Navigating the new EPC requirements for commercial property landlords

Under current proposals, the minimum Energy Performance Certificate (EPC) rating for commercial properties is set to increase from E to B, with legal prohibitions on letting non-compliant buildings.

What’s changing and what’s at stake?

The Minimum Energy Efficiency Standards (MEES) set performance requirements for properties to be legally let in England and Wales. The aim is to improve the energy efficiency of the nation’s building stock and help the UK reach its net zero targets.

Since April 2023, landlords of non-domestic let property must ensure their building has at least an EPC rating of E, even when there has been no renewal or assignment of the lease. Without an exemption, buildings rated F or G may already be categorised as substandard.

Government proposals would raise the minimum EPC standard for commercial properties from the current rating of E to a minimum of C by 2027, with a further increase to a minimum rating of B by 2030 – 2035. EPC rating B is still expected to become the long-term benchmark for commercial buildings. Although these deadlines may seem distant, the implications are significant. Without timely investment in energy efficiency improvements, a substantial proportion of the commercial property market may fall short of the new requirements. Current estimates indicate that around 70% of commercial floor space in England and Wales is rated C or below, placing approximately £700 billion worth of assets at risk of becoming difficult to occupy or potentially unlettable.

A range of MEES exemptions may be available, but each has tight conditions. These include situations where upgrades are not economically viable within a seven-year “payback” period; where all reasonable improvements have already been carried out; where required works would damage the building; or where third-party consent, such as from a tenant or lender, is refused.

Landlords should also be aware that exemptions under MEES are not permanent or transferable.  Any exemption registered on the PRS Exemptions Register lapses automatically when the building changes ownership. This means that a buyer cannot rely on the previous landlord’s exemption, but new landlords can apply for a six-month temporary exemption while they make improvements or register a further valid exemption.

Although the proposed EPC deadlines will come into effect over the next few years, landlords may find it helpful to start planning for compliance as part of their broader asset strategy. Taking early steps can offer practical advantages – such as spreading improvement costs, enhancing building performance, and strengthening market appeal -while ensuring properties remain well positioned as standards evolve.

What landlords should do now

1. Audit your portfolio

Identify which assets are at risk (D, E, F, G rated) and prioritise those requiring upgrades.

2. Plan improvements early

Heating systems, insulation, glazing, lighting, building controls and renewable energy will all be key levers.

3. Check and register exemptions

Some properties may qualify for valid exemptions (e.g. due to cost or structural constraints). These must be registered to be relied upon.

4. Document decision-making

Keep clear records of assessments, cost-benefit analyses and upgrade plans. These may prove crucial in defending against enforcement action or negotiating leases.

5. Revisit lease drafting & landlord rights

Ensure leases give landlords power to carry out upgrades or require tenant co-operation where needed.

6. Monitor policy developments

The Government is consulting on further reforms to the Energy Performance of Buildings (EPB) regime.

For more information on how we can assist you in reviewing your existing leases to manage compliance with the MEES regulations or if you would like to discuss any commercial property matter further, please feel free to email me or contact the team on 020 8858 6971.