Energy Performance Certificate Reform (Scotland)
The Scottish Government is overhauling the Energy Performance Certificate (EPC) system, new regulations were previously expected to come into force in October 2026; however, the Scottish Government has since confirmed that implementation has been delayed and is now anticipated mid-2027, subject to further updates. The aim is to provide clearer, more meaningful information on energy performance and heating emissions, supporting Scotland’s net-zero targets.
What’s Changing?
- New EPC formats for both residential and non-domestic buildings.
- Validity reduced to 5 years (currently 10) to ensure ratings reflect current building performance.
- A new Property Report will accompany every EPC, replacing Recommendation Reports and providing tailored guidance on energy efficiency measures and alternative heating systems.
- Stronger governance and quality assurance for EPC assessors and Approved Organisations.
- Final details of the methodology and calculation approach remain subject to further development and may evolve ahead of implementation.
Residential EPCs – New Metrics
Residential EPCs will introduce three clear A–G metrics, designed to be more intuitive for householders:
- Heat Retention Rating (HRR) – how well the home retains heat, reflecting fabric performance such as insulation and glazing.
- Heating System Rating (HSR) – efficiency, emissions and running cost performance of the main heating system.
- Energy Cost Rating (ECR) – estimated annual running costs under standardised conditions.
These metrics aim to support better retrofit decisions by linking comfort, cost and carbon performance.
Non-Domestic EPCs – Updated Methodology
Non-domestic buildings will move to a revised assessment approach that provides:
- An Energy Performance Rating based on modelled emissions.
- An Energy Use Rating (kWh/m²/yr), giving clearer visibility of actual energy demand.
- A Direct Emissions Rating, highlighting on-site carbon emissions from regulated energy uses.
- Updated heating-system classifications aligned with decarbonisation pathways.
This will give owners and occupiers a more transparent view of efficiency, operational performance and future compliance risk.
These changes are expected to provide greater transparency but may also result in different relative performance outcomes compared to current EPC ratings.
What This Means for Asset Owners
Portfolio risk: The revised methodology may materially alter how buildings score relative to current EPCs. Ratings achieved under the existing cost-based model may not translate directly to the new framework, particularly where buildings perform less well on fabric efficiency or heating system characteristics.
A key commercial implication is the risk of downward (or upward) re-rating once the new system is introduced. Assets currently achieving A–C ratings may not retain these positions under the revised methodology, even without physical changes to the building.
This could affect asset value, ESG ratings, future lettability and compliance with lender requirements.
Older EPCs will be invalidated once the new system is live; EPCs will need refreshing more frequently.
Heat-loss performance and heating-system emissions may become more prominent indicators of asset quality.
Forward planning: Early-stage modelling and scenario testing can help identify assets at risk of adverse re-rating and support targeted interventions or informed hold/sell decisions ahead of implementation.
This introduces a potential “rating arbitrage” dynamic in the market. Vendors of assets that may be adversely re-rated may seek to transact ahead of implementation to preserve value. Conversely, purchasers are increasingly scrutinising how assets might perform under the new methodology and may seek to reflect anticipated rating changes through pricing adjustments or enhanced due diligence.
Atelier Ten can support with indicative performance modelling using the current UK EPC methodologies as a proxy, and scenario testing ahead of the new Scottish software release.
What’s Next on the Policy Agenda?
The government is developing optional Heat & Energy Efficiency Technical Suitability Assessments to provide deeper, bespoke technical analysis beyond EPCs.
Proposals for minimum energy efficiency standards (initially for the private rented sector) are under review; these may reference the new EPC metrics in future.
A revised Heat in Buildings Bill is expected, taking a more pragmatic approach but retaining a 2045 ambition to phase out polluting heating systems where practicable.
How Atelier Ten Can Help
Atelier Ten is actively tracking the reform and modelling implications for new and existing buildings.
We can support through:
- Portfolio EPC impact reviews.
- Forward-looking retrofit and heating-system assessments.
- Scenario modelling based on pre-release methodologies.
- Strategic advice for planning, ESG and asset-management decisions.
For further insight or to discuss implications for your properties, please contact our Environmental Divisional Director Sarah Peterson – sarah.peterson@atelierten.com