EPCs Are Changing
COMMERCIAL PROPERTY
Commercial Property EPCs Are Changing: What Should Landlords Be Planning for Now?
2031 might sound a long way away. In property terms, it really isn’t.
Changes to Minimum Energy Efficiency Standards (MEES) are set to significantly raise expectations for some commercial properties over the coming years, while landlords with residential property also have a new 2030 energy efficiency standard to prepare for.
For landlords with larger commercial assets, and particularly those with mixed-use portfolios, now is the time to understand where properties currently stand and consider how future energy efficiency requirements can form part of wider asset management plans.
The key is not necessarily to start undertaking major works tomorrow. It is to start planning today.
What are the current EPC requirements for commercial property?
An Energy Performance Certificate (EPC) rates the energy efficiency of a building from A, the most efficient, to G, the least efficient.
Under the current Minimum Energy Efficiency Standards, most privately rented non-domestic properties in England and Wales that require an EPC must achieve at least an E rating, unless a valid exemption applies.
Since April 2023, this requirement has applied to all privately rented non-domestic properties within the scope of the regulations, rather than only when a new tenancy is granted or an existing tenancy renewed.
But the Government has now set out its intended direction for the next stage of commercial MEES.
What is changing for commercial property EPCs?
In June 2026, the Government confirmed that it intends to introduce a more targeted approach than had previously been proposed.
Under the current proposal, from 2031 privately rented non-domestic buildings over 1,000 square metres would be required to achieve EPC B where this is cost-effective.
Buildings below 1,000 square metres would continue to be subject to the existing minimum EPC E standard.
The previously proposed interim EPC C milestone will not be introduced, while existing mechanisms including the seven-year payback test and exemptions are expected to remain.
Importantly, these changes are not yet in force. Secondary legislation must pass through Parliament before the higher standard takes effect, and further detail and updated guidance are still expected.
Nevertheless, for owners of larger commercial properties, the direction of travel is now much clearer.
Why should commercial landlords start planning now?
Five years can disappear remarkably quickly in commercial property.
Major works need to be assessed, specified, budgeted and delivered. Existing leases may affect when and how improvements can be made. Tenants need to be considered. Planned maintenance programmes may already contain works that could influence a building’s energy performance.
Waiting until a compliance deadline is approaching could therefore mean undertaking expensive works at an inconvenient time – or missing opportunities to incorporate improvements into work that was going to happen anyway.
A more strategic approach starts by asking some straightforward questions now.
1. Where does your portfolio currently stand?
The first step is understanding the EPC position of each asset.
Which properties are already performing strongly? Which larger buildings could potentially fall within the proposed EPC B requirement? Which assets are currently some distance from that standard?
Looking across a portfolio rather than dealing with each property in isolation can help landlords identify priorities and begin planning future investment.
2. What work is already planned?
Improving energy performance doesn’t necessarily have to mean a standalone refurbishment project.
A roof replacement, heating system upgrade, lighting replacement or wider refurbishment may present an opportunity to improve energy efficiency at the same time.
Aligning energy improvements with planned maintenance and capital expenditure can help avoid duplication, minimise disruption and ensure money is spent more effectively.
This is where a long-term asset management plan becomes particularly valuable.
3. What lease events are coming up?
Lease events can create natural opportunities to undertake improvements.
If a lease expiry or break is approaching, for example, there may be an opportunity to carry out work during a void period before a new tenant takes occupation.
Equally, where a tenant is remaining in occupation, early communication can help landlords understand how potential works might affect their business and how improvements can be delivered with minimal disruption.
The important point is to think about EPC requirements alongside the lease strategy, rather than treating the two as separate issues.
Energy efficiency isn’t only about compliance
There is also a danger in viewing EPC improvements purely as a regulatory cost.
More energy-efficient buildings can potentially offer lower occupational costs and provide a more attractive proposition to tenants increasingly conscious of energy consumption and environmental performance.
Improvements may also enhance the long-term marketability and resilience of an asset.
The right question, therefore, isn’t simply:
“What do we have to do to comply?”
It is also:
“What improvements make commercial sense for this property?”
That distinction is important.
A considered programme of improvements should take account of the building itself, existing tenants, future leasing strategy, planned maintenance, investment objectives and the likely return from the work.
What about residential property?
For landlords with mixed-use buildings or portfolios containing both commercial and residential property, there is another important deadline to consider.
The Government has confirmed its intention that privately rented homes in England and Wales will need to meet a higher energy efficiency standard from 1 October 2030.
The new domestic standard is intended to be broadly equivalent to today’s EPC C, although reforms to the way residential EPCs are calculated mean the eventual system will be more nuanced than simply requiring every property to display a traditional C rating.
Under the confirmed policy, landlords will generally be expected to invest up to £10,000 per property on relevant improvements, after which an exemption may be available if the required standard still cannot be achieved.
There is also an incentive for landlords to act early. Privately rented homes achieving an Energy Efficiency Rating of C or above on an EPC before 1 October 2029 are intended to be treated as compliant with the higher standard until that EPC expires or is replaced.
As with the proposed commercial changes, further legislation is required to put the new residential requirements into effect.
Mixed-use landlords need to consider both
A building containing commercial space at ground-floor level with residential accommodation above is a good example of why EPC planning can become more complicated.
Different parts of a mixed-use building may be subject to different EPC assessments and different minimum energy efficiency requirements.
That could mean a landlord planning towards one future standard for the residential accommodation while the commercial element follows another – particularly where the non-domestic part forms part of a larger commercial building.
The way individual units within a mixed-use property are assessed will depend on the configuration and occupation of the building, so landlords should seek appropriate professional advice for their particular property.
What is clear, however, is that looking at energy efficiency across the whole asset can create opportunities that might be missed by treating individual units independently.
Don’t wait for the deadline
The changing EPC landscape doesn’t mean every landlord needs to embark on an expensive programme of works immediately.
It does mean landlords should know what they own, understand how their properties currently perform and start considering future energy efficiency requirements alongside their wider property strategy.
For some assets, very little may need to change.
For others, the journey to a higher standard could involve significant investment and careful planning.
Finding that out in 2026 gives you options.
Finding it out shortly before a deadline gives you considerably fewer.
At Shepherd Property Consultants, we work with commercial property owners to take a proactive approach to property and asset management – considering maintenance, investment, tenants, lease events and long-term property performance together.
If you’d like to discuss the future requirements for your property or how energy efficiency improvements could fit into your wider asset management strategy, get in touch with our team today.
Is there something we can work on together?