Scotland’s Climate Change Act Good News Property Sector
31st March 2010
Alan McKenna
The unanimous backing given by MSPs to the Climate Change (Scotland) Act should be welcomed with open arms by Scotland’s property sector. Described as the world’s most ambitious climate change measures, the Act sets a target of reducing emissions by 80 per cent by 2050. Significantly, it also gives powers to fine householders and businesses if they fail to act to improve energy efficiency.
The Act follows in the wake of the unveiling of a strategy to encourage energy companies and the UK government to boost energy efficiency investment in Scotland by securing a greater share for Scottish households from the Carbon Emissions Reduction Target (CERT).
CERT is an initiative that places an obligation on energy companies to provide households with subsidised energy efficiency measures, such as cavity wall and loft insulation, energy efficient appliances and low energy light bulbs. The focus of the strategy is working with delivery partners in Scotland to introduce many more potential CERT customers to the energy supply companies.
Housing and Communities Minister Alex Neil has said that there has never been a greater need to improve the energy performance of Scotland’s homes, noting that high fuel prices are putting real pressure upon household budgets and more and more are falling into fuel poverty. Faced with this, improving the energy efficiency of Scotland’s housing stock presents a sustainable solution.
Already British Gas has over 75 schemes with local authorities throughout the UK where if householders insulate their homes, they can receive up to £125 off their council tax bill. Meanwhile, councils in Scotland are now considering options to replace council tax. For example, Glasgow City Council has proposed a ‘hybrid’ tax, being a combination of property and land values. The Scottish government will of course require to legislate if such a change is to be made.
Meanwhile, it is understood that information on how council tax payers who carry out energy saving alterations can achieve discounts of £50 from their council tax will be included in the council tax bills issued in April.
In addition to householders, it is also in the interests of commercial property developers, owners and occupiers to make property as energy efficient as possible through redevelopment to reduce running costs and avoid being hit by forthcoming taxes and legislation. Taking steps to improve energy performance now can save money in the future and improving a property’s Energy Performance Certificate (EPC) rating today can, in the long term, deliver substantial savings by reducing energy bills.
Energy efficient property will be more attractive to potential occupants with its promise of lower energy bills, giving them a higher capital value than less energy efficient buildings, and the imposition of more stringent environmental regulations by the government can play a part in stimulating the economy. Indeed, according to recent research, an energy efficiency programme to refurbish non-domestic buildings could create 50,000 long term jobs while saving UK plc £700m in lower energy bills.
One way for the government to encourage investment in the refurbishment of existing buildings to make them more energy efficient would be to extend plans for green loans for homeowners to encompass non-domestic buildings. The government intends to enable businesses to set up solar panels, wind turbines and ground-source heat pumps without being immediately liable to an increase in the business rates applied to these investments.
Given that emissions from the built environment make up nearly half of the UK’s carbon emissions, what is clear is that how the property industry responds to government regulations to make buildings more energy-efficient will be instrumental in meeting Britain’s targets.
Indeed, the Scottish Property Federation has already welcomed the introduction to the Climate Change Act of business rates incentives for energy efficiency improvements to commercial properties. By legislating for regulations to reduce carbon emissions from existing properties, not just new properties, the Scottish Parliament is moving further ahead in relation to Scotland’s property sector than any other jurisdiction within the UK.
A new targeted rates relief for renewable energy producers will be introduced from 1 April offering discounts of up to 100% to support the central role of renewable energy producers in the climate change agenda and to promote expansion of the sector. Clearly the Climate Change Act places energy efficiency at the top of the agenda in Scotland’s commercial and residential property sectors.
Alan McKenna FRICS, Dip Rating is head of rating at Shepherd Chartered Surveyors
