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The Government has published an interim response on Minimum Energy Efficiency Standards (MEES) for non‑domestic properties in England and Wales. The Government’s previous proposal for a minimum EPC rating of C by 2027 has been abandoned, with an EPC B standard proposed from 2031 for certain non‑domestic buildings. While the proposal offers some additional planning certainty, it should not be viewed as a reason to delay action. There are several practical and strategic considerations that landlords can address now, which are discussed below.
The Current Position (Minimum EPC E)
MEES were introduced under the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 to improve the energy efficiency of rented buildings. Since 1 April 2018, landlords must not grant a new tenancy of a non‑domestic property that is “sub‑standard” (i.e. has an EPC below E), and since 1 April 2023 they must not continue to let such property, in each case unless an exemption applies or the premises fall outside the scope of the regime (for example where no valid EPC is required).
Exemptions
Landlords are under an obligation to carry out “relevant energy efficiency improvements” to ensure compliance, but prescribed exemptions may be available in certain circumstances. Exemptions generally must be evidenced and registered on the PRS Exemptions Register before they can be relied upon.
Prescribed exemptions include, for example where improvements are not cost‑effective (seven‑year payback test), where improvements would reduce the property’s value, where required third‑party consent cannot be obtained. The above is not an exhaustive list, and landlords should refer to official guidance to consider whether other available exemptions may apply.
Penalties and Publication
Failure to comply can result in financial penalties that vary by breach type, duration and rateable value, with maxima up to £150,000. Enforcement outcomes may be published by the enforcing authority, and the PRS Exemptions Register records exemptions relied upon
The New Proposal – Indicative EPC B Standard from 2031
The Government has moved away from its earlier two‑stage approach (EPC C by 2027 then EPC B by 2030) and has instead suggested a single EPC B requirement from 2031.This is an interim response and would require secondary legislation to take effect.
The proposed minimum B rating would apply to privately rented non‑domestic buildings over 1,000m2, with premises under 1,000m2 remaining subject to the EPC E minimum under the proposal.
How the 1,000m2 threshold will be assessed remains to be set out in secondary legislation. The Government indicates that the existing exemptions, including the seven‑year payback test, would remain available, subject to any changes made in secondary legislation.
What Does This Mean for Landlords?
The proposal offers directional clarity and may provide some additional planning certainty for expenditure profiling, together with more time to prepare. However, early action remains important.
What Should Landlords Be Doing Now?
The additional time before any new requirements take effect provides an opportunity to plan a strategic, cost‑effective approach.
Landlords should consider:
- Reviewing and identifying properties that are unlikely to meet a potential EPC B requirement and scoping improvement works that may be required.
- Considering upcoming new lettings, renewals, lease expiries or planned refurbishment works as opportunities to deliver energy efficiency improvements.
- Reviewing potential exemptions, evidential requirements and PRS registration steps to understand what may be relevant.
- Distinguishing assets likely to be over the proposed 1,000m2 threshold (and therefore within scope of a potential EPC B uplift) from those likely to be under the threshold (and therefore remaining subject to an EPC E minimum under the proposal), noting details may change through secondary legislation.
- Budgeting early for significant improvements and aligning them with other planned works to minimise disruption and cost.
- Reviewing lease documentation to understand rights and obligations on works, access, alterations and cost recovery.
- Engaging with occupiers early where access, fit‑out or alterations may be needed to improve energy performance.
- Monitoring legislative developments, as further detail is expected in secondary legislation on timing, threshold operation and any changes to exemptions or registration.
Owners of large portfolios should consider commencing retrofit programmes in good time, as demand for specialist contractors, consultants and equipment may increase closer to 2031, potentially affecting costs and timelines.
Legislative Watchpoints
Secondary legislation is expected to address, among other things, commencement and timing, how the 1,000m2 threshold will operate in practice, and any changes to exemptions and PRS registration requirements.
There is currently no confirmed timetable for secondary legislation, and key questions remain on how the 1,000m2 threshold will be applied in different scenarios, including multi‑let buildings, treatment of common parts, sub‑divisions and the impact of extensions or alterations.
Conclusion
The interim proposal to move to a single EPC B requirement for larger non‑domestic properties from 2031 provides directional clarity and is likely to be welcomed by some landlords.
Commercial property owners should not treat any extended timeframe as a reason to delay and should use the period to assess portfolios, engage with occupiers and plan improvements in a cost‑effective manner.
