background

In 2019, the Scottish Government committed to a statutory target to reach net zero by 2045. Scottish emissions reduced by 50% between 1990 and 2022, however, as noted by the Climate Change Committee in their 2023 Progress Report, more must be done to ensure we continue the transition to net zero^[5]. The Scottish Government is committed to taking the required action, outlining in the 2025 to 2026 Programme for Government that tackling the climate emergency is a priority^[6].

The way in which we heat our buildings accounts for around 19% of Scotland’s total emissions, which is the third largest cause of greenhouse gas emissions in Scotland. Our Heat in Buildings (HiBs) programme aims to make Scotland’s homes and buildings cleaner, greener and easier to heat so that they no longer contribute to climate change, as part of the wider just transition to net zero. There is no way to meet net zero without moving away from using polluting heating systems, such as gas and oil boilers, in our buildings. This means that if we want to reach net zero, homes and businesses across Scotland will need to use clean heating systems, such as heat pumps or heat networks, in the future.

Energy efficiency improvements will also have a role to play in reaching net zero. Improved energy efficiency can reduce emissions from a home that uses a polluting heating system due to a reduction in required energy to heat the property. All PRS homes installing certain measures could reduce emissions across PRS dwellings by around 5% if householder behaviour remains the same^[7]. Fabric improvements can also help prepare properties for the use of certain clean heating systems that require good levels of energy efficiency to make a home feel comfortable.

The Scottish Government is intentionally ensuring that the new EPC regulations, and EPC rating system, are developed in tandem with our proposals for PRS MEES regulations. This means that the new EPC regulations will be laid in September 2025 and come into force in autumn 2026, considerably in advance of the PRS MEES regulations, which will be in force from 2028. This will ensure that PRS landlords have significant time in advance of the MEES coming into force to understand how their property performs under the new EPC regulations’ HRR, and then allowing them time to act if they need to in order to comply with the new MEES regulations.

The Fuel Poverty (Targets, Definition and Strategy) (Scotland) Act sets statutory targets that by the end of 2040 no more than 5% of households will be in fuel poverty, no more than 1% of households will be in extreme fuel poverty and the median fuel poverty gap of households in fuel poverty is no more than £250 in 2015 prices before adding inflation. The first periodic report^[8] published in April is an important milestone in demonstrating the progress made over the last three years through the actions that were set out in the Fuel Poverty Strategy^[9], but equally from taking actions not contained within the Strategy, which illustrates the cross-cutting nature of fuel poverty and the changing context to which the Scottish Government has had to respond to since publication in 2021. Addressing poor energy efficiency is the only lever within the Scottish Government’s devolved competence that can improve fuel poverty.

Upgrading the fabric of a home can make a contribution towards mitigating fuel poverty by having the potential to reduce energy bills if prices and heating system usage remains the same. However, although evidence is clear that energy efficiency improvements could reduce the energy required to heat a home to a suitable level of thermal comfort, there is less evidence available on how individual household behaviours, particularly in their usage of energy, would change as a result of having a more energy efficient home. A household may choose to spend the same about of money on heating, but have a warmer home in return, or they may be happy with a similar level of temperature, but now be able achieve that level using less fuel and at a cheaper cost. This does make it difficult therefore to estimate cost savings for individual homes or tenants as there are many factors that will apply, including the unit cost of energy that the tenant currently pays.

Evidence shows the lowest rates of fuel poverty are associated with higher energy efficiency standards. 32% of households living in dwellings currently rated EPC band C or better were fuel poor, compared to 48% living in dwellings in bands F or G^[10]. This is why it is important that the Scottish Government encourage improvements in the energy efficiency of homes to support fuel poverty aims.

Warmer homes also help lead to healthier people. Homes with better fabric result in reduced issues with damp, removing damp-ness related illnesses and improving chronic conditions, such as asthma. This is not just beneficial for the individual, and could have economic benefits by way of reduced healthcare spending, fewer sick days from work, and increased concentration while working from home^[11]. This means that improving the energy efficiency of homes can contribute to better health for the people of Scotland.

2.2 Scottish Government commitment to energy efficiency

Improving the energy efficiency of buildings has been a priority for Scottish Ministers for over a decade. It was first designated as a national infrastructure priority in 2015^[12], which was the first long-term commitment to reduce the energy demand and to decarbonise the heat supply of our residential, services and industrial sectors. This commitment was then brought forward in Scotland’s Energy Strategy^[13] in 2017 and consulted on as part of our Energy Efficient Scotland^[14] consultation in 2018.

This was followed by the development of the draft Energy Efficiency (Domestic Private Rented Property) (Scotland) Regulations which were consulted on in 2019 and then laid before Scottish Parliament in 2020^[15]. These regulations were agreed to by the Scottish Parliament with no objection before being withdrawn due to the impact of the covid pandemic on the sector^[16]. At the time of withdrawal the Scottish Government made clear it would look to bring these regulations forward at a later date.

This was confirmed in our HiBs Strategy published in 2021, which set out our intention to revise our proposals to regulate energy efficiency^[17] in the domestic PRS, in line with direction provided by the Climate Change Committee. In the same year the Scottish Government also published its Fuel Poverty Strategy^[18] which reinforced the commitment to regulate energy efficiency and the role these regulations can have in removing poor energy efficiency as a driver of fuel poverty. Subsequent to this, the Scottish Government consulted on proposals for a HiBs Bill. The consultation that took place between November 2023 and March 2024 set out proposals for MEES within the PRS as well as wider proposals for energy efficiency and clean heat^[19].

Most recently, in a statement to Parliament on the 3 April 2025, the Scottish Government committed to introducing a HiBs Bill in 2025. The HiBs Bill will introduce a target to decarbonise our buildings by 2045 – giving home and building owners confidence on the Scottish Government’s commitment to change while outlining collective actions to help achieve this – and will include provisions to encourage heat networks and introduce MEES in the owner occupier and non-domestic sectors in the future. Alongside the development of the HiBs Bill, the Scottish Government confirmed our intention to progress with MEES in the PRS using existing powers in the Energy Act 2011, which is the focus of this consultation. New EPC regulations will also be laid in the Scottish Parliament in autumn 2025, coming into force in autumn 2026, which will create a new EPC rating system which will support the HiBs Bill and introduction of PRS MEES regulations.

MEES are not new within the Scottish rental sector, with requirements to meet minimum levels being in place for social rented properties since 2014^[20]. Since the introduction of standards the proportion of social rented properties that have a good level of energy efficiency (current EPC band C or better) have increased from 53% in 2016, to 61% in 2021 and most recently 69% in 2023. The social rented sector has the highest proportion of more energy efficient properties in 2023 (those rated current EPC A/B/C)^[21].

2.3 UK Government position

The UKG introduced a MEES for domestic PRS properties across England and Wales in 2015^[22]. Properties below EPC band E cannot be let without relevant energy efficiency improvements being carried out. Earlier this year, UKG published a consultation seeking views on proposals to amend the existing regulations to require properties to achieve EPC band C before being let. The standard would apply to ‘new tenancies’ from 2028 with ‘all tenancies’ then required to meet the higher standard by 2030. The consultation closed on 2 May 2025.

The UKG was also seeking views on proposed changes to the Energy Act 2011, which is the primary legislation that gives both UK Ministers and Scottish Ministers the powers to make energy efficiency regulations for private rented properties. Most notably, the UKG proposed to amend the maximum financial penalty that can be imposed for non-compliance with the energy efficiency regulations. The Energy Act 2011 currently specifies that any financial penalty must not exceed £5,000. The proposed amendment from UKG would increase this to £30,000.

2.4 EPC reform

Separately, the Scottish Government is reforming EPCs so that they have a clearer focus on the energy efficiency of the building fabric and give better information on the emissions and efficiency of the heating system. Our 2023 EPC Reform consultation^[23] set out our proposals and we published our response in January this year^[24]. We will lay new EPC regulations in autumn 2025 and intend to bring them into force during autumn 2026, though this will depend on the UKG’s timetable for the development of the Home Energy Model (HEM).

EPC reform will introduce a new rating, the HRR, that we intend to use as the basis for MEES in the PRS sector. This rating will focus on the fabric of the building and will directly measure how well it retains heat to maintain a comfortable internal temperature, so it would not be affected by changes to the heating system. Alongside this rating, the EPC would also show the efficiency and running costs of its heating system, and the cost of energy to run the home to standardised conditions.

Our work to reform EPCs will enhance the information available to landlords and tenants to support fuel poverty objectives in the PRS. The new EPC HRR will directly assess the fabric energy efficiency of the building – i.e. how well it retains heat. Basing a MEES upon this new rating will therefore allow a more accurate assessment of the direct impact of poor energy efficiency on fuel poverty than the current cost-based EPC rating. Given the importance of also being able to understand how much it costs to heat a home, the existing cost-based rating will be retained on the EPC and renamed as the ‘Energy Cost Rating’. This will allow the EPC to support fuel poverty policy by continuing to provide a rating for the cost of energy, whilst enhancing this through a direct measure of the fabric energy efficiency of a property.

2.5 The PRS MEES proposal: why the PRS

A MEES in the PRS is being prioritised by the Scottish Government due to the positive impact action in this sector could have in supporting fuel poverty aims, while also contributing to our climate change targets. Improving energy efficiency in the PRS could result in a 5% reduction in emissions across the sector as a whole if certain measures are installed and heating use stays the same.

Energy efficiency improvements would benefit tenants by enabling them to use less energy to reach the same thermal comfort in their homes, possibly resulting in lower bills and a reduction in overall fuel poverty rates. However, typically, when a property is rented, the tenant is not able to make those upgrades themselves. Upgrades are usually the responsibility of the landlord. This means that the landlord would be required to improve the property for the tenant to benefit.

The PRS in Scotland is made up of around 300,000 homes, with 52% of these already reaching EPC band C based on current ratings^[25]. However, as a sector, it has some of the highest rates of fuel poverty in the country. Approximately 44% of people in privately rented homes are living in fuel poverty. This correlates to the domestic PRS currently having the highest proportion of the lowest energy efficient properties in Scotland (14% rated EPC band E/F/G).

To improve this, the Scottish Government is proposing to introduce a MEES so that as far as possible all PRS homes have certain energy efficiency measures installed to reach EPC HRR band C. This would apply to new tenancies from 2028 and to all privately rented homes by the end of 2033.

As a basis for this proposal, we have reconsidered the withdrawn draft 2020 regulations, taking into account the feedback received through consultations, including the HiBs Bill consultation, advice from key stakeholders and updated policy positions on climate change and fuel poverty.

2.6 Timeline

Consultation period: June to August 2025

Lay regulations in Scottish Parliament: Early 2026

Regulations in force (active and applying to new tenancies): 2028

Backstop date for compliance: 2033