Tenements Short Life Working Group – energy efficiency and zero emissions heating: final report

5. Recommendations

5.1 Recommendation 1: Owners will require funding from government and access to finance.

The SLWG fully supports the Scottish Government's aim of decarbonising Scotland's buildings, including tenements, and the targets set out in the Heat in Buildings Strategy. To achieve these, however, owners will require very significant financial support from government. Without substantial investment from the state many owners simply will not be able to afford the works required to meet new standards and the targets will not be met.

Given the nature of many tenement buildings the costs of improving energy efficiency are often higher and the options for zero direct emissions heating systems more limited than for other portions of Scotland's housing stock. Flats are more likely to be of traditional construction than the rest of the housing stock and often have limitations on available space. They may also require common measures to be taken across the entire building, potentially including undertaking significant repair and maintenance work prior to improved energy efficiency measures even being considered. Without significant financial assistance, undertaking the necessary improvements will be unachievable for many owners.

Any new funding programmes developed by government to tackle the challenge of tenements will need to address the issue of owners within a single tenement being in potentially significantly different financial situations from one another. Funding for necessary works must either be available to the building as whole (possibly via compulsory owners' associations should they be established in future) or significant assistance provided to each owner in the building to identify what funding is available to them individually.

The Group recognises that government resources are finite, even in the context of addressing the climate emergency, and that options for private finance are required. While it is clear that the decarbonisation of Scotland's building stock will be a generational challenge to be achieved over multiple parliaments, estimates in the Heat in Buildings Strategy suggest costs in excess of £33 billion with a commitment across the current parliamentary session of £1.8bn of public investment. This serves as a stark illustration of the gap between available public money and the total expenditure required.Therefore, the SLWG stresses the importance of the work being undertaken by the Green Heat Finance Taskforce,^[4] and was pleased to be invited to provide evidence to the Taskforce on the specific challenges and opportunities presented by tenements. We look forward to its findings.

While the costs of decarbonising our building stock will be enormous and owners will require considerable support, the Group is also keen to highlight the significant economic and cultural opportunities that the transition to Net Zero can bring if correctly harnessed. Local jobs and supply chains can be prioritised to boost communities, new green jobs and industries developed, and our built environment enhanced and future proofed to ensure our homes and buildings are safe, warm and efficient for generations to come.

5.2 Recommendation 2: The SLWG supports the Scottish Government's proposals to take a phased approach to regulating tenement buildings.

The SLWG strongly supports the establishment of compulsory owners' associations as recommended by the Scottish Parliamentary Working Group on Tenement Maintenance^[5] and which is now being considered by the SLC. It also understands the timeline and process of the SLC in undertaking its work.

The establishment of COAs, however, is not guaranteed nor is their ability to be the "silver bullet" able to deliver on all of the works that may be required. There remains uncertainty over the extent to which it will be possible and proportionate to mandate certain works and measures. Furthermore, while COAs could serve to facilitate the undertaking of common energy efficiency and zero direct emissions heat works in tenements this would not be their primary role and the SLWG would not wish to see discourse regarding potential future duties or obligations on COAs hinder the work of the SLC in any way.

Given this, the Group acknowledges the value of an approach which looks to improve the energy efficiency of the tenement stock as much as possible using the powers that may be available to the Scottish Government at different junctures and supports the proposed approach set out by the Scottish Government [Box 2].

Box 2: What might a phased approach to regulating tenements look like?

A phased approach to regulating tenements could, at phase 1, see individual flats within tenement buildings required to meet new energy efficiency standards, where this is feasible and cost-effective, alongside the rest of the housing stock. Depending on their suitability for individual zero direct emissions heating systems, certain types of tenements may initially not be asked to replace their existing fossil fuel systems until more suitable options could be offered to them, for example through development of a heat network or an assessment of communal heating options for the building being carried out.

At phase 2, all individual flats could be required to meet both new energy efficiency standards and use a zero direct emissions heating system.

This approach would be developed to work alongside the prospective legislative changes the SLC may propose following completion of its law reform project considering the establishment of compulsory owners' associations. For example, should COAs be established in future they may prove well placed to organise the undertaking of a future whole building assessment for energy efficiency and zero direct emissions heat recommending suitable common energy efficiency measures and zero direct emissions heating systems for the building. A whole building energy efficiency standard could also be considered in future should it be determined that such a standard was necessary, proportionate and enforceable.

Individual owners should be required to improve the energy efficiency of their dwellings as much as possible and consider zero direct emissions heating options where these are viable. This approach should be aligned across the owner occupied, private rented and social housing sectors.

Concurrently, the Scottish Government must work to encourage, support and facilitate common energy efficiency works where these are possible and promote the voluntary adoption of owners' associations in tenements. Easily accessible sources of bespoke advice and guidance for owners looking to undertake works will also be essential. Existing providers of advice should be properly supported and funded by Scottish Government.

While the Group supports this phased approach, it stresses the importance that the Scottish Government provides clarity to owners on what it expects can be achieved in terms of energy efficiency and zero direct emissions heating in these buildings. To this end the Group would support consideration of a "whole tenement" energy efficiency standard being set in future should the development of future powers make this fair and workable.

5.3 Recommendation 3: A Whole Building Assessment for energy efficiency and zero direct emissions heating should be developed.

The SLWG recommends that a methodology be developed for a Whole Building Assessment (WBA) for energy efficiency and zero direct emissions heat. Such an assessment should provide information and recommendations to owners on both the energy efficiency measures and zero direct emissions heat systems which are most appropriate for their building as a whole and for their individual dwellings. As part of the phased approach discussed in Recommendation 2 above, the WBA could also potentially be used, in future, as a basis for regulation should a whole building energy efficiency standard be set.

Development of such an assessment is regarded by the SLWG as vital in providing information to owners on which individual and communal measures are suitable for their flat and building, the extent to which these measures would improve the energy efficiency and comfort of their homes, and the costs and potential savings. Crucially, this assessment would highlight communal zero direct emissions heating options for the whole building, which otherwise and individually, each owner alone would be unlikely to consider.

The Group is aware of other current and proposed assessment procedures which may be required on some tenement properties, for example the Single Building Assessment on fire safety and five-yearly maintenance reports recommended by the Scottish Parliamentary Working Group on Tenement Maintenance. It also notes the recommendation of the Climate Change Committee for the introduction of Green Building Passports. In order to ensure minimised disruption to owners, economic utilisation of available skills, and consistency of data and outputs, the relevant teams within Scottish Government should work closely to ensure any future assessments or tools are aligned and where possible combined. Similarly, any new methodology for a whole building assessment will need to be able to take account of the likelihood that each individual flat within a block will still require its own EPC.

5.4 Recommendation 4: Key Scottish Government work streams supporting the Scottish Law Commission project must be taken forward and properly aligned.

While the Scottish Law Commission undertakes its law review work examining compulsory owners' associations, it is important that the Scottish Government simultaneously takes forward work on the five-yearly building inspections, and building reserve funds that were also recommended by the Scottish Parliamentary Working Group on Tenement Maintenance. Work to ensure the necessary delivery and support programmes, and skills and supply chains are in place to allow owners' associations to carry out the duties they may have placed on them is vital and the progress of this may impact the outcome of the SLC's considerations. The need for local supply chains with knowledge of specific local climate, construction and materials, and skills should not be underestimated.

As discussed in recommendation 2, encouraging, supporting and facilitating common energy efficiency works where these are possible and promoting the voluntary adoption of owners' associations in tenements will also be key to success.

The Group understands that responsibilities for these work streams will rest with different teams across Scottish Government and indeed fall under various Ministerial portfolios likely including Housing, Zero Carbon Buildings, Justice, and Skills. Strong communication and joint working between the relevant teams and officials responsible for these areas will play an important role in their success.

5.5 Recommendation 5: The Tenements Act should be further amended to support energy efficiency and zero direct emissions heat common works.

The SLWG recognises that the Tenement (Scotland) Act 2004 was amended in 2009 to include "installation of insulation" as a "maintenance" measure, thus allowing decisions on this to be approved by majority under the Tenement Management Scheme (TMS) where the scheme applies.

The Group recommends that the Scottish Government consider whether the Act could be amended further, expanding the definition of "maintenance" measures to include an expanded list of energy efficiency measures, the installation of communal zero emissions heating systems, and the use of common areas for siting of equipment necessary for individual zero direct emissions heating systems.

The Act could also be amended to alter 50:50 ties in the voting process from a negative to an affirmative decision to improve the likelihood of works being undertaken.

The Scottish Government may also wish to consider whether it can be made easier for owners to undertake other measures which could play a role in reaching net zero, for example installation of electric vehicle charging infrastructure. Action should be considered to ensure that the installation of renewable energy and microgeneration equipment, or any other measure that could reduce emissions, cannot be unreasonably blocked by owners.

Communication and messaging around any amendments would be important as works considered "maintenance" under an amended Tenements (Scotland) Act 2004 would not necessarily be considered maintenance in the context of the requirements of other Acts, for example the Planning (Listed Buildings and Conservation Areas) (Scotland) Act 1997.

Further engagement with stakeholders, including local authorities, will be important to ensure that any changes proposed are effective, necessary and enforceable.

5.6 Recommendation 6: Expert advice is required on traditional and protected buildings

Around 27% of tenements in Scotland are traditional buildings (constructed before 1919) - a higher proportion than any other type of housing across the stock. While there are significant similarities in the challenges faced and opportunities presented by tenements, and traditional and protected buildings, the latter represents a distinct and invaluable part of Scotland's built environment and deserves specific consideration to ensure regulation, available skills, the supply chain, and assessment methods are appropriate.

In the Heat in Buildings Strategy the Scottish Government committed to develop approaches and solutions to transition Scotland's traditional and protected buildings to zero direct emissions heating while respecting and preserving the special characteristics of these buildings. To achieve this and to ensure new regulations best harness the opportunity presented by these buildings in moving towards net zero, the SLWG recommends that Scottish Government convene an expert group to consider how best to regulate traditional and protected buildings for energy efficiency and zero emissions heating.