Energy Performance of Buildings (Scotland) Regulations 2025: business and regulatory impact assessment

Section 2: Engagement & Information Gathering

Engagement Approach

The Scottish Government has engaged extensively in the development of its policy on EPC reform ahead of laying these regulations.

Public consultation and stakeholder engagement

We have held three formal public consultations, during 2021, 2023 and 2025, at each stage allowing us to further refine our policy development in the light of stakeholder feedback:

• 2021 consultation – this consultation outlined our initial proposals for reform, which included renaming the current EPC ratings and adding a third rating so that EPCs would display separate ratings for energy efficiency, cost, and carbon emissions.
• 2023 consultation – this consultation set out our preferred approach to reform, including confirming the new rating system that we intended to use for domestic and non-domestic EPCs and our intention to reduce the EPC validity period from 10 to five years, redesign EPCs to make them more accessible, and enhance quality assurance for consumers of EPC assessors and Approved Organisations.
• 2025 technical consultation – this consultation set out proposals for increases to EPC lodgement fees to support the costs of developing the new technical infrastructure (Register and calculation methodology) and operational infrastructure (introduction of enhanced onsite audit and inspection arrangements). It also sought views on the level of EPC penalty charges.

During the consultations, the Scottish Government held stakeholder events and received written responses. Analysis of these events and the responses received was set out in three published reports:

• 2021 consultation^[32]
• 2023 consultation^[33]
• 2025 consultation^[34]

During the four years of policy development, we met stakeholders during consultation events, or bilaterally, from a wide range of different organisations. These included housing providers, landlords, local authorities, public bodies, utilities, the construction sector, mortgage lenders, and bodies representing: the EPC assessment sector, estate and letting agents, conveyancing solicitors. Alongside the 201 individual responses from the general public, this ensured wide-ranging and comprehensive engagement with groups likely to be impacted by the development of the regulations. Our goal from the outset was to make sure as many people were able to contribute to discussions and sessions as possible.

In addition, the consultation on the proposals for a Heat in Buildings Bill (which ran from November 2023 to March 2024), involved a wide range of stakeholder events and over 300 responses received to the consultation. That consultation also considered the role that EPCs could play in supporting proposed mandatory standards. It attracted widespread public, media and parliamentary interest in our proposals for EPC reform, and therefore also contributed to the final development of policy underpinning the new regulations.

Stakeholder working groups

The Scottish Government established a number of support groups to provide a forum for ongoing engagement and challenge to help refine our proposals.

This included an External Reference Group and an independently-chaired subgroup of the Heat in Buildings Strategic Advisory Group. Proposals were also presented to the Regulatory Review Group (RRG).

External Reference Group

The External Reference Group ensures that those working within the current EPC system (assessors, approved organisations, surveyors issuing Home Reports, building regulations officers/ local authority officers, etc.) are kept informed on progress and able to give views (i.e. to advise, inform, and discuss). It meets regularly throughout the year when relevant, to be kept abreast of progress in development of the regulations and will continue to do so when they are implemented.

This group is made up of the following external stakeholders (including wider-public sector representatives):

• All six EPC Approved Organisations^[35] (representing the businesses directly impacted by the regulations, which govern the terms of their appointment, and those of their circa 3,500 members in Scotland)
• Proficiency (trade body representing domestic and non-domestic EPC assessors in Scotland)
• Property Energy Professionals Association (PEPA) (trade body representing the Approved Organisations)
• Royal Institution of Chartered Surveyors (RICS) (whose members are responsible for issuing Home Reports, of which a large number of EPCs issued form a part)
• COSLA (representing Scotland’s 32 local authorities)
• Association of Local Authority Chief Housing Officers (ALACHO)
• Energy Saving Trust (representing energy advisors and external delivery programmes)
• UK Finance (representing lenders)
• Propertymark (representing estate and lettings agents)
• ESPC (representing conveyancing solicitors)
• Consumer Scotland (representing consumer interests)
• UK Government (Observers)

Independently chaired subgroup of the Heat in Buildings Strategic Advisory Group

The independently chaired subgroup of the Heat in Buildings Strategic Advisory Group (SAG) was established to provide independent challenge, advice, and expertise to support the Scottish Government. Members were chosen based on their expertise/ experience, and for their independence as experts who are not directly impacted by any changes introduced through our wider EPC Reform programme.

This group meets roughly quarterly and will continue to meet throughout 2025 (and beyond, as required).

It is made up of the following external stakeholders (including wider-public sector representatives):

• Regulatory Assistance Project (Chair) (representing independent expertise in regulatory design)
• Chartered Association of Building Engineers (representing professional expertise in disciplines across the built environment)
• Citizens Advice Scotland (representing consumer interests)
• Federation of Small Businesses (representing business interests)
• Monmouthshire County Council (representing independent expertise in EPC enforcement within local government)
• Nesta (representing public engagement and user design interests)
• Scottish Futures Trust (independent expertise in infrastructure development)
• Sustainable Energy Authority of Ireland (SEAI) (international expertise in EPC regulatory design and delivery)

Regulatory Review Group

Scottish Government officials presented the Government Response on EPC reform to the Regulatory Review Group (RRG) at its meeting on 25 March 2025. Following the meeting, the Chair of the Group wrote to Ministers, making the following recommendations:

“1. Further consideration is needed regarding how the proposed changes to the EPC will interact with the home report.

2. The RRG notes concerns raised about potential unintended consequences for consumers if mortgage providers start using the revised EPC ratings as criteria for lending.

3. Constructive working relationships with Local Authorities and Scottish Government are critical to the success of implementation.

4. The management and capacity of on-site inspections presents potential challenges.

5. Comprehensive public engagement is essential to ensure consumer understanding and support”.

The Scottish Government welcomed these recommendations from the RRG and is acting on them as part of its work with stakeholders (including local authorities, mortgage lenders, estate and lettings agents, conveyancing solicitors, Approved Organisations and communication with the wider public), ahead of the regulations coming into force in autumn 2026.

As requested by the RRG, Scottish Government officials will return again to the Group, to give an update on this work once it has progressed.

Internal Scottish Government and wider public sector engagement

The Scottish Government has engaged with a range of internal policy and regulatory functions impacted by our proposed reforms, including those from:

• Directorate for Energy & Climate Change (teams responsible for Heat in Buildings regulation (such as the proposed private rented sector minimum energy efficiency standard and Social Housing Net Zero Standard), Heat in Buildings delivery programmes, (such as Warmer Homes Scotland and Area-Based Schemes), Heat Networks and public sector heat decarbonisation;
• Directorate for Local Government & Housing (teams responsible for Building Standards, Housing (such as colleagues leading the review of Home Reports), Fuel Poverty; and
• Directorate of Tax and Revenue (teams responsible for the proposed Building Safety Levy) public buildings, and with legal and analytical colleagues.

To ensure that all relevant parts of the Scottish Government were able to input to, and be aware of the impact of, the reforms in the new regulations, we established an internal Scottish Government working group which included representatives from all of the policy and regulatory functions listed above.

As we have continued to develop these regulations, this group has continued to meet on a regular basis.

We have also engaged with the wider public sector through ongoing discussions with:

• Convention of Scottish Local Authorities (COSLA) and individual local authorities
• Scottish Energy Officer Network (SEON)
• Improvement Service
• Local Authority Building Standards Scotland (LABSS)
• Association of Local Authority Chief Housing Officers (ALACHO)
• Trading Standards Scotland
• Historic Environment Scotland
• Scottish Futures Trust

UK/ Devolved Administrations

The Scottish Government has engaged with the UK Government throughout the development of our policy on EPC reform and in finalising the new regulations. This has included:

• Official level engagement and participation in regular UK-wide working groups on existing EPC regulations and the calculation methodologies which underpin them (SAP, SBEM, and development of the new Home Energy Model);
• Official level engagement in operational matters impacting the UK-wide EPC assessor market (including conventions followed by assessors and Approved Organisations, or changes to the EPC calculation methodology);
• Official level bilateral discussions on EPC policy and policy in related areas where UK Government policies or programmes use EPCs (such as the private rented sector minimum energy efficiency standard regulations in England & Wales);
• Successful negotiation with the UK Government to extend new powers under Part 10 of the Energy Act 2023 to allow the Scottish Ministers to make new EPC regulations (to replace powers which were lost when the European Communities Act 1972 was repealed during EU Exit);
• Agreement with the UK Government that the new Home Energy Model will be adopted across the UK as the basis for the EPC calculation methodology underpinning new regulations in Scotland and in England & Wales and Northern Ireland;
• Agreement with the UK Government that the new Scottish EPC Register will be integrated with the UK Government’s ‘cloud calculation service’ which underpins the EPC Registers for England & Wales and Northern Ireland; and
• formal association of the Scottish Government with parts of the UK Government’s own recent consultation on EPC reform, where suggested reforms on quality assurance and data lodgement and reporting would impact the UK-wide internal market and therefore the approach taken in Scotland^[36]

As part of our EPC Reform work, the Scottish Government advocated successfully for the need for more formal arrangements across the UK, to governance of EPC legislation and operational delivery. This reflects the fact that, since EU Exit, the four governments can no longer rely upon the unifying legal framework of the EU Energy Performance of Buildings Directive.

In summer 2025, a Memorandum of Understanding (MoU) was finalised between Ministers of the UK Government and other Devolved Administrations. This sets the parameters for how the governments work together when exercising their new powers under Part 10 of the Energy Act 2023. This ensures there is an official forum for engagement across the UK, and will facilitates joint working on areas such as EPC assessor skills and consumer protection.

The UK Government is also an observer on our External Reference Group (ERG) (see above) and Monmouthshire Council (from Wales) is a member of our EPC subgroup of the Heat in Buildings Strategic Advisory Group (SAG) (see above).

International

The Scottish Government has a commitment to align with the EU, where appropriate, and in a manner that contributes towards maintaining and advancing standards. The legal requirements for EPCs originated in EU law set out in the Energy Performance of Buildings Directive, which was recast several times between 2004 and 2018, prior to the UK’s exit from the EU. The Directive was recast again by the EU in 2024, including new provisions for onsite audit and inspection of a proportion of certificates.

Given our commitment to continue to maintain alignment, the Scottish Government has, during consultation on EPC reform and the development of the new regulations:

• engaged directly with the Government of the Kingdom of Denmark, through its Danish Energy Agency (DEA), as part of our existing Memorandum of Understanding. This included a formal response from the DEA to the 2023 consultation, and ongoing peer review workshops to test our proposals and consider alignment with the 2024 recast of the Directive; and
• engaged with the Government of the Republic of Ireland, through its Sustainable Energy Authority of Ireland, which sits as a member of our EPC subgroup of the Heat in Buildings SAG allowing us to benchmark our proposals against existing practice in transposing the Directive within Ireland, in particular where Ireland has already adopted onsite audit and inspection requirements.

Business & Third Sector Engagement

The Scottish Government has engaged extensively with business and the third sector throughout the development of its policy for EPC reform and the new regulations. This has taken place primarily through the External Reference Group outlined above, which includes a representative range of business and consumer interests.

Public consultation

2023 consultation

The 2023 consultation was the most comprehensive articulation of our preferred approach, and attracted the most responses (323). A wide range of individuals and organisations responded as set out in this respondent profile chart from the analysis report:

The majority of the 31 representative bodies which responded included business and / or third sector groups amongst their membership (such as the Association for Decentralised Energy, Heating & Hotwater Industry Council, Homes for Scotland, National Insulation Association, Property Energy Professionals Association, Propertymark, Scottish Federation of Housing Associations, Scottish Land & Estates, the Law Society of Scotland, the Royal Incorporation of Architects in Scotland).

In their responses to the 2023 consultation, responses to the most prominent questions from those respondents who were organisations, and therefore include representatives of these businesses and third sector stakeholders (and also include local authorities who may themselves be housing providers, together with public bodies and academic / research bodies) were as follows^[37]:

• New domestic EPC rating system (Q1)

For organisations, in each case, other than landlords’ representative bodies, there were clear majorities (67% of respondents) in favour of the proposed new ratings to be displayed on the reformed domestic EPC. On that basis, the Scottish Government has decided to introduce the reforms through the new regulations.

• New non-domestic EPC rating system (Q6)

Opinion on reform of non-domestic EPC ratings was more mixed, with many organisations (16%) saying they did not know if they agreed with the new non-domestic ratings, and 25% not answering the question. This in part is likely to reflect the smaller size and more specialised nature of the non-domestic EPC market (with around c.5,000 assessments p.a. carried out compared to c.200,000 domestic assessments p.a.) Of those organisations who did answer, 51% were in favour and 9% against. Given that there were more in favour than against this proposal, the Scottish Government has decided to introduce these reforms through the new regulations.

• Change to EPC validity period (Q10)

Opinion of organisations on proposals to reduce the EPC validity period from 10 years to five was mixed, with a significant minority (30%) opposed to the proposals. The largest number of respondents (46%) were in favour of the proposals, but 15% of organisational respondents did not answer this question. 80% of housing providers who responded were opposed.

The Scottish Government recognises that there could be additional costs for businesses and the third sector from a reduced validity period, meaning that EPCs need to be renewed more frequently. This will not impact the advertisement of property for sale (where in practice a new EPC is produced each time a domestic property is advertised for sale to meet the requirements of the Home Report legislation) or for the construction of a new building, where a new EPC is also always required. Further information on the impacts of change in validity period is set out in Section 3 (Costs, Benefits and Impacts: Numbers of EPCs lodged).

• Review and update to audit and assurance requirements for EPCs (Q17)

There was a clear majority (67%) of organisations who were in favour of the Scottish Government’s proposals to review and update the audit and assurance requirements for EPCs in Scotland. The Scottish Government has therefore decided to introduce new operational governance arrangements through the appointment process for Approved Organisations, and the requirements for EPC assessors, set out in the new regulations. The regulations also make provision for the new onsite audit and inspection requirement which was set out in the Scottish Government’s response to the 2023 consultation, as a basis for enhancing audit and quality assurance.

2025 technical consultation

In total, 29 written responses were received to the technical consultation on EPC lodgement fees and penalty charges. The table below provides a breakdown of responses by respondent type.

* The local authorities included one mainland authority, one rural mainland authority, and one island authority.

Note: this table does not add up to 100% due to rounding.

In addition to the written responses, 46 organisations participated in the consultation workshops. The table below provides a breakdown of the organisations represented at the workshops.

*The housing associations included two from mainland Scotland and one island area.

**The local authorities included six mainland authorities and one island authority.

Note: this table does not add up to 100% due to rounding.

Of the 29 written responses received to the 2025 technical consultation on EPC lodgement fees and penalty charges, the analysis of the consultation responses sets out that, overall, between half and two thirds of respondents who answered the questions supported each of the proposals:

• 68% supported the use of a statutory fee levied on lodgement of EPCs to fund the new elements of the regulatory regime
• 50% supported raising the statutory fees levied upon lodgement by £3.40 for both domestic and non-domestic EPCs
• 61% supported a review of the lodgement fee level within two years of the new regulations coming into force
• 57% supported reviewing the on-site audit and inspection function within two years of the new regulations coming into force
• 64% supported reviewing the penalty charges issued to those who do not provide a valid EPC within two years of the new regulations coming into force

Across each of the proposals, most of the opposition came from individuals rather than organisations. On this basis, the Scottish Government has decided to increase the EPC lodgement fee to the level set out in the new regulations, and to review this within two years of the new regulations coming into force. The Scottish Government has also decided to keep the EPC penalty charge at its current level, and to review this within two years of the new regulations coming into force.

Bilateral engagement with business and third sector

As part of our work to develop proposals for EPC reform we have engaged with businesses directly through one to one interviews, including during the formal consultation period. We started the business interviews in 2023 and they continued into 2025. They were held during consultation periods where related questions could be discussed in a separate format. A number of businesses were interviewed ranging from SMEs to larger companies and international organisations. These span multiple sectors including Approved Organisations; surveyors; architects; landlords; energy focused organisations; Local Authorities; financial industries and heating system manufacturers.

Our interview process has been clear from the outset. We informed participants that we would anonymise the content of interviews to allow for open and direct engagement with the issues. In reporting on these interviews, no names have been used and only the business sector and size used to identify contributors.

Themes identified in business engagement

Our interviews highlighted a range of different themes, which are summarised below:

• Types of businesses most affected by EPC reform

Interviews with SMEs in the assessment sector, with large businesses (energy companies and heating system manufacturers) and SMEs who were chartered surveyors, highlighted that EPC producers (i.e. assessors) would be affected by higher data gathering requirements and that businesses lodging EPCs (assessors and Approved Organisations) would be directly affected by changes to the lodgement fees. One SME highlighted that “ultimately, the costs will fall on assessors. Approved Organisations will just pass the costs on to them.” Interviewees also highlighted likely impacts of increased costs on social housing providers (housing associations and local authorities) and the potential for fee increases to be passed on to domestic and non-domestic tenants. There was concern about potential disproportionate impact on landlords and property agents operating in remote, rural and island locations.

• Changes to the non-domestic rating system

A chartered surveyor SME thought that “The biggest impact will fall on commercial property owners from change to headline non-domestic rating moving to a ratio (reference property) based rating as is done in the rest of the UK”.

• Lodgement fee increase

This drew a wide range of responses, all of them highlighting the likely impact on businesses and upon consumers. An assessor SME highlighted that “lodgement fee increases together with additional EPCs from the move to a five-year validity period means that the costs will be passed directly to the consumer.” Another noted that this “... will see a universal increase in costs that all will be expected to pay without distinction”. There was concern in particular on the impacts of this on social housing providers – the combination of increasing lodgement fees and reducing the validity period of the EPC. Those interviewees taking a more positive response included a large energy company who saw benefit in “Increased costs of more time on site to get more accurate information. More important to get it right, especially for the accuracy of the heat retention rating.” This was also supported by findings during analysis of responses during the technical consultation that “the increase in the fee would cover the costs of the additional regulatory services which will require additional resources, and ensure the system is well supported and quality assured. The increase would be broadly in line with inflation, which was considered reasonable. The fact that the proposed costs would remain lower than some other European countries/the European average was welcomed”.

• Enhanced auditing requirements

The Scottish Government’s proposals drew mixed responses from businesses. A social landlord SME noted that “there are significant challenges with onsite auditing – and this is even more acute in remote, rural and island areas. The risk is smaller from an RSL point of view”. An SME Approved Organisation also highlighted that “with audits going above and beyond, this means more costs to develop assessors. Others took a positive view, with a large energy company noting that “for the purpose and benefits of onsite audits, there are some opportunities. If we find out that EPCs are of a poorer standard, we can build it into a win-win scenario by improving the EPC and the assessor.” An SME Approved Organisation said that “benefits [from audits] are that assessor’s ability to rationalise EPCs should improve. With government auditing this should strengthen the reputation of the market. It should be very good for EPC quality in general and needs to be done fairly”.

• Penalty charges

Interviewees did not comment on this in the one-to-one interviews, but during analysis of the consultation, one built environment-focused organisation noted that “regular reviews and considerations towards inflationary adjustments, and any increase in EPC Regulation breaches, would be a reasonable course of action in keeping the penalty charges proportionate over the medium and long term”.

• Reduction in validity period impact on costs

There was concern from an SME social landlord that reducing the validity period could potentially double the rate of assessments being required and that this could necessitate employing more staff to undertake this, with a risk of significant cost increases. An Approved Organisation SME was concerned about a lot of change within the industry and that reducing the validity period was a major shift in policy. Another Approved Organisation SME noted that the additional volumes required by reduction in validity period may require additional assessors working in the sector. A large building energy modelling software and consultancy firm saw little impact in the reduction in validity period.

• EPC as a driver for compliance

A number of interviewees recognised that there was a role for EPCs in supporting compliance with potential mandatory standards or eligibility for funding. An Approved Organisation SME said that “[EPCs]...should be used for things like funding, marketing and regulatory reasons”, whilst a large building energy modelling software and consultancy firm saw benefits in EPCs taking on an increased role if evidencing compliance, which could help their business to do more.

• New EPC ratings

Businesses interviewed were generally supportive of the new ratings proposed, with a large energy company noting that they were “really supportive of the new metrics considered. Carbon intensity and energy costs of the home are really good aspects to compare”. A large heating systems manufacturer said that “there are positives from the ratings being able to show the actual benefits of air source heat pumps.” An Approved Organisation SME, on the other hand, was concerned about “what happens with movements between bands? Will people accept this drop even though they see no difference in their own properties. This is a huge issue and could have impact on programmes”.

• Education / awareness of EPCs

Changes to the rating system also linked to issues around public awareness and perception of EPCs, with a large energy company highlighting the role that EPCs can play in this and that this “would be to the benefit of householders”, whilst a large heating systems manufacturer stressed that the new ratings were “likely to need a public awareness campaign”. An Approved Organisation SME noted that “until in the long term people can see house prices influenced by EPCs, estate agents will not be motivated to go for quality. These correlations should be pointed out more.”

• Impacts on property market

Interviewees highlighted a range of impacts. A medium to large business in the financial industries noted that “EPCs are needed to understand the value of existing portfolios and their robustness over time. In a no action taken scenario the black book valuations of properties drop 40% over 20 years. The only basis for addressing this is through standardised EPCs and that is why getting reform right is so important. It informs lending policies and future impacts”. Another noted that “there could be instances of properties moving down ratings and this could be mortgage linked, moving homes out of eligibility.” EPCs were seen as providing a potential baseline on energy efficiency which could help customers and mortgage brokers, with a medium to large business in the financial industries highlighting that “research from 2024 investigated the importance of energy efficiency to buyers. It showed that energy efficiency was the second most sought-after attribute following location”.

Engagement with assessor organisations

As part of our EPC reform programme, we have also completed a review of the operational governance that covers those businesses which are accreditation organisations and with EPC assessors themselves, including representative bodies such as the Property Energy Professionals Association and Proficiency.

We have engaged extensively with each Approved Organisation through our External Reference Group (ERG) and directly (both virtually and in-person) to discuss our proposed EPC reform proposals. The governance review covered five main thematic areas:

• Appointment and management of AOs – including moving to a time-limited appointment process and more regular reporting requirements.
• Quality assurance – including the introduction of onsite auditing and smart auditing.
• Enforcement of regulations – including additional support for local authorities to discharge their duties as enforcement bodies.
• Consumer c are – including improving consumer awareness.
• Skills and qualifications of EPC assessors – including a commitment to review the skills landscape jointly with other devolved administrations across the United Kingdom, and to ensure future training reflects the upcoming regulatory changes in Scotland.

AOs were, generally, supportive of our proposals. Questions around the logistics of onsite auditing were a common theme – and, as the Scottish Government progresses on the development of this new function, we will continue to engage with our AOs to ensure any onsite audit regime can be successfully delivered.

Concerns were raised regarding the duration of the time-limited appointment of AOs. The Scottish Government has recognised these concerns and we agree that a balanced approach is required to give our existing (and potential future) AOs the certainty needed, while also ensuring any potential poor performance/ non-compliance can be addressed sufficiently.