What is a Section 63 action plan (and do I need one)?

According to the United Nations Environment Programme, buildings account for approximately 39% of energy-related carbon dioxide emissions annually. Therefore tackling this output is essential in the fight against climate change.

As part of their contribution towards tackling climate change, the Scottish Government has committed to achieving an 80% reduction in Scotland’s overall emissions by 2050. 

In order to achieve this ambitious, but necessary goal, they have introduced The Climate Change Act Scotland 2009,  with Section 63, specifically focussed on assessing and improving the energy performance of non-domestic buildings. 

This blog will explore everything you need to know about Section 63 of the The Climate Change (Scotland) Act 2009, to help you understand what you need to do as a non-domestic building owner. 

What exactly is Section 63 of the Climate Change (Scotland) Act?

The Energy Performance Certificate (EPC) was introduced in order to facilitate the reduction of energy and CO2 emissions in all UK properties available to buy or rent. 

But, in 2014, Consumer Focus research showed that only 17% of those with an EPC were acting on the recommendations. This lack of voluntary action prompted the introduction of mandatory energy requirements. 

Under Section 63: Energy Performance of Non-Domestic Buildings, of the Climate Change (Scotland) Act 2009, it is a legal requirement for owners of non-domestic buildings to evaluate and improve the energy efficiency of their properties with the aim of reducing greenhouse gas emissions.

These regulations are regularly referred to as the Section 63 regulations.

As of 1st September, 2016, the regulations require the owners of non-domestic properties to:

• undertake an assessment on the energy performance and greenhouse gas emissions of existing non-domestic buildings
• produce and Action plan outlining steps for energy efficiency improvement
• take steps to improve the energy performance of non-domestic buildings

What is a Section 63 action plan?

A Section 63 Action Plan identifies opportunities for carbon and energy performance improvement, as well as outlining how these could be carried out through physical improvements to the property.

As with the Energy Performance Certificate, the Action Plan must be available to prospective buyers or tenants, and provided to the new owner or tenant. 

There are two types of Action Plan:

• Prescribed measures Action Plan
• Alternative measures Action Plan

The Prescribed Measures Action Plan, is a list based on the Scottish Government’s priorities for improving existing buildings. There are seven specific suggested improvements:

• Adding central time heating controls to the HVAC system.
• Upgrading lighting controls to manual and photoelectric switching.
• Draught-stripping windows and doors (to reduce heat loss )
• Adding insulation to the hot water storage cylinder.
• Improving lighting by replacing low efficiency incandescent lamps with compact fluorescent lamps.
• Replacing the boiler if older than 15 years.
• Insulating accessible roof space 

The above improvements would happen in an ideal scenario. However they are not tailored, and do not take into consideration the feasibility of the improvements, or the budget within which the owner is working. This is where the Alternative Action Plan may come in.

The Alternative Action Plan is a more tailored approach that is designed to ensure the building will achieve the desired energy target rating. This type of Action plan involves more work upfront, but may allow for a more flexible, and cost effective approach, while still reducing carbon emissions. 

Who needs a section 63 action plan?

Most owners of a non-domestic building will require a Section 63 Action Plan. The need for one is triggered after the sale and lease of a non-domestic building over 1000m2 floor area. 

It is a requirement over and above an Energy Performance Certificate however in certain circumstances, if your EPC is valid, this could be used to inform the Action Plan. 

There are some buildings that are exempt from a section 63 action plan, including:

• Buildings with a floor area of less than 1,000 sq m.
• Properties that have met or exceed the equivalent energy standards of the 2002 Scottish building regulations. This may exempt older buildings that have had comprehensive upgrades to their HVAC and lighting. 
• Temporary buildings  (intended life of 2 years or less).
• Workshops and agricultural buildings meeting the “low energy demand” rule.
• Buildings participating in the Green Deal scheme.
• Prisons and young offender institutions.

If you fall into one of these categories, then you will only require an EPC.

How do you get a Section 63 report?

In order to get an action plan, you will need to employ the services of an accredited and registered Section 63 Advisor. They will be able to produce an Action Plan, as well as able to provide advice on how the plan can be implemented in order to meet identified targets. 

Section 63 Advisors are usually non-domestic EPC Assessors, who have undertaken further training in the Action Plan assessment software and are able to provide building-specific advice on energy efficiency improvements. 

It may be beneficial, if possible to engage a Section 63 Advisor who also carried out your EPC as they will be familiar with your building. 

How long do you have to implement the Section 63 action plan?

Once the Action Plan has been agreed upon with your Section 63 Advisor, you will have 42 months to complete the improvements outlined in the Action Plan. 

If the owner wishes, they can choose to defer the improvements by lodging a Display Energy Certificate (DEC), which reports on the actual measured energy use. The DEC must be lodged annually until the action plan improvements are implemented. 

Section 63 Action Plans and DECs should be lodged with the Scottish EPC Register and must legally be made available to prospective buyers or tenants.

Once the improvements have been completed a new EPC and Action Plan are created. These are lodged onto the Scottish Central Register in order to confirm that the building meets the required regulations. 

How much does a Section 63 report cost?

Putting an exact figure on how much will depend on a number of considerations. Each building will be appraised and priced individually, so any pricing structure will be subject to change. 

However, a Section 63 Action Plan will usually cost you somewhere in the region of £500- £900. 

Of course, on top of how much it will cost to employ a Section 63 Advisor there are other cost considerations.

Firstly, you need to consider how much the Action Plan improvements will cost to implement. This is where the Alternative Action Plan may come into play. Although the cost may be more upfront, as it is a more invested process, the outline is more flexible and takes into consideration any budget requirements that you might have for improving a building. While ideally you would complete everything on the Prescribed Action Plan, this may not be a financially feasible option for you at this time.

However, there are also a lot of cost benefits to a Section 63 Action Plan.

Firstly, you need to consider how much you could save by improving the energy efficiency of your building – potentially thousands. It makes it more attractive to potential renters or buyers, as they will spend less money on energy. This could help recoup some of the initial outlay costs. 

Plus, there are the environmental considerations. The Section 63 regulations were introduced in order to combat climate change, and the cost to the environment could be high if the improvements are not undertaken. 

There are also financial implications if you don’t carry out the required improvements laid out in the Section 63 Action Plan. If you fail to provide an Action Plan upon sale or rent, or if you fail to complete the improvement works within the time required you could be hit with a £1000 fine for each failure. 

In summary: What is a Section 63 action plan?

A section 63 action plan is a crucial step on the road to reducing greenhouse gas emissions and improving energy efficiency in non-domestic building owners.

As well as being a legal requirement, the Action Plan will outline the necessary efficiency improvements, which will not only help you avoid fines for non-compliance, but will also save you money on energy costs, and help the environment.

Hardies Property & Construction Consultants have a number of experienced Chartered Surveyors who are fully trained and accredited Commercial Energy Assessors. If you would like to find out how we can help then get in touch. We cover all areas of Scotland and would be happy to provide you with advice and free quotations for the production of a Section 63 Action Plan.