RESIDENTIAL PROPERTY: NEW PROPOSALS FOR MINIMUM STANDARDS OF ENERGY EFFICIENCY IN THE PRIVATE RENTED SECTOR
The Scottish Government has launched a new consultation on proposed regulations requiring most rented homes to meet or exceed a new EPC HRR Band C. This is the third time that the Scottish Government has consulted on minimum energy efficiency standards in recent years.
Those tenancies to which the Repairing Standard currently applies would fall within scope (so most private residential tenancies (PRTs) and short assured tenancies (SATs) would be covered by the proposals), but short-term lets would be excluded as would the tenancies on agricultural holdings, crofts and small landholdings currently excluded from the Repairing Standard – even once the Repairing Standard has been extended to these tenancies from 28 March 2027.
Under the proposals, a landlord will not be able to let a property unless they (1) have an EPC HRR Band C or (2) have made “all relevant energy efficiency improvements” or (3) qualify for an exemption.
What is EPC HRR Band C?
The Scottish Government intends to introduce a new energy performance (EPC) system in autumn 2026 which will include a Heat Retention Rating (HRR) based on the building’s fabric. A current EPC Category C would not be evidence of compliance with EPC HRR Band C and a new reformed EPC would be required.
What are “relevant energy efficiency improvements?
A “relevant energy efficiency improvement” is an improvement taken from a list in the proposed regulations (such as insulation, double glazing and draught proofing) which is identified in an EPC issued under the proposed new system as one which would improve the energy efficiency for that property and for which the cost of purchase or installation can be financed wholly or partly by a Scottish Government grant or loan.
The proposed regulations set a £10K cap on how much a landlord must spend on relevant energy efficiency improvements, including the cost of a new EPC. If improvements to meet the required standard exceed this cap, landlords must spend up to the cap and then register for an exemption which remains in place until the property changes ownership.
What are the other exemptions?
Limited five year exemptions would apply for some situations, including situations where the tenant or planning authority is refusing the carrying out of any relevant energy efficiency improvements or where there is potential structural harm caused by such works (expert evidence required). A six month exemption would be available for new owners of substandard properties with sitting tenants.
Briefing note and timing
A briefing note with more detail on the proposals is available here. The proposed regulations will be of interest to those who are (or who may become) private landlords, but it should be stressed that these are just proposals at this stage and so they may change.
The consultation is available here and closes on 29 August 2025. If the proposals are taken forward, it can be excepted that regulations will be laid before the Scottish Parliament in early 2026, take effect for new tenancies from 1 April 2028, and apply to all tenancies from 1 April 2033.