Property energy certificate breaches going unchecked, auditor general says

Property owners who breach energy performance rules are not being fined by the Building and Construction Authority, as weak monitoring systems and years-long backlogs leave compliance largely unchecked, the auditor general has found.

The BCA is responsible for monitoring compliance with building energy standards, including issuing energy performance certificates (EPCs), which rate a property’s energy efficiency.

These certificates are required in many property-related situations, including new developments or major renovations.

However, a report published by the NAO on Monday sheds light on the BCA’s failure to act against breaches, with lengthy backlogs, archaic monitoring systems and poor paper trails meaning that compliance is effectively going largely unchecked.

According to the NAO, monitoring for compliance within the central database of EPCs has been carried out entirely manually, leading to “significant backlogs over the years”.

This manual verification involved authorities corresponding with property owners through registered mail. This was eventually abandoned altogether in 2020, “given the inefficiency of the process”.

This work was largely carried out by a single officer, who, by the time the process was abandoned, had only covered applications submitted before 2017.

“As a result, any applications submitted after 2016 have not been formally verified to confirm whether an EPC was conducted,” NAO noted.

A new system, intended to link the existing EPC database, first created in 2010, to some EPC records within the Planning Authority’s system, is only slated to start operating in mid-2027.

In the meantime, “there is still no formal end-to-end audit trail for new EPC applications, no integrated system linking PA approvals to EPC records, and no reliable real-time visibility of compliance levels,” NAO said in its report.

Another system meant to integrate with records of several other public entities and flag EPC irregularities has not yet been implemented, despite initial promises that it would be operational by June 2023.

This effectively means that “no automated controls, verification processes, or structured enforcement mechanisms have been put in place to prevent missing, unrecorded or due EPCs or to address non-compliance,” NAO said, adding that this is particularly problematic for rental properties.

According to the auditor general, “BCA remains unable to adequately monitor compliance or accurately determine the number of outstanding or expired EPCs, with older applications continuing to rely on manual checks”.

While anybody submitting a permit application to the PA is warned that fines will be applied to those not complying with EPC regulations, there is effectively no enforcement being carried out, NAO said.

BCA itself “aims to avoid resorting to fines or penalties” because this would require it to open criminal proceedings.

“Consequently, no fines are currently being imposed on defaulters. In addition, at present, there is no specific department responsible for monitoring and enforcement,” the auditor general said.

Although the BCA previously issued notification letters informing applicants of the need to obtain an EPC, this process was also abandoned, as the authority was largely unable to reliably keep track of which properties required certification or how many certificates were already registered.

Instead of detecting and penalising non-compliance, BCA appears to be largely relying on notaries and banks to flag the need for an EPC once a property sale is registered or a home loan issued.

It is also relying on property owners themselves to reveal the need for an EPC through schemes such as “Irrinova Darek,” in which applicants must submit an EPC to be eligible for funds.

Ultimately, the auditor general said, the BCA had made little or no progress since a previous audit in 2020 flagged several similar shortcomings, warning that “immediate and structured corrective action is required to address long-standing control deficiencies”.