When a commercial property needs energy-efficiency improvements, one question usually comes before all others: who pays for the work—the landlord or the tenant?
The short answer is that the landlord normally carries the legal responsibility for complying with the Minimum Energy Efficiency Standards, commonly known as MEES. However, the commercial lease may determine whether some costs can be recovered from the tenant, shared between the parties or allocated according to who controls the affected part of the building.
That distinction is important. Legal responsibility for MEES compliance and contractual responsibility for paying for improvement work are not always the same thing.
A landlord cannot automatically assume that every EPC-related cost can be passed through the service charge. Equally, a tenant should not assume that energy improvements are always exclusively the landlord’s financial responsibility. The position can change depending on the lease wording, the type of work, the building services involved, the tenant’s alterations and whether the tenant is assigning or subletting its interest.
This guide explains how responsibility commonly works across offices, shops, warehouses, industrial units and multi-let commercial buildings in England and Wales. It also examines service charges, access, consent, tenant fit-outs, lease events, exemptions and the government’s proposed commercial MEES changes for 2031.
The quick answer: who is responsible for commercial MEES compliance?
For most privately rented non-domestic properties covered by the regulations, the landlord is responsible for ensuring that the property meets the applicable minimum EPC standard or that a valid exemption has been properly registered.
The current minimum standard remains EPC E.
Since 1 April 2023, the requirement has generally applied to all relevant privately rented non-domestic properties, including properties continuing to be let under an existing tenancy. A landlord should not continue letting a covered F- or G-rated property unless it has been improved to the required standard or a valid exemption applies.
The official government guidance for non-domestic landlords explains the current rules, the properties covered, the available exemptions and the evidence that may be requested during enforcement.
However, deciding who ultimately pays for the improvements requires a separate examination of the lease.
A well-drafted commercial lease may contain provisions covering:
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Repairs and maintenance
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Replacement of building services
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Capital improvements
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Statutory compliance
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Service-charge recovery
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Landlord access
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Tenant alterations
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Sustainability cooperation
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Data sharing
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Reinstatement at the end of the lease
The precise wording matters. A general obligation to comply with legislation does not necessarily give a landlord an unrestricted right to recover the cost of a major capital upgrade from an occupational tenant.
Where the financial consequences are significant, the lease should be reviewed by a solicitor experienced in commercial property.
Legal responsibility and payment responsibility are different
Commercial property owners sometimes treat MEES as though it works like an ordinary repair. In practice, the position can be more complicated.
The MEES regulations place the principal compliance obligation on the landlord of the relevant property. If the property is below the required rating, it is normally the landlord who faces the risk of enforcement for continuing to let it without completing the necessary improvements or registering an applicable exemption.
But the lease may allow the landlord to recover certain expenditure from the tenant.
For example, a landlord may be legally responsible for replacing an inefficient communal heating system, while the service-charge provisions may permit some or all of the cost to be recovered from the occupiers. Alternatively, the lease may only allow recovery of routine repair and maintenance expenditure, leaving the landlord unable to recover the cost of an improvement.
The correct question is therefore not simply:
“Is this the landlord’s responsibility?”
It is:
“Who carries the regulatory obligation, who controls the affected equipment, who benefits from the work, and what does the lease allow each party to recover?”
Answering those questions early can prevent disputes, delayed works and unsuccessful exemption applications.
The landlord’s core commercial MEES responsibility
The landlord should establish whether the property is covered by the regulations, whether a valid EPC exists and whether the current rating meets the applicable minimum.
Where the property is rated F or G, the landlord should investigate the recommended improvements rather than assuming that an exemption automatically applies.
A structured commercial MEES compliance review should consider:
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The current EPC and recommendation report
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Whether the EPC accurately represents the building
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The construction and thermal performance of the property
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Heating, ventilation and air-conditioning systems
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Lighting and controls
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Renewable-energy systems
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Building use and occupancy assumptions
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Existing leases and tenant alterations
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Improvement costs and predicted savings
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Access and third-party consent requirements
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Available exemptions and evidence requirements
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Planned maintenance, refurbishment and lease events
An EPC recommendation report is a useful starting point, but it should not automatically be treated as a final scope of works. Some recommendations may be unsuitable, incorrectly prioritised or based on assumptions that no longer reflect the property.
Before commissioning expensive improvements, the landlord should consider obtaining a professional EPC improvement plan. This can help identify which measures are likely to produce the necessary rating improvement and which could result in unnecessary expenditure.
Does the landlord always have to pay?
No. Although the landlord normally remains responsible for MEES compliance, the lease may permit certain costs to be recovered from the tenant.
Whether recovery is possible depends on the exact language of the lease and the nature of the proposed work.
A landlord may have a stronger argument for recovery where the work involves maintaining or replacing equipment already included within the service-charge regime. Examples might include communal lighting, central boilers, ventilation equipment, controls or other shared building services.
Recovery may be more difficult where the proposed work is clearly a capital improvement rather than a repair or replacement. The fact that the improvement would help the property achieve a better EPC rating does not automatically make the cost recoverable.
Important questions include:
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Is the affected equipment part of the landlord’s retained premises?
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Is it exclusively used by one tenant or shared by several tenants?
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Does the lease permit recovery for improvements or only repairs?
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Does the lease contain a statutory-compliance provision?
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Is there a service-charge cap?
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Must the landlord consider affordability or the remaining lease term?
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Does the work reduce tenants’ energy costs?
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Is the expenditure required immediately or intended to protect future asset value?
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Does the lease contain specific environmental or sustainability clauses?
A solicitor should confirm the recoverability position before the landlord issues demands or commits to substantial works.
Can MEES improvement costs be included in the service charge?
Sometimes—but not automatically.
Service-charge clauses vary considerably. Some modern leases expressly permit expenditure on energy efficiency, environmental performance, sustainability targets or compliance with legal requirements. Older leases may say nothing about these issues.
Even where a lease gives the landlord broad management powers, it may distinguish between repair, replacement and improvement.
Consider an older gas boiler serving a multi-let office building. If the boiler has failed and must be replaced, the cost may fall within an existing repair or replacement provision. If the boiler remains operational but the landlord wants to replace it solely to improve the EPC rating, the work may be characterised differently.
The same issue arises with:
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LED lighting upgrades
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Solar photovoltaic panels
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Heat pumps
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New building-management systems
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Improved insulation
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Window replacement
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Mechanical ventilation upgrades
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Smart metering
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Variable-speed drives
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Heating and cooling controls
Commercial justification is important, but it does not override the lease.
A landlord planning significant energy improvements should combine technical advice with a lease review. This creates a defensible strategy showing what work is required, why it is recommended, who controls the relevant element and how the expenditure may be allocated.
When might the tenant be responsible?
A tenant may become responsible for EPC-related matters in several situations.
The tenant is subletting the premises
When a tenant sublets all or part of its premises, it becomes a landlord in relation to the subtenant.
The tenant may therefore acquire responsibilities connected with the subletting, including the requirement to make an appropriate EPC available and the need to consider whether the premises can lawfully be let under MEES.
This is particularly important where part of a floor, shop, office suite or warehouse is being separately occupied.
A head tenant should not assume that the superior landlord’s whole-building EPC will always be sufficient. The correct EPC arrangement depends on how the property is divided, the building services and whether the area being sublet is designed or altered for separate occupation.
Government guidance on EPCs for non-dwellings confirms that an assignment or subletting can trigger EPC responsibilities.
The tenant is assigning its lease
An assignment transfers the tenant’s leasehold interest to another party. An EPC may be required because an interest in the building is being transferred.
The assigning tenant should check the EPC position early, particularly where the existing certificate is expired, relates to the wrong part of the building or no longer reflects substantial alterations.
Discovering an EPC or MEES issue immediately before completion can delay the transaction. The problem is more serious if the relevant property is rated F or G.
The tenant has installed inefficient equipment
A tenant’s fit-out can affect the energy performance of the space.
Lighting, heating, cooling, ventilation, controls and hot-water equipment can all influence a non-domestic EPC assessment. A tenant may install a system that meets its operational requirements but worsens the property’s calculated energy performance.
This can create a difficult situation. The landlord remains concerned about its MEES obligations and future lettability, while the tenant may argue that the fit-out was authorised under the licence for alterations.
Modern leases and licences for alterations should address this risk directly. They may require the tenant to:
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Avoid reducing the EPC rating
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Provide specifications before installing new systems
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Use energy-efficient equipment
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Obtain landlord approval
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supply commissioning and technical records
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Cooperate with EPC assessments
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Remedy non-compliant alterations
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Reinstate the premises at the end of the lease
A landlord should review the proposed fit-out before approval rather than waiting until the next EPC assessment exposes the problem.
The tenant controls its own building services
In some properties, the tenant controls the heating, ventilation, cooling and lighting within its demise. The landlord may have limited access or practical ability to alter those systems during the tenancy.
This does not necessarily remove the landlord’s MEES risk. It does mean that the parties may need to cooperate to implement the recommended measures.
Where the lease requires tenant consent or access, the landlord should follow the correct procedure and retain evidence of every request, response and proposed arrangement.
Tenant fit-outs can improve or damage an EPC rating
A commercial fit-out should never be assessed solely from an aesthetic or operational perspective.
The selection of lighting, HVAC systems and controls can materially affect the future EPC rating. This is especially relevant where a landlord expects the tenant’s works to remain when the lease ends.
For example, replacing old fluorescent lighting with properly designed LED fittings and controls may improve the assessment. Installing inefficient comfort cooling, excessive lighting or poorly controlled electric heating may have the opposite effect.
A useful pre-fit-out process includes:
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Reviewing the existing EPC and recommendation report.
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Recording the current building services.
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Obtaining the tenant’s proposed mechanical and electrical specifications.
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Modelling the likely effect of significant changes.
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Agreeing any necessary design revisions.
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Preserving commissioning documents and product specifications.
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Completing a reassessment where required or commercially appropriate.
Our commercial EPC service can help landlords, tenants and agents establish the current position and identify the information needed for an accurate assessment.
What happens if the tenant refuses access or consent?
Some energy-efficiency measures cannot be completed without the consent of another party. That party might be a tenant, superior landlord, freeholder, lender, planning authority or another third party.
If tenant consent is genuinely required and cannot be obtained despite the landlord’s best efforts, a third-party consent exemption may be available.
However, refusal alone is not enough.
The landlord should be able to demonstrate:
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Why consent was legally or contractually required
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What improvement was proposed
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What information was provided to the tenant
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When consent was requested
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What access arrangements were offered
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Whether disruption was addressed
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Whether reasonable conditions were considered
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How and when consent was refused
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Why any conditions imposed could not reasonably be satisfied
Written evidence is crucial. Informal telephone conversations and undocumented discussions may not provide an adequate evidence trail.
Where the lack of tenant consent is the basis of the exemption, government guidance states that the exemption may end when the current tenancy ends or is assigned. The landlord must then reconsider whether the improvement can be completed.
Our MEES exemption support service can help property owners understand the technical evidence required before an exemption is registered. Exemptions should never be treated as a simple alternative to compliance; they must be applicable, properly evidenced and registered before they can be relied upon.
What if the proposed improvements are not cost-effective?
For non-domestic property, the seven-year payback test is an important part of the existing MEES framework.
Broadly, a measure or package of measures may fail the test where its installation cost is greater than the calculated energy-cost savings over seven years.
This is an evidence-based calculation—not a general claim that the work feels too expensive.
The landlord may need appropriate quotations, energy-price information, estimated savings and clear calculations. Government guidance currently requires three quotations from qualified installers when registering the seven-year payback exemption.
Our detailed guide to the commercial MEES seven-year payback exemption explains how the test operates and why evidence quality matters.
Property owners can also use our initial EPC improvement cost calculator to explore possible budget ranges. Calculator results should be treated as preliminary guidance rather than a substitute for property-specific assessment and contractor quotations.
Multi-let buildings: responsibility becomes more complicated
Multi-let commercial buildings present some of the most difficult MEES scenarios.
An office block might have central heating controlled by the landlord, separate cooling systems controlled by individual tenants, communal lighting, tenant-installed equipment and several different EPCs covering different parts of the building.
Before planning improvements, the owner should establish:
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Whether the relevant EPC covers the whole building or a separately occupied part
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Which areas are included within each assessment
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Whether heating and cooling systems are communal or independent
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Which party owns and controls each system
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Whether tenant alterations have been reflected
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Which leases permit access and cost recovery
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Whether works must be coordinated across several occupiers
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Whether vacant possession or lease events create a better opportunity for upgrades
A whole-building EPC does not always provide the right answer for every letting. Equally, separate tenant-area EPCs may not capture all landlord-controlled building services.
The correct assessment boundary should be established by an appropriately accredited non-domestic energy assessor.
This is particularly important for offices divided floor by floor, shopping centres, retail parades, business parks and mixed-use developments. Our guide to MEES compliance for mixed-use properties explains additional issues where commercial and residential areas form part of the same building.
Illustrative example: a landlord replacing communal lighting
A landlord owns a three-storey office building occupied by four tenants. The communal corridors, staircases and reception use old fluorescent lighting. Each tenant controls the lighting within its own suite.
The landlord’s assessment identifies communal LED lighting and improved controls as sensible measures.
The landlord is likely to control the communal system and arrange the work. Whether the cost can be recovered from the tenants depends on the service-charge wording. If the lease permits the landlord to replace common services and recover reasonable expenditure, some recovery may be possible. If the lease limits recovery to basic repair and maintenance, the position may be less clear.
The most practical approach is to document the condition of the existing equipment, the expected savings, the improvement in lighting quality and the potential EPC benefit. The landlord should then obtain legal advice on the relevant service-charge provisions.
Illustrative example: a tenant installs new air conditioning
A tenant takes a lease of an open-plan office and proposes a major fit-out. The plans include new comfort cooling, extensive feature lighting and additional server equipment.
The landlord approves the layout without considering energy performance.
Several years later, the tenant assigns the lease. A new EPC is commissioned, and the rating is worse than expected because the assessment reflects the installed systems and controls.
The parties must now determine whether the tenant’s alterations breached the lease or licence for alterations, whether reinstatement is required and who should pay for corrective work.
This could have been avoided by reviewing the fit-out specifications before approval and requiring energy-performance cooperation within the licence.
Illustrative example: a head tenant sublets part of a warehouse
A company leases a large industrial unit but no longer needs the whole building. It decides to sublet a separately accessible section to another business.
By creating the subletting, the head tenant becomes the landlord in relation to the new occupier. It must consider the EPC requirements for the area being offered and whether the proposed subletting complies with MEES.
The existing EPC may cover the entire warehouse but not accurately represent the separately occupied section. The head tenant should obtain professional advice before marketing or completing the sublease.
The superior landlord should also check whether the subletting and any related alterations could affect the wider building’s energy strategy.
Detailed case study: coordinating MEES across a multi-let office building
The following illustrative case study demonstrates how responsibility can be divided in practice.
A property company owns a 1,450 m² office building occupied by three tenants. The existing EPC rating is D.
The building has a central gas heating system controlled by the landlord. Communal areas use older lighting. Each tenant has installed separate cooling and lighting equipment within its own office space.
One lease has six years remaining, another has two years remaining, and the third tenant is negotiating a renewal. The landlord is concerned about future MEES requirements, operating costs and the ability to refinance or sell the asset.
A simple approach would be to commission a new EPC and start completing every recommendation. However, that could lead to unnecessary expenditure and tenant disputes.
Instead, the owner follows a structured process.
First, the current EPC is reviewed against the actual building. The review identifies missing plant information and several assumptions that may no longer be accurate.
Second, responsibility for the building services is mapped. The landlord controls the boiler, main distribution, communal lighting and building fabric. The tenants control equipment within their demised areas.
Third, an improvement pathway is developed. It includes better heating controls, upgraded communal lighting, improvements to selected tenant-area lighting, revised operating schedules and a longer-term heating strategy.
Fourth, the leases are reviewed. The owner establishes which costs may potentially be recovered, which works require tenant access and which should be treated as landlord investment.
Fifth, the planned work is aligned with lease events. The tenant negotiating a renewal agrees to cooperate with lighting and control upgrades. Work within the suite with only two years remaining is programmed for the expected void period, avoiding unnecessary disruption.
Sixth, the owner retains quotations, specifications, correspondence, commissioning documents and assessment evidence in a central compliance file.
The result is not merely a better certificate. The landlord gains a staged asset plan showing which measures should be completed immediately, which should coincide with lease events and which require further assessment.
This approach also gives the landlord stronger information for budgeting, negotiations, refinancing and future disposal.
For owners managing multiple buildings, our portfolio compliance management service can organise EPC ratings, expiry dates, lease events, exemptions, improvement priorities and evidence across the entire portfolio.
How the proposed 2031 commercial MEES changes affect this question
The current legal minimum for relevant non-domestic rented property remains EPC E.
In June 2026, the government confirmed its intention to adopt a more targeted approach for future commercial MEES requirements.
The proposal is that privately rented buildings over 1,000 m² in England and Wales will need to achieve EPC B from 2031 where cost-effective. Buildings at or below 1,000 m² are intended to remain subject to the current EPC E minimum.
The previously proposed EPC C milestone for 2027 will not be taken forward.
These changes are not yet in force. The government has confirmed that the higher standard will require secondary legislation, and further details about implementation and the 1,000 m² threshold are still expected.
Landlords should therefore distinguish carefully between:
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The current EPC E legal requirement
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The government’s proposed EPC B requirement for larger buildings from 2031
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Voluntary asset, lender, investor or corporate sustainability targets
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Contractual obligations agreed within individual leases
Owners of larger buildings should not wait for the final year before investigating their position. Major plant replacement, lease negotiations, planning applications and coordinated tenant works can take years to complete.
However, landlords should also avoid describing the proposed EPC B standard as though it were already law.
How MEES responsibilities should be addressed in new commercial leases
A new lease creates an opportunity to prevent future disputes.
The parties may wish to address:
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Access for EPC assessments and improvement works
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Sharing energy-consumption data
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Restrictions on alterations that reduce energy performance
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Standards for replacement equipment
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Cooperation with energy-efficiency projects
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Responsibility for obtaining EPCs after tenant works
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Cost recovery and service-charge treatment
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Treatment of grants, incentives and savings
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Reinstatement of inefficient tenant installations
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Cooperation with lawful exemption evidence
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Review of environmental provisions when regulations change
These clauses should be commercially reasonable and tailored to the building. A small retail tenant should not automatically be expected to accept the same obligations as a major corporate occupier of a large office building.
Technical advice should establish what the building actually needs. Legal advice should then convert that strategy into suitable lease provisions.
Why landlords should not wait for a lease renewal
A lease renewal is often treated as the natural moment to address MEES. It is certainly an important checkpoint, but it should not be the first time the property’s position is investigated.
Since April 2023, the current non-domestic MEES requirement has generally applied to continuing lettings as well as new tenancies. A landlord may therefore have an existing compliance issue even when no transaction is approaching.
Early review provides more options. The owner may be able to coordinate improvements with planned maintenance, negotiate access sensibly, use a void period or incorporate works into a refurbishment programme.
Read our detailed guide to commercial lease renewals and MEES compliance for the checks that should be completed before negotiations progress.
What happens if nobody deals with the problem?
Ignoring an F- or G-rated commercial property does not transfer the risk to the tenant.
Enforcement authorities may request the EPC that applied when the property was let, the tenancy agreement, records of improvements and other relevant documents.
Current penalties for letting a non-compliant non-domestic property for less than three months can reach the greater of £5,000 or 10% of the property’s rateable value, capped at £50,000.
For a breach lasting three months or more, the financial penalty can reach the greater of £10,000 or 20% of the rateable value, capped at £150,000. Publication penalties may also apply.
Providing false or misleading exemption information can create an additional enforcement risk.
Our guide to MEES fines and enforcement explains what authorities may investigate and why a complete evidence trail is essential.
A practical action plan for commercial landlords
Start by checking the EPC register and confirming which certificate applies to the property being let. Do not rely only on the rating shown in an old marketing brochure.
Next, compare the certificate with the actual building. Check whether major alterations, new HVAC equipment or tenant fit-outs have taken place since the assessment.
Review the recommendation report, but do not approve expensive work until the likely rating impact has been considered.
Map the responsibility for each relevant building element. Identify which systems belong to the landlord, which are controlled by the tenant and which serve multiple occupiers.
Review the lease before assuming that costs can be recovered.
Engage with tenants early where access, data or consent may be needed.
Obtain suitable quotations and preserve all technical evidence.
If compliance cannot be achieved, assess whether an exemption genuinely applies and what documentation is required.
Finally, retain everything in a structured compliance evidence pack. Our guide to creating a MEES compliance evidence pack explains the records property owners should consider preserving.
A practical action plan for commercial tenants
Tenants should request the EPC and understand the property’s current rating before committing to a lease.
The tenant should also check:
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Whether the lease passes through energy-improvement expenditure
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Whether service-charge caps apply
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What access rights the landlord has
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Whether alterations can reduce the EPC rating
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Who pays for an EPC following tenant works
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What happens on assignment or subletting
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Whether reinstatement obligations apply
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What energy data must be supplied
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Whether planned landlord works could disrupt operations
A tenant planning to assign or sublet should investigate the EPC position well before marketing the space.
How MEES Compliance can help
MEES Compliance provides practical support for commercial landlords, tenants, property managers, asset managers and portfolio owners across the UK.
Our services include:
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Commercial EPC assessments
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MEES compliance audits
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EPC improvement planning
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Review of existing certificates and recommendations
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Property and portfolio risk screening
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Upgrade pathway development
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Exemption eligibility guidance
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Evidence-pack preparation support
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Coordination with accredited assessors
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Support for commercial acquisitions, lettings and lease events
A professional MEES audit can help establish where the property stands, what action may be required and what evidence should be retained.
If you manage several properties, we can help prioritise the portfolio according to rating, floor area, lease events, certificate expiry and commercial risk.
You can also use our free MEES Compliance Checker for an initial indication of your position.
For property-specific assistance, contact the MEES Compliance team with the property address, current EPC, approximate floor area, tenancy status and any relevant lease or building-services information.
Final conclusion
The landlord normally carries the principal legal responsibility for commercial MEES compliance, but that does not automatically answer who pays for every improvement.
Payment depends on the lease, the type of work, control of the building services, service-charge provisions, tenant alterations and the circumstances of the transaction.
The safest approach is to connect the technical, contractual and commercial issues before work begins.
A properly structured assessment can help the parties identify what must be done, what can be recovered, what requires consent and which improvements should be coordinated with maintenance, fit-out or lease events.
That is far more effective than waiting for an expired EPC, failed transaction, enforcement notice or dispute over an unexpected service-charge demand.
This article provides general information and does not constitute legal advice. Commercial landlords and tenants should obtain independent legal advice about their leases and regulatory responsibilities.
