Delivering net zero for Scotland's buildings - Heat in Buildings Bill: consultation

5. Monitoring and Enforcement

5.1 For any law that places requirements on us to be credible there must be a way to check that we are meeting the requirements when supposed to (monitoring) as well as a reason for us to meet the requirements (enforcement).

Monitoring

5.2 This consultation has described five points in time at which we may be asked to meet the Heat in Buildings Standard:

• at the end of a grace period which follows the completion of a property purchase;
• following notice from a local authority to a building owner in a Heat Network Zone that they are required to end their use of polluting heating;
• at the end of 2028, private landlords will need to have met the minimum energy efficiency standard
• at the end of 2033, owner occupiers will need to have met the minimum energy efficiency standard^[27]; and
• at the end of 2045, all building owners will need to have ended their use of polluting heating.

5.3 There are two ways in which we could monitor whether people are meeting their requirements under these five scenarios:

EPCs

We could be asked to submit an EPC, which would show:

• the type of heating system used in the building.
• the presence (or not) of particular energy efficiency measures, such as loft insulation.
• the fabric efficiency rating of the building.

An EPC would therefore demonstrate comprehensively if a building had ended its use of polluting heating and whether a home had met the minimum energy efficiency standard.

Sampling

We could be subject to checks to verify whether the heating system we were using complied and/or whether the energy efficiency standard had been met. Such checks would be undertaken on a random sample of buildings – for example:

• 5% of properties that reached the end of their grace period in a given month; or
• 1% of all homes in 2033 or 2045.

We expect these checks would be based on available information (for example, an EPC record) rather than any need to physically inspect properties, particularly as the Standard beds in.

5.4 The benefit of using EPCs to monitor the Standard is that they are an existing and familiar tool, already included as part of the sale of properties and with information freely available via the EPC Register. The EPC Register means that a body responsible for checking compliance could readily access this information and connect it to a property transaction.

5.5 The onus would be on the homeowner, landlord or business to arrange and pay for the EPC assessment. This approach creates new costs for households (over and above any work to meet the Heat in Buildings Standard). The cost of an EPC varies from building to building, but in the domestic sector it can be over £100 – and, given the further distances, may be higher still in rural areas and on islands. However, this approach may present significant employment opportunities for existing and new assessors.

5.6 The benefit of sampling properties is that the costs of monitoring are taken away from the public. It is also a more proportionate system, given that monitoring would not apply to all of Scotland’s 2,495,000 homes and 220,000 non-domestic buildings.

5.7 Costs of sampling properties are likely to fall to public finances, however these costs to government can be minimised by our current plan not to physically inspect any properties.

5.8 We think that a combination of both approaches may provide the most robust way to confirm compliance, and would be grateful for your views on this as well as whether there are any other forms of evidence for complying which are appropriate. For example, this may include the submission of an installation certificate – although this may be resource intensive as an authority will need to check and confirm this evidence.

Enforcement

5.9 While the vast majority of the population supports efforts to reduce our emissions, this is unlikely to be reason enough for people to make the changes needed to meet the Standard.

5.10 We are proposing that private landlords would be subject to civil penalties if they don’t meet the minimum energy efficiency standard after 2028, because it is tenants, including some who may be living within vulnerable circumstances, who will suffer.

5.11 However, we do not think that such penalties will be universally suitable for other people who do not meet the Heat in Buildings Standard, at least when it is first introduced.

5.12 Costs are likely to be the main reason which prevents people from undertaking work to meet the Standard; this means that it would be counterproductive to issue fines or penalties that further hamper the ability of people to pay when the Standard is still bedding in, and when the costs of clean heating will still have further to fall.

5.13 But we do have to find compelling reasons for people to meet the requirements, and to include the relevant powers in our proposed Heat in Buildings Bill.

5.14 We have considered additional charges on council tax and non- domestic rates for those buildings that haven’t met the Heat in Buildings Standard when they are required to. However, we don’t wish to increase costs for households and businesses at this time, and there is evidence that similar charges have not been an effective incentive for people in the past. At the same time, reliefs and additional charges are something which we may wish or need to consider in future – particularly as the latter may help to finance work in local areas, for example.

5.15 One thing that we are exploring is whether banks and buildings societies can – or already do – make complying with laws relating to your property a condition of mortgage and/or home and buildings insurance.

5.16 If this were to extend to meeting the Heat in Buildings Standard when required to, then it would give building owners a strong incentive to do so and to ensure compliance with the terms of their mortgage or home or buildings insurance. In such a scenario, we may wish to record those buildings that have not met the Heat in Buildings Standard when they were required to, thus avoiding the need to fine or penalise building owners. We will engage further with lenders and insurance companies on this point.

5.17 However, if it becomes evident that not enough properties are complying with the Standard, we may think about other tools to help us achieve this, including wider civil penalties. We want to make sure that, if we do decide to deploy these in the future, they are proportionate and affordable and don’t place anyone under financial hardship. To make sure that this is the case, we would consult on the detailed parameters and proposals for any civil penalties ahead of their introduction in future.

5.18 In the meantime, and while we propose to include the relevant powers within our proposed Bill, we don’t intend that such penalties will play a key part during the initial stages of the Standard’s introduction.

The monitoring and enforcement body

5.19 Once we confirm how the monitoring and enforcement system will work in practice, we will then consider which bodies are best placed to deliver these.

5.20 Both the Scottish Government (or a body acting on our behalf) and local authorities may be suited to this role. If there is evidence which supports there being a role for local authorities then, in keeping with the Verity House Agreement^[28], we will work with our partners in local government to collaborate on this.

Exemptions and extra time

5.21 While monitoring and enforcement are necessary to make the Heat in Buildings Standard credible, homeowners, landlords and businesses should be assured that they will be treated fairly.

5.22 We know that everyone’s individual circumstances are different, and that our homes and other buildings also vary considerably. We want to make sure that the implementation of the Standard brings about positive change for people. We are aware that some may need to keep their homes at a higher temperature to be comfortable – e.g. homes where there are small children or older people, or others with specific needs. We are particularly keen to hear how the Standard can help ensure this comfort and about any of the challenges particular groups of society may face in complying.

5.23 To ensure fairness, the Heat in Buildings Bill will:

Ahead of 2045, exempt those who can’t, or perhaps should not have to, meet the Heat in Buildings Standard.

Provide extra time for those who need it to meet the Standard, or require that people comply with a modified version of the Standard which takes into account their building’s characteristics or unique circumstances.

Make it easy for people to appeal where they feel the requirements are incorrect or unfair.

5.24 In Chapter 3, we suggested that exemptions may be appropriate for first time buyers, or for certain businesses to protect the local or national economy.

5.25 Since exemptions will affect the pace at which we reduce emissions, we are seeking your views on whether it is right to exempt people from the Heat in Buildings Standard, and if so, to whom these exemptions should apply. There may be very specific and narrow circumstances in which this provision can apply – for example, if a building is due to be demolished or if major building works are about to be undertaken in the near future.

5.26 In Chapter 3, we also suggested that extra time might be needed for those living in properties for which clean heating options are currently limited – for example some flats, properties that may struggle to improve their energy efficiency, or in buildings in areas where there are constraints to the electricity grid. Without extra time to meet the Standard, they may be forced to install systems that are expensive or unsuitable to run.

5.27 The Scottish Government established a Short Life Working Group to look at the ways in which our approach and regulations would need to take the needs and circumstances of those in tenements, flats and similar properties fully into account. We will be publishing that report at around the same time as this consultation, and will be guided by its recommendations.

5.28 We have also set out in Chapter 2 how we are considering developing an assessment tool which would enable building owners to understand which types of clean heating system are most suitable for their building, or which can also show cases where these would not be suitable until cleaner alternative fuel options become available. We think that such a tool could give a more detailed technical assessment of the suitability of different heating systems or energy efficiency measures for buildings than is possible under the more basic assessment used for an Energy Performance Certificate. We envisage such a tool could be used to help to understand:

• what types of clean heating systems are most technically suitable for a building and which are not
• what types of energy efficiency measures are most technically suitable for a building and which are not
• what types of clean heating system and energy efficiency measures might be appropriate for tenements where some elements of the building are in common ownership and where a communal heating system may be an alternative to individual heating systems for each flat^[29]
• buildings which are not suitable for a clean heating system until cleaner alternative fuel options become available
• what types of clean heating systems and energy efficiency measures might be appropriate for traditional buildings or those with protected characteristics, and those which might not.

5.29 This tool would then be able to support any modifications that were needed to the Standard to take account of a building’s characteristics or unique circumstances, or to support any appeals that people might want to make where they feel the requirements are incorrect or unfair.

Questions on Chapter 5 - Monitoring and Enforcement

Q18. We will need to have a way to monitor if people are meeting the Heat in Buildings Standard, and discussed two options for this. Which do you support?

a. Submitting EPCs alone.

b. Sampling a percentage of buildings.

c. A combination of the two.

d. None, there should be no monitoring.

e. Another method, please suggest below or explain your selected answer.

Q19. We will need to have a way to enforce the Heat in Buildings Standard. We discussed possible options to help achieve compliance. What are your views on these ideas?

a. I support relying on market and financial product mechanisms such as mortgages or home/ building insurance.

b. I support extra Council Tax and Non-domestic Rates charges, in future, for those who don’t comply.

c. I support the introduction of civil penalties, in future, if compliance is not achieved.

d. I support a mixture of the above options.

e. I do not support the suggested enforcement tools, but have another suggestion (please provide below).

f. I do not support any form of enforcement.

Q20. To what extent do you support our proposals to modify the Standard or exempt certain people from the need to meet the Heat in Buildings Standard?

Strongly support

Somewhat support

Neither support nor oppose

Somewhat oppose

Strongly oppose

Don’t know

Please include any additional comments below.

Q21. Which people, businesses, or types of buildings, if any, should be eligible for a modified standard or exemptions?

Q22. To what extent do you support our proposals to give certain people extra time to meet the Heat in Buildings Standard?

Strongly support

Somewhat support

Neither support nor oppose

Somewhat oppose

Strongly oppose

Don’t know

Please include any additional comments below.

Q23. Which people, businesses or types of buildings, if any, should be eligible for extra time?