Summary – Scottish Government Heat in Buildings Proposals
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Questionnaire
Question 1
To what extent do you support our proposal to prohibit the use of polluting heating systems in all buildings after 2045?
☒ Strongly support
The NIA supports the prohibition of polluting systems in all buildings after 2045, as decarbonising Scotland’s buildings is essential for it meet its 2045 net zero target. This is supported by the proposed minimum energy efficiency standards (MEES), which will ensure that the majority of Scottish homes achieve a good level of fabric energy efficiency. However, the standards do not include more expensive measures such as solid wall insulation, which risks leaving some households behind.
A fabric first approach is vital to ensure that properties are ready for the transition to low-carbon heat. If heat pumps (or other low carbon heating systems) are installed in properties with inadequate insulation, there is a risk that those heat pumps will have overly expensive running costs, as heat pumps are most effective in properties with a high thermal efficiency. Making sure that a home has adequate insulation prior to installing a heat pump is essential to safeguard consumers from potential energy bill increases.
To improve information and advice, the NIA supports the development of an assessment tool to help building owners understand which types of clean heating system are most suitable for their building.
Question 2
To what extent do you agree that we should introduce a minimum energy efficiency standard to be met by private sector landlords by the end of 2028 (even if they are already using clean heating)?
☒ Strongly support
The NIA supports the introduction MEES for private sector landlords by 2028, as private rented homes typically have a poorer standard of energy efficiency. The Scottish House Condition Survey published in May 2023 found that 30% of private rented sector households are fuel poor, in comparison, only 9% of those with a mortgage and 14% of those who own outright are assessed to be fuel poor – highlighting that private rented homes should be urgently addressed to protect tenants.
This said, there must be support in place to support landlords through the transition. A recent report by British Gas found that one of the main barriers for landlords looking to upgrade their properties is a lack of knowledge around EPC standards, with 44% of landlords not knowing the EPC rating of their properties. In addition, over half of landlords don’t know enough about the grants available to them to make improvements. Government and industry must work together to tackle the lack of knowledge and financial support to incentivise landlords to make changes to properties.
It is also important that private landlords are given sufficient notice before MEES come into force, so that they have time to upgrade their properties. Therefore, we would like to see the Scottish Government finalise MEES regulations and embed them into law as quickly as possible. This would provide much-needed clarity to landlords and the retrofit industry, which is important for targets to be deliverable. If MEES are implemented too close to the date they are set to come into force, it may be impossible to feasibly meet them. For instance, there may be a risk of supply chain bottlenecks if thousands of private landlords are trying to install energy efficiency measures at the same time.
The NIA agrees that MEES should still be met even if the property has clean heating installed. A fabric-first approach, in line with PAS 2035, should be followed and is essential to reduce overall energy demand and to improve the comfort and well-being of tenants.
(1 Scottish Government (2023). Scottish House Condition Survey: 2021 Key Findings. Available at: Fuel Poverty – Scottish House Condition Survey: 2021 Key Findings – gov.scot (www.gov.scot), 2 British Gas (2023). Greening the Private Rental Sector. Available at: british-gas-greening-the-prs-report.pdf (centrica.com)
Question 3
To what extent do you agree that we should introduce a minimum energy efficiency standard to be met in owner occupied homes (which still have a polluting heating system) by the end of 2033?
☒ Somewhat support
The NIA supports the introduction of a MEES to be met in owner occupied homes by the end of 2033.
However, and especially without an initial legal requirement to do so, advice and support for owner occupiers must be improved to incentivise residents to make the necessary improvements to their homes. The proposal does state ‘there will be very strong incentives for homeowners to invest in energy efficiency’ however these are not fully realised within this consultation. We urge the Scottish Government to roll out these strong incentives as soon as possible, as these will be vital to encourage homeowners to meet MEES and to reduce the financial burden of doing so.
The NIA disagrees with the proposal that owner-occupied homes that have ended their use of polluting heating by 2033 will not be required to meet the MEES. Whilst we understand the need to protect homeowners from financial burden, it is vital to treat the fabric of the home first, in line with PAS 2035, to maximise efficiency of low carbon heat and to ensure measures deliver the intended outcomes. A fabric-first approach according to PAS 2035 is of critical importance for the following reasons:
- To protect residents from high energy prices. Low carbon heating system replacements are expected to be dominated by electrified options like heat pumps. The high electricity to gas price ratio (3.86 to 1 as of the January 2024 price cap level) means that without significant energy demand reduction measures, residents with electrified heating will be exposed to high energy bills. Therefore, we believe that households who have replaced polluting heating systems should still be subject to MEES. This is particularly important given the current cost-of-living and energy crises, with electricity prices expected to remain well above pre-crisis levels for the rest of the decade. MEES for all households, regardless of heating system, will protect them from the risk of sustained high energy bills in the long term.
- To increase the efficiency and reduce the running costs of heat pumps. The efficiency of heat pumps is linked to the fabric efficiency of homes. MEES for homes installing heat pumps are important because a higher fabric efficiency will increase the efficiency of heat pumps and reduce the cost they incur to run. Higher insulation standards should allow a smaller, cheaper heat pump to be installed that will have lower operating costs for residents. As such, MEES for all homes will result in more efficient and cheaper-to-run heating systems.
- To reduce the cost of electricity network expansion. If the majority of homes are to replace gas with electric heating, a huge expansion of the electricity grid will be required. There is a huge capital cost associated with building more renewable generation capacity and expanding the electricity network. According to Ofgem and the UK Government, £170bn – £210bn will need to be invested in the UK grid by 2050 to achieve our net zero targets. Therefore, it is imperative that homes consume as little electricity as possible because the cheapest energy is the energy we don’t use. Ambitious MEES which reduce the energy demand of new homes will reduce the scale by which the electricity network and additional renewable capacity will need to be expanded by, thus saving billions of pounds in capital costs for residents and government.
Therefore, the NIA believes that MEES should apply to all homes, including those with a non-polluting heating system. This should be accompanied by greater support for residents to improve the energy efficiency of their homes.
(3 Ofgem (2024). Energy price cap. Available at: Energy price cap | Ofgem, 4 Jillian Ambrose (2023). ‘Higher energy bills forecast for UK households next year’, The Guardian. Available at: Higher energy bills forecast for UK households next year | Energy bills | The Guardian, 5 Regen. Building a GB electricity network ready for net zero. Available at: Building a GB electricity network for net zero (regen.co.uk)
Question 4
Do you agree with our proposal to set a minimum energy efficiency standard that can be met by either installing a straightforward list of measures, or showing a good level of energy efficiency based on a reformed EPC fabric efficiency metric?
☒ Somewhat support
The Scottish Government has recently consulted on EPC reform, therefore we expect the accuracy of EPCs will improve after the introduction of the new metrics that more accurately reflect the fabric efficiency of a home and support the transition to net zero. This will be further strengthened by the introduction of the Home Energy Model which will result in significantly more accurate and effective EPCs. EPCs take into account the individual property characteristics, whereas using a ‘one size fits all’ list that doesn’t consider property-specific characteristics creates a risk that the list of measures will become a ‘tick-box’ exercise that is irrelevant for certain property types.
It must be recognised and considered that properties have differing energy needs, and it is critical to ensure that residents have access to high quality, accessible advice to make sure that they can make informed choices about which measures are the most suitable for their property. The focus of the minimum energy efficiency standard must be to ensure that each property can benefit from the most suitable energy efficiency measures tailored to its individual needs.
Should the Scottish Government decide to use a list of measures to demonstrate compliance with the MEES, we believe that solid wall insulation (IWI and EWI) should also be included. This is essential to make sure that solid wall homes are not left behind on the transition to net zero. For many solid wall properties, most or all of the measures on the proposed list will not be relevant, meaning that these homes will be subject to weaker energy efficiency standards. There is a risk that this will create a two-tiered society whereby those with solid walls will be subject to higher energy bills and colder homes than those without.
The proposed requirements reflect a commitment to providing warmer homes and lower bills for residents. However, the practicalities for homeowners and landlords must be considered. Meeting the standards may involve a significant financial contribution, particularly in harder to treat properties which require complex measures. To alleviate this, the NIA recommends the implementation of additional support, funding and guidance to effectively deliver the proposed measures.
Question 5
What is your view on the initial proposed list of measures to meet the minimum energy efficiency standard?
☒ Somewhat oppose
We believe that solid wall insulation (IWI and EWI) should also be included on the proposed list of measures. This is essential to make sure that solid wall homes are not left behind on the transition to net zero. For many solid wall properties, most or all of the measures on the proposed list will not be relevant, meaning that these homes will be subject to weaker energy efficiency standards. There is a risk that this will create a two-tiered society whereby those with solid walls will be subject to higher energy bills and colder homes than those without.
Nearly a quarter of homes in Scotland have solid walls and of these, only 16% had insulated walls as of 2022. Hence, there is an urgent need for more targeted support for solid wall homes, particularly because 45% of a home’s heat can be lost through uninsulated solid walls. We recognise that installing solid wall insulation across all of the homes that need it will be a challenge and therefore we would be open to a later compliance date for solid wall properties. However, it is vital that solid wall properties are not disregarded altogether from MEES. This would leave residents of solid wall homes colder and worse off in the long-term. Therefore, solid wall insulation (IWI and EWI) installed in line with PAS 2030/2035 as part of a fabric first approach, should be included on the list of measures for any MEES. According to Energy Saving Trust, this could save a typical detached home £660 per year on their energy bills.
Early engagement with residents is also essential to demonstrate the benefits of such measures. Including higher cost measures in the list alongside providing high-quality advice will help residents to make informed choices. Where necessary, additional time and financial support to complete higher cost measures should be granted.
(6 Scottish Government (2024). Scottish House Condition Survey: 2022 Key Findings. Available at: Supporting documents – Scottish House Condition Survey: 2022 Key Findings – gov.scot (www.gov.scot), 7 Emma Spencer (2024). ‘Save energy with solid wall insulation’, Money Supermarket. Available at: Solid Wall Insulation | MoneySuperMarket, 8 Energy Saving Trust (2024). Solid wall insulation. Available at: Advice on insulating your solid walls – Energy Saving Trust)
Question 6
Do you think that properties for which most or all of the measures on the initial proposed list are not relevant should be required to meet an equivalent minimum energy efficiency standard?
☒ NO – these properties should be considered compliant once they have installed all the measures that are appropriate for their building type, even if this is few or no measures.
☒ YES – they should be required to meet the standard and additional measures should be included on the list (such as solid wall insulation, solid floor insulation and flat roof insulation), and they should be required to install all of these where feasible.
☒ YES – they should be required to meet the standard and additional measures should be included on the list (such as solid wall insulation, solid floor insulation and flat roof insulation), but they should only be required to install some of these where feasible and cost effective.
☒ YES – they should be required to meet the standard and additional measures should be included on the list (such as solid wall insulation, solid floor insulation and flat roof insulation), but they should only be required to install some of these where feasible, and they should be allowed additional time to do so.
Question 7
Do you think that properties for which most or all of the measures on the initial proposed list are not relevant should be required to meet an equivalent minimum energy efficiency standard?
☒ DON’T KNOW – The NIA believe that both the worst first and fabric first approach should be followed to address the need for investment in existing homes. MEES across housing tenures are a key regulatory lever that will drive progress towards more energy efficient housing.
However, the enforcement of private sector MEES and incentivising owner occupier MEES must be considered to ensure residents and landlords are motivated to make energy efficiency improvements. Measures must remain affordable, fair and feasible for homeowners and landlords and the Scottish Government should ensure that advice and financial support is accessible.
In terms of approach, the standard suggests that evidence including invoices or photographs could be used to show that a property has installed all of the measures (or as many as are feasible) for it to meet the standard. However, reformed EPCs will also include all the information that is required to show that an owner has met the standard. The NIA strongly advocates for robust evaluation and quality control of measures installed under MEES (such as through in-use performance testing) to avoid exposing residents to property damage and health risks, such as damp and mould, resulting from poor quality installations. High quality, PAS-compliant installs must be promoted to ensure that the benefits of measures are delivered as intended.
Question 9
To what extent do you support the requirement to end the use of polluting heating following a property purchase?
☒ Neither support nor oppose – The NIA agree that to ensure we reach climate change targets, we should consider other options to influence homeowners, landlords and businesses to make the change to clean heating systems before 2045.
The cost of upgrades to meet requirements will be a significant challenge for homeowners, especially for first-time buyers – and would significantly impact the housing market; affecting property values and impacting the buying/selling process. Lower-income homeowners are likely to be impacted the most, and this could create disparities in housing options.
Importantly, whilst the requirement to end the use of polluting heating is necessary, it is vital to ensure that properties are first ready for the transition to low-carbon heat. If heat pumps (or other low carbon heating systems) are installed in properties with inadequate insulation, there is a risk that those heat pumps will have overly expensive running costs, as heat pumps are most effective in properties with a high thermal efficiency. Making sure that a home has adequate insulation prior to installing a heat pump is essential to safeguard consumers from potential energy bill increases.
The NIA agrees that a grace period should be implemented to allow homeowners to make required changes. In order for the requirement to be fair, the Scottish Government would need to ensure:
- There are robust enforcement procedures in place to monitor and verify that upgrades have been installed to a high standard
- There is a significant range of finance products/ public funding to support people and businesses to make the required upgrades, including those who might not currently be able to access standard forms of private finance, such as mortgages.
- Homeowners have access to comprehensive advice and information services
- That the impact on the housing market is minimised as much as possible – for example providing an exemption for first-time buyers
Question 11
To what extent do you support our proposal to apply a cost-cap where people are required to end their use of polluting heating following a property purchase?
☒ Neither support nor oppose – The NIA understands the rationale for implementing a cost-cap to ensure homeowners do not pay unreasonable costs and that financing options can be determined.
However, introducing a cost-cap can be problematic as it could lead to unintended consequences such as compromising quality and market distortion. A strict cost-cap may influence selection of measures based solely on cost, rather than considering the most effective and sustainable solution – this could also discourage innovation in the sector. For instance, a low cost cap may exclude measures like solid wall insulation which are higher cost but which have significant benefits in terms of energy bill savings and thermal comfort.
If a cost-cap is implemented, the NIA recommends that the cap is flexible and adaptable to account for factors such as inflation, changing market rates and harder to treat properties.
Question 12
To what extent do you support our proposal to apply a cost-cap where people are required to end their use of polluting heating following a property purchase?
☒ Another, please suggest below – The three options proposed each have disadvantages which have been highlighted in the consultation. If a cost-cap is implemented, the NIA recommends that the cap is flexible and adaptable to account for factors such as inflation, changing market rates and harder to treat properties. To provide flexibility and fairness, cost-caps should take a range of variables into account, including building type, wall type, EPC rating, heating type etc, as seen with other energy efficiency schemes. Every property is different and there are many factors that can affect the cost of upgrading to a reasonable level of energy efficiency. Therefore, it is important that any cost cap reflects the heterogenous nature of Scotland’s housing stock and does not exclude harder to treat properties from important energy efficiency standards.
Question 18
We will need to have a way to monitor if people are meeting the Heat in Buildings Standard, and discussed two options for this. Which do you support?
☒ A combination of the two – The NIA supports using a combination of both EPCs and sampling to monitor and enforce the proposed requirements.
The NIA also strongly advocates for evaluation and quality control of measures installed, to avoid exposing residents to property damage and health risks, such as damp and mould, resulting from poor quality installations. Monitoring must take into account the quality of installs to ensure that the intended consequences are delivered. These further checks could be completed as part of the sampling process.
Question 19
We will need to have a way to enforce the Heat in Buildings Standard. We discussed possible options to help achieve compliance. What are your views on these ideas?
☒ I support a mixture of the above options – The NIA believes the most effective way to enforce the Heat in Buildings Standard is through proactive reinforcement; offering comprehensive information and advice alongside a range of different financing options. The Scottish Government’s priority must be to provide residents with financial support and generous incentives to help them comply with MEES, with penalties a last resort.
The NIA agrees with proposing that private landlords should be subject to civil penalties if they refuse to meet the MEES. However, a recent report by British Gas shows that lack of information and costs are the main barriers for landlords when considering upgrades to properties. Therefore, it is important that appropriate support is available to help landlords comply and to avoid the need for penalties wherever possible.
For homeowners, the NIA agrees with the Scottish Government’s decision to avoid wider civil penalties, at least for the initial stages of the standard – particularly as the main barrier is the cost of measures. Homeowners should be engaged as early as possible to achieve targets. Information and support around eligible funding streams must be improved to incentivise homeowners to implement measures.
In addition, it is likely that enforcement bodies will experience gaps and inconsistencies with the quality of EPC data, hindering the identification of target properties. The Scottish Government should facilitate cross-team working for example between landlords, local authorities, Historic Environment Scotland, building control and trading standards to share intelligence and coordinate enforcement activity.
(9 British Gas (2023). Greening the Private Rental Sector. Available at: british-gas-greening-the-prs-report.pdf (centrica.com), 10 Centre for Sustainable Energy (2022). Compliance & Enforcement of the Minimum Energy Efficiency Standard (MEES) in the Private Rented Sector. Available at: Compliance & Enforcement of the Minimum Energy Efficiency Standard (MEES) in the Private Rented Sector (centreforsustainableenergy.ams3.digitaloceanspaces.com)
Question 20
To what extent do you support our proposals to modify the Standard or exempt certain people from the need to meet the Heat in Buildings Standard?
☒ Somewhat support – The NIA accepts that individual circumstances, and our homes and buildings, vary significantly, and therefore any enforcement should be fair and should protect vulnerable residents. Exemptions should be treated on a case-by-case basis where possible to allow for the greatest flexibility.
As full exemption from standards would hinder the pace we reduce carbon emissions, this should only be provided in a very limited set of circumstances where it is not possible for standards to be met. Instead, additional time and support should be offered for properties where it is more difficult to meet standards. For instance, we would support giving solid wall homes a later date to comply with MEES. This recognises the challenges associated with insulating Scotland’s solid wall housing stock, without excluding them from standards altogether, which would leave residents of solid wall homes colder and worse off.
Question 22
To what extent do you support our proposals to give certain people extra time to meet the Heat in Buildings Standard?
☒ Somewhat support – The NIA accepts that individual circumstances, and our homes and buildings, vary significantly, and therefore any enforcement should be fair and should protect vulnerable residents.
The NIA also agrees that extra time may be required for those living in properties where clean heating options are limited – in this case residents should focus on improving the fabric of the building to reduce energy demand and to ensure the property is ready for clean heat once suitable options become available.
As full exemption from standards would hinder the pace we reduce carbon emissions – additional time and support should instead be offered, where reasonable and feasible, to do so.
