Energy Performance of Buildings (Scotland) Regulations 2025: Fairer Scotland Duty assessment

Fairer Scotland Duty Summary

Title of regulations

The Energy Performance of Buildings (Scotland) Regulation 2025

Summary of aims and expected outcomes of The Energy Performance of Buildings (Scotland) Regulation 2025

The Fairer Scotland Duty, set out in Part 1 of the Equality Act 2010, came into force in Scotland from 1 April 2018. It places a legal responsibility on particular public bodies in Scotland to actively consider (‘pay due regard’ to) how they can reduce inequalities of outcome caused by socio-economic disadvantage, when making strategic decisions.

This Fairer Scotland Duty Assessment considers the impacts of the Energy Performance of Buildings (Scotland) Regulation 2025 on those experiencing socio-economic disadvantage – those living on a low income compared to others in Scotland. These regulations will introduce reformed Energy Performance Certificates (EPCs). This assessment does not explicitly assess the impact of policies which rely, or may rely in future, on EPCs, such as Minimum Energy Efficiency Standards.

EPCs are an important source of information for current and potential building owners and tenants to help them understand the energy performance of their building. EPCs must be provided when a building is advertised for sale or for let to a new tenant, and upon completion of construction of a new building. They have, in practice, formed part of the prescribed documents of the Home Report since 2008.

The need for this reform programme follows advice from our statutory advisers, the Climate Change Committee^[1], and is further compounded by recommendations received as part of an independent report, commissioned on behalf of the Scottish Government in 2019^[2]. The Scottish Government committed to reforming EPCs in light of longstanding feedback that they are not fit for purpose in providing property owners, tenants, or purchasers with relevant information on meeting net zero requirements for heating and energy efficiency.

The current EPC rating system has been widely criticised for not measuring and incentivising the most useful thing for consumers to understand net zero climate impacts. For example, in some circumstances it can reward the installation of cheaper to run, but polluting, heating systems. For energy efficiency, this means that, since they are based on energy cost, they do not accurately reflect how good the building’s insulation is as the rating is strongly influenced by the cost of fuel.

EPCs have also been criticised for being hard to understand for consumers. Work is therefore needed to redesign the format of the certificate to make it more accessible. The current EPC only makes standardised assumptions about a building’s energy needs. It does not take account of occupants’ behaviour or preferences, making it harder for consumers to understand the impact their behaviours could have on their energy use and emissions.

The Scottish Government therefore recognises the need for reforms to remove the potential perverse outcomes of the current EPC rating system and to ensure that EPCs give more accurate and useful information to consumers on their building’s performance against statutory net zero climate objectives.

Reforms to the technical and operational infrastructure upon which EPCs are based are required since it is now life-expired and needs to be replaced. The technical infrastructure covers two elements: the EPC Register which is currently maintained by the Energy Saving Trust, appointed by the Scottish Ministers as Keeper of the Register; and the EPC calculation methodology (currently provided by SAP and SBEM).

The operational infrastructure consists of the Approved Organisations and assessors, which must meet requirements set out in the EPC regulations, and in the EPC Operational Framework. The current Operational Framework (which governs the conduct of assessors and the Approved Organisations) was established by the Scottish Government and introduced in late 2012 as part of the transposition of the recast Directive^[3]. This Framework is also now life-expired and must be reviewed and reformed in order to support the reforms and to improve the overall assurance of EPC quality.

Energy Performance Certificate (EPC) Regulations

The overall aim of these regulations is to provide the legislative basis for the operation of the EPC system and EPC assessor market within Scotland. The changes being made through the revised regulations are administrative in nature. They will not change the circumstances in which an EPC is currently required, when a property is advertised for sale or let, other than reducing the EPC validity period. The Energy Performance of Buildings (Scotland) Regulation 2025 regulations will:

• Introduce additional information on an EPC with a new EPC rating system for domestic buildings:
  • Heat Retention Rating (fabric energy efficiency);
  • Heating System Rating (type, emissions, efficiency, running costs)
  • Energy Cost Rating (retaining but renaming the existing Energy Efficiency Rating)
• introduce a new EPC rating system for non-domestic buildings;
• increase EPC lodgement fees
  • from £2.60 to £6.00 for domestic EPCs
  • from £12.10 to £15.50 for non-domestic EPCs
• reduce the validity period of EPCs from 10 to five years
• introduce strengthened operational governance arrangements for EPC assessors and Approved Organisations to enhance quality assurance for consumers;

EPCs supporting wider objectives

Beyond the legal requirements of the EPC regulations themselves, EPCs are also used to support a wide range of other government policies, regulations and funding programmes, including to:

• support the delivery of Scottish and UK Government programmes such as Warmer Homes Scotland, Area-Based Schemes, Home Energy Scotland loans and grants, the Energy Company Obligation and Renewable Heat Incentive;
• underpin statutory requirements (e.g. in practice acting as a prescribed document within the Home Report^[4]; as part of the Scottish Government’s Fuel Poverty Strategy^[5]; evidence in support of the Energy Company Obligation)
• provide lenders and landlords with information about the energy performance of their stock
• define mortgage terms used by banks and lending organisations
• supply information for energy efficiency research
• create statistical models and map potential improvements and costs, including government reporting in annual surveys such as the Scottish Housing Condition Survey^[6]

EPC Reform will contribute towards the Scottish Government’s wider strategic priorities of:

• Tackling the climate emergency by investing in green energy and infrastructure, since introducing the new EPC rating system will ensure that consumers have better information on the steps they can make to improve their property for net zero through investment in clean heating and energy efficiency; and the new operational framework will ensure higher quality EPC assessments that consumers can trust; these reforms will underpin proposed regulatory standards that will drive emissions reduction through decarbonisation of heating; and
• Eradicating child poverty, since the new EPC rating system will directly assess the contribution that poor energy efficiency makes towards fuel poverty specifically, and child poverty more widely, helping to inform the Scottish Government’s statutory fuel poverty strategy and to better-target government programmes and funding towards improving those properties which are hardest to heat.

Summary of evidence

Reformed EPCs will be an important tool for those experiencing socio-economic disadvantage as they will help homeowners and tenants understand their homes’ energy efficiency and provide information on potential improvements. This is particularly important for those experiencing income related pressures or who are at risk of fuel poverty, who may face greater barriers to accessing energy-efficient housing. The Regulations ensure that EPCs are available to prospective buyers and tenants so that informed decisions can be made on their decision to buy or rent a property. For those already occupying a property the EPC also provides information that they can use i.e. for tenants to engage with landlords on the energy efficiency of properties. This is important for those of socio-economic disadvantage given that households who are also in income poverty are the most likely to face serious difficulties paying for their essential needs including energy^[7].

The Climate Change Committee^[8], external stakeholders and independent reports have highlighted concerns around the relevance, accuracy and quality of EPCs produced and that this can impact all users of EPCs including those of socio-economic disadvantage. The ratings which EPCs currently display have been criticised by stakeholders as in need of reform as, in their current format, EPCs are not aligned with our net zero ambitions. An independent review^[9] of EPCs recommended the need to improve the quality of EPCs and, in particular, to strengthen quality assurance requirements around audit and inspection of EPCs.

EPCs have also been criticised^[10] for being hard to understand for consumers and consultation responses made clear that EPCs should provide clear information and links to further support to building owners and tenants to improve the energy efficiency of the buildings they occupy. Reformed EPCs have been designed to effectively communicate energy efficiency and heating system information to a wide array of users and provide links to further support where available.

These calls for reform have been made across the UK, with the UK Government receiving similar recommendations from the Climate Change Committee and consumer groups such as Which?

The independent Regulatory Review Group has also recommended that comprehensive public engagement is essential to ensure consumer understanding and support^[11].

A communications plan will be developed to ensure our key stakeholders and the wider public are made aware of the EPC reforms and how these changes may affect them in advance of the regulations coming into force.

The Regulatory Review Group also noted concerns raised about potential unintended consequences for consumers if mortgage providers start using the revised EPC ratings as criteria for lending. This has been mitigated through extensive engagement with the financial sector, including through the Financial Conduct Authority, Scottish Financial Enterprise and individual lenders and mortgage advisers, in advance of regulations coming into force. This will help ensure consistency in the way that lenders use the revised EPC ratings.

Internal 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;
• Directorate of Tax and Revenue (teams responsible for the proposed Building Safety Levy) public buildings, and with legal and analytical colleagues; and
• Directorate for Tackling Child Poverty and Social Justice (team responsible for Fairer Scotland Duty Assessment.)

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, an internal Scottish Government working group was established and included representatives from all of the policy and regulatory functions listed above. As these regulations were developed this group has continued to meet on a regular basis.

Consultations

As part of our evidence-gathering process, three public consultations on EPC reform have been held:

• Domestic Energy Performance Certificates (EPC) reform: consultation (2021)
• Energy Performance Certificate (EPC) reform: consultation (2023)
• Energy Performance Certificate reform – lodgement fees and penalty charges: technical consultation (2025)

During these consultations, a series of public and stakeholder workshops were held and were well attended. 16 one-to-one interviews with businesses were conducted.

Extensive external engagement with impacted individuals and sectors has also been ongoing throughout this reform programme. Consultation responses were received from groups with a focus on fuel poverty.

More than 60 equality rights’ organisations were contacted to highlight consultations and invite participation through a specific response, workshop attendance and contribution or through bilateral discussion to expand on proposals more directly.

Summary of Response Received

In response to the 2021 consultation, there were few responses which specifically raised issues of socio-economic disadvantage. However, in response to the question “Do you agree or disagree with the addition of the proposed Energy Use Rating?” a number of responses raised concerns that an EPC would require changes to be made to a property at potential significant cost to property owners. This was not the Scottish Government’s policy intention, and building owners are not required to install potential improvement measures or alternative heating systems that are highlighted on an EPC. Respondents stressed that it is important to retain a cost rating or running cost information on an EPC, as this is useful information for householders.

The 2023 consultation asked more direct questions on socio-economic disadvantage, including “We welcome any views on the usefulness of our proposals for other relevant policy areas, such as fuel poverty or the delivery of government schemes.” EPCs were perceived to be useful for a range of policy areas as well as better targeting of resources for schemes, however, there were also concerns the EPC rating system could lead to higher levels of fuel poverty if people were forced to install heating systems that were more expensive to run. As now set out in the regulations, there is no legal requirement for building owners to install the improvement measures or alternative heating systems highlighted on an EPC. The EPC continues to be a source of information only.

In response to the 2025 consultation concerns were shared that an increase in lodgement fees combined with reduced validity period would result in increased costs for social housing provision, which could create additional pressures on poorer households. One organisation noted that the fee increase could have significant financial impacts when applied to the full council housing stock, with increases potentially being passed on to tenants. Workshops as part of the Energy Performance Certificate reform – lodgement fees and penalty charges: technical consultation (2025)^[12] asked attendees what the impact of our proposals, in relation to lodgement fees, onsite audit and inspections and penalty charges, will be on various groups in Scotland. No potential socio-economic impacts were identified by stakeholders at these workshops.

In addition, to support our work, an External Reference Group (ERG) and subgroup of the Scottish Government’s Heat in Buildings Strategic Advisory Group (SAG) were set up to provide external, expert input. Consumer interests are represented across these groups by Consumer Scotland and Citizens Advice Scotland (CAS).