Commercial agents now have clearer direction on the future of Minimum Energy Efficiency Standards (MEES) after DESNZ published an interim response to its 2019 and 2021 consultations.
This marks a significant shift from the earlier policy direction. The UK Government’s 2019 consultation on a future regulatory target for non-domestic MEES of EPC B by 2030 received strong support, and the 2020 Energy White Paper confirmed EPC B by 2030 as the future trajectory for the non-domestic private rented sector. The Energy White Paper also committed to requiring all rented non-domestic buildings to reach EPC Band B by 2030.
Campaigning on behalf of members
Propertymark has consistently called for clearer guidance and support so that landlords can meet energy efficiency targets. In previous engagements with UK Government officials, we emphasised the need for realistic timelines and financial assistance to deliver the necessary upgrades.
We will continue to engage with DESNZ to ensure the final policy is practical, proportionate and supported by clear guidance, advice and financial support for property owners.
EPC C milestone dropped
DESNZ has confirmed that the previously proposed interim milestone of EPC C by 2027 will not be taken forward. The department says this will give landlords and tenants more time to improve buildings in a way that suits both the property and the lease agreement.
Existing flexibility mechanisms will remain, including the seven-year payback test and exemptions. DESNZ states this means landlords will only be required to make improvements that are practical, affordable and cost-effective.
Under the current rules, landlords of non-domestic private rented properties in England and Wales must already ensure properties have at least an EPC E rating, unless a valid exemption is registered. Since 1 April 2023, that requirement has applied to all privately rented non-domestic properties, even where there has been no change in tenancy.
Why larger buildings are the focus
DESNZ says the new approach is designed to focus action where it delivers the greatest benefits. The department estimates that improving the largest rented buildings could save tenants up to £360 million per year in energy bills by 2031, while also reducing energy demand, supporting energy security and cutting carbon emissions.
The focus on larger buildings reflects their disproportionate impact. Propertymark has previously highlighted that premises of 1,000 square metres or above represent only 10% of commercial and industrial buildings but emit over half of all carbon from the building stock.
Around half of all energy consumed in commercial and industrial buildings in England and Wales is in the rented sector, placing landlords at the centre of future energy-efficiency improvements.
Smaller premises given more flexibility
For buildings below 1,000 square metres, DESNZ intends to keep the current EPC E minimum standard in place, with no set deadline for moving beyond that level. The department says this will give more flexibility to SMEs and high street landlords of smaller premises to upgrade buildings over time.
This is particularly important for agents managing or advising on mixed portfolios, where smaller retail, office, and high street premises may face different practical and financial barriers from larger commercial assets.
Sector still faces a major compliance challenge
The revised approach gives greater clarity, but it does not remove the need for long-term planning. We have previously reported research indicating that the commercial property sector was on track to miss the UK Government’s 2030 MEES target by a decade, with full compliance projected only by 2040.
That research also found that more than 13,000 commercial rental properties still held EPC ratings of F or G, making them non-compliant and unlettable under current rules. The pace of upgrades had also slowed, with a 20% year-on-year decline in properties achieving higher EPC ratings of A* to B in 2024.
What agents should do now
Commercial agents should review portfolios to identify buildings over 1,000 square metres, check current EPC ratings, and begin conversations with landlords and tenants about likely improvement works. Although the EPC B requirement is not yet law, DESNZ has made clear that it aims to introduce legislation and updated guidance at the earliest opportunity, while working with stakeholders on the detail.
Agents should also keep records of exemptions, payback assessments and any improvement plans, as these will be important if the new framework follows the direction set out in the interim response.
