The commercial property market has received its clearest indication yet of how the Government intends to strengthen Minimum Energy Efficiency Standards for larger rented buildings.
In June 2026, the Government confirmed its intention to introduce a targeted EPC B requirement for privately rented non-domestic buildings exceeding 1,000m² in England and Wales. The proposed standard would apply from 2031, provided that the necessary energy-efficiency improvements are considered cost-effective.
Buildings below the 1,000m² threshold are expected to remain subject to the existing minimum EPC E standard. The previously proposed interim EPC C milestone for 2027 will not be taken forward.
This is a substantial policy change for commercial landlords, investors, managing agents and occupiers. It narrows the proposed EPC B obligation to larger premises, but it also gives owners of those buildings a clearer deadline against which to plan surveys, capital expenditure, lease negotiations and improvement works.
However, one point must be understood from the outset: EPC B by 2031 is not yet the current legal minimum. The proposal will require secondary legislation before it becomes enforceable. Until that legislation is passed, the existing commercial MEES requirement remains EPC E for covered privately rented non-domestic properties. (GOV.UK)
For many larger commercial assets, 2031 may appear distant. In practical property-management terms, it is not. Complex buildings can require several years of assessment, design work, landlord-and-tenant coordination, procurement, installation and reassessment before an EPC B rating is secured.
This guide explains what has changed, which properties may be affected, how the cost-effectiveness provisions are expected to operate and what commercial property owners should start doing now.
What did the Government announce in June 2026?
The Government’s interim response confirms four central policy intentions for non-domestic privately rented property in England and Wales.
From 2031, privately rented buildings with a floor area exceeding 1,000m² are proposed to require an EPC B rating where achieving that standard is cost-effective.
Buildings below 1,000m² are intended to remain at the existing EPC E minimum.
The earlier proposal for an interim EPC C milestone in 2027 has been dropped.
Existing flexibility mechanisms, including the seven-year payback test and recognised exemptions, are expected to remain available.
The Government has stated that the higher standard will only take effect after the necessary secondary legislation has passed through Parliament. Further details concerning the threshold, implementation process and updated guidance are still expected. (GOV.UK)
This means landlords should treat EPC B by 2031 as a serious planning requirement, while continuing to distinguish between confirmed policy intention and current enforceable law.
That distinction is especially important when making lease decisions, valuing assets, preparing investment papers or communicating obligations to tenants.
What is the current commercial MEES requirement?
The present minimum standard for covered privately rented non-domestic properties remains EPC E.
Since 1 April 2018, a commercial landlord has generally been unable to grant a new tenancy, renew a tenancy or extend an existing tenancy for a substandard property unless it has achieved at least EPC E or a valid exemption applies.
Since 1 April 2023, that requirement has applied to all covered privately rented non-domestic properties, including properties where there has been no tenancy change.
This means that commercial properties rated EPC F or G may already be unlawful to let unless they fall outside the regulations or are supported by a valid exemption registered on the PRS Exemptions Register. (GOV.UK)
Landlords uncertain about their current position can begin with our free MEES Compliance Checker or request a detailed MEES audit.
The current EPC E duty should not be ignored while attention moves towards 2031. A building that may eventually require EPC B must still comply with today’s rules.
Which buildings could be affected by the proposed EPC B requirement?
The proposed higher standard is aimed at privately rented non-domestic buildings exceeding 1,000m² in England and Wales.
This may include larger:
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Office buildings
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Warehouses and distribution facilities
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Retail premises
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Industrial buildings
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Hotels and hospitality properties
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Leisure facilities
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Mixed-use commercial developments
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Business parks
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Large healthcare or specialist-use premises
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Multi-let commercial buildings
Whether a particular property falls within the future regime will depend on the final legislation and the method used to apply the 1,000m² threshold.
Questions are likely to arise around buildings divided into several units, properties with multiple EPCs, mixed-use assets, phased developments and sites containing more than one building.
For example, a commercial estate may occupy a total area well above 1,000m² while containing several independently let units, each with its own EPC. The final rules will need to clarify whether the threshold is assessed by building, EPC unit, demise, total relevant floor area or another defined basis.
This is one reason landlords should avoid making irreversible assumptions before the final implementation guidance is published.
The correct immediate action is to establish an accurate asset record showing:
For portfolios, this information should be held in a central compliance register rather than spread across individual property files. Our portfolio compliance management service is designed to help landlords and managing agents create that structured view.
What happens to commercial buildings below 1,000m²?
Under the Government’s stated intention, privately rented non-domestic buildings below 1,000m² would continue to be subject to the existing EPC E minimum rather than being required to reach EPC B in 2031.
This is commercially significant because smaller shops, offices, workshops and industrial units may no longer face the same proposed 2031 trajectory as larger properties.
However, owners should not interpret this as a reason to disregard energy performance.
A smaller commercial property may still benefit from improvement because:
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EPC E remains a legal minimum, not necessarily a desirable market standard.
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Tenants may increasingly prefer efficient premises.
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Lenders and investors may impose their own sustainability criteria.
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Energy costs can influence tenant demand and lease negotiations.
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EPC methodology and building regulations may continue to evolve.
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Future governments could revisit the threshold or minimum standard.
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Poorly performing assets may become harder to refinance, sell or insure competitively.
A building that remains technically lettable at EPC E may still be commercially disadvantaged when compared with a similar EPC C or B property.
The decision should therefore be based on both legal compliance and wider asset strategy.
Why was the EPC C milestone removed?
Earlier proposals considered an interim EPC C requirement before the final EPC B target. The Government has now confirmed that the proposed EPC C milestone for 2027 will not be taken forward.
The stated intention is to give landlords and tenants more time to improve buildings in a way that fits individual properties and lease arrangements. (GOV.UK)
Removing the interim milestone may reduce the risk of landlords carrying out short-term measures merely to reach EPC C, followed by another round of works shortly afterwards to achieve EPC B.
For larger buildings, it may be more efficient to create one coordinated improvement programme designed around the final target.
For example, a landlord might otherwise replace lighting and make limited controls improvements to move from EPC D to C, only to discover that major heating, cooling or fabric changes are still required to reach B. A properly modelled strategy may combine those measures into one planned programme, reducing disruption and avoiding duplicated professional fees.
This does not mean every owner should wait until the final years before 2031. It means the improvement pathway can be designed around the actual building rather than an artificial interim rating.
Why reaching EPC B can be difficult for larger commercial buildings
A commercial EPC is influenced by the calculated energy performance of the building and its fixed services. The assessment can consider factors such as:
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Building fabric
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Glazing
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Heating systems
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Cooling systems
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Ventilation
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Hot-water provision
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Lighting efficiency
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Controls
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Building geometry
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Occupancy assumptions
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Fuel type
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Renewable-energy systems
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Distribution losses
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Plant efficiency
The path to EPC B can therefore vary considerably between buildings.
One office may reach EPC B through lighting upgrades, better controls and replacement heating equipment. Another may require major plant replacement, façade improvements or renewable generation.
The size of the building does not automatically determine the difficulty of compliance. A modern 5,000m² office with efficient services may already be close to EPC B, while an older 1,200m² property with electric resistance heating, poor glazing and outdated cooling equipment may require substantial intervention.
This is why relying only on the recommendation section of an existing EPC can be insufficient for investment planning.
A serious compliance strategy may require:
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Verification of the current EPC and underlying assessment assumptions.
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Inspection of the building and fixed services.
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Review of planned maintenance and plant-replacement cycles.
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Scenario modelling for improvement combinations.
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Cost and disruption analysis.
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Review of lease responsibilities and tenant consent.
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A staged programme leading to reassessment.
Our commercial EPC service can establish the building’s current position, while an EPC improvement plan provides a more structured route towards the required rating.
The seven-year payback test remains important
The Government has indicated that existing flexibility mechanisms will remain in place, including the seven-year payback test.
Under the current non-domestic MEES framework, an improvement may fail the test where the expected energy-cost savings over seven years are lower than the cost of purchasing and installing the measure.
Where the relevant conditions and evidence requirements are met, the landlord may not be required to carry out that improvement.
This protection is important because EPC B should not automatically mean that every conceivable upgrade must be completed regardless of cost.
However, the payback test should not be treated as a casual estimate. It is a regulatory mechanism requiring proper evidence and calculation. The official formula and requirements are set out in the detailed non-domestic landlord guidance. (GOV.UK)
A landlord should therefore avoid statements such as “the works are too expensive” unless the conclusion is supported by a compliant assessment.
The evidence may need to demonstrate:
Where an exemption is relied upon, it must generally be registered before it can protect the landlord.
Our MEES exemption eligibility checker can provide an initial indication, but a formal exemption decision should be based on the property, evidence and applicable regulations.
Commercial MEES exemptions will remain part of the framework
The Government’s interim response states that exemptions and existing flexibility mechanisms are expected to remain available under the proposed higher standard.
Under the current regime, non-domestic landlords may be able to rely on exemptions in circumstances such as:
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A recommended improvement failing the seven-year payback test
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All relevant improvements having been completed while the property remains below the required standard
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Required third-party consent being refused or granted subject to unreasonable conditions
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Certain improvement works being expected to reduce the property’s market value by more than the specified amount
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Wall insulation presenting a risk to the fabric or structure of the building
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A new landlord qualifying for temporary protection in defined circumstances
The exact exemptions applying to the future EPC B standard may depend on the final legislation and updated guidance.
Existing exemptions are not automatic. They generally require evidence and registration on the official PRS Exemptions Register.
The Government’s updated evidence guidance confirms that an exemption must be registered before it can be relied upon. It also confirms that exemptions may cease to apply when a property changes ownership, meaning a buyer should not assume that the seller’s registered exemption will continue after completion. (GOV.UK)
Landlords who believe their building cannot economically reach the required standard should begin assembling evidence early rather than waiting until a lease transaction or enforcement issue creates urgency.
Our MEES exemptions service supports eligibility reviews, evidence assessment and exemption-registration planning.
Why landlords should begin planning before the legislation is final
Some owners may decide that no action is necessary until Parliament passes the secondary legislation.
That approach carries risk.
Planning does not mean committing immediately to major capital expenditure. It means obtaining enough reliable information to prevent rushed or poorly targeted decisions later.
Commercial improvement projects often need to align with:
A landlord who identifies an EPC B risk in 2026 or 2027 can coordinate upgrades with planned lifecycle works. A landlord who waits until 2030 may need to replace functioning equipment early, negotiate access under pressure or accept a period in which the asset cannot be let on the intended terms.
Early assessment creates optionality.
It allows an owner to separate:
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Immediate legal defects
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Low-cost efficiency improvements
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Medium-term planned upgrades
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Major capital projects
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Measures requiring tenant cooperation
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Measures that may qualify for an exemption
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Improvements that should be timed with lease expiry or refurbishment
The result is a property strategy rather than a last-minute compliance reaction.
Illustrative case study: a 3,500m² office building rated EPC D
Consider a hypothetical 3,500m² multi-let office building in the South East.
The property holds an EPC D rating. The central gas boilers are more than 15 years old, several floors use older fluorescent lighting, cooling is provided by a mixture of systems installed during different tenant fit-outs and the building-management controls are poorly configured.
The landlord initially assumes that achieving EPC B will require a full façade replacement.
A structured review produces a different result.
The assessment identifies that the most significant opportunities are:
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Replacing the remaining fluorescent lighting with efficient LED systems
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Installing improved occupancy and daylight controls
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Recommissioning the building-management system
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Correcting heating and cooling schedules
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Replacing inefficient pumps
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Improving sub-metering
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Replacing the boilers at the end of their planned lifecycle
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Reviewing the efficiency of tenant-installed cooling systems
Instead of carrying out every measure immediately, the landlord creates a five-year programme.
Lighting and controls are completed during floor-by-floor lease events. Pump upgrades are included in the next maintenance budget. Boiler replacement is aligned with the planned plant lifecycle. A revised EPC model is reviewed after each major phase.
The important point is not that every office will follow this pathway. It is that early modelling can prevent expensive assumptions and help integrate MEES preparation with works that were likely to occur anyway.
The landlord moves from an undefined “EPC B problem” to a staged, evidence-based plan.
Illustrative case study: a 1,400m² warehouse close to the threshold
Now consider a hypothetical 1,400m² warehouse with offices, rated EPC E.
The building falls above the proposed 1,000m² threshold. Its warehouse area has older high-bay lighting, the office section uses electric panel heaters and the roof has limited insulation.
The property is currently lettable because it meets the existing EPC E minimum. Nevertheless, it may be materially exposed to the proposed 2031 requirement.
An improvement review tests several scenarios.
LED warehouse lighting produces a useful uplift and a relatively short payback period. Improving roof insulation may be practical when the roof covering is replaced, but disruptive and less economic as a standalone project. Replacing office heating improves the model but requires closer consideration of electrical capacity and tenant use.
The recommended approach is therefore not simply to install every EPC recommendation.
Instead, the landlord:
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Completes the lighting upgrade promptly
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Coordinates roof insulation with the planned roof renewal
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Reviews heating replacement before the next lease
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Preserves all quotations, calculations and technical evidence
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Plans a new EPC assessment after the major works
This example shows why apparently simple buildings still require sequencing. The best compliance route may depend on the maintenance calendar rather than the order in which recommendations appear on an EPC.
Illustrative case study: a commercial portfolio with mixed exposure
A portfolio owner holds 24 non-domestic assets.
Six buildings exceed 1,000m². Three of those are already rated EPC B or above, two are rated D and one has an expired EPC.
The remaining 18 properties are below the proposed threshold, but four are rated EPC F or G and may already present a current compliance concern.
The wrong response would be to focus exclusively on the large EPC D buildings because the proposed 2031 change has attracted attention.
The correct priority order is:
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Investigate the existing EPC F and G properties because current EPC E rules may already restrict letting.
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Commission a valid EPC for the large property with an expired certificate where required.
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Verify the three large assets reported as EPC B or above.
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Develop improvement pathways for the two large EPC D buildings.
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Record the smaller EPC E properties for monitoring rather than immediate major works.
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Review exemptions, ownership changes and lease events across the portfolio.
This is the value of portfolio-level compliance management. It separates current legal exposure from future strategic risk.
A structured portfolio review can be arranged through our portfolio compliance management service.
EPC B is not only a regulatory issue
For commercial property owners, EPC performance increasingly intersects with wider asset considerations.
A building below EPC B may face pressure from:
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Corporate tenant sustainability policies
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Investor ESG requirements
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Green-finance criteria
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Lender due diligence
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Acquisition surveys
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Asset valuations
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Future service-charge negotiations
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Carbon-reduction commitments
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Occupier energy-cost concerns
An inefficient building may remain legally lettable but still lose competitiveness.
By contrast, a carefully upgraded property may offer:
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Reduced energy demand
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Lower operational costs
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Improved tenant appeal
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Better control of plant and services
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Reduced exposure to future regulation
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Stronger due-diligence documentation
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Improved resilience against energy-price changes
The Government estimates that the targeted policy could reduce tenants’ energy bills across the affected sector by approximately £360 million per year by 2031. (GOV.UK)
The commercial case for improvement should therefore be tested alongside the regulatory case.
Not every project will produce the same return, but landlords should assess the potential effect on operating cost, tenant retention and asset liquidity rather than viewing EPC work as a pure compliance expense.
How to prepare a commercial building for the proposed 2031 standard
The strongest approach is to move through a structured sequence.
Confirm the building’s EPC position
Locate the current EPC, confirm its expiry date and check whether the certificate accurately describes the building.
An old EPC may not reflect improvements completed since the assessment. Equally, a favourable certificate should not be accepted without checking that it covers the relevant building or demise.
The official Energy Performance of Buildings Register can be used to search for lodged certificates.
Where a new assessment is required, arrange a suitable commercial EPC.
Establish whether the property is currently compliant
Do not move directly to 2031 planning without checking today’s EPC E requirement.
A property rated F or G may require immediate action, exemption analysis or legal review.
Our free MEES Fine Risk Calculator can help illustrate potential exposure, while the official non-domestic landlord guidance should be consulted for the current regulatory requirements.
Confirm whether the building is likely to exceed 1,000m²
Check the relevant floor-area records, EPC documentation, leases and building plans.
Where the property consists of several units or certificates, record the uncertainty and wait for final threshold guidance rather than relying on an unsupported interpretation.
Commission a modelled improvement pathway
An EPC improvement pathway should show more than a generic list of measures.
It should consider:
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Likely EPC effect
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Estimated cost
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Practical sequencing
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Building use
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Existing plant condition
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Tenant disruption
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Lease responsibilities
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Planning constraints
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Payback
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Reassessment timing
Our EPC Improvement Cost Calculator can provide an initial estimate, but a larger commercial building will usually require property-specific assessment and modelling.
Coordinate the plan with asset management
The improvement strategy should be linked to lease events, plant-replacement cycles, refurbishment and capital budgets.
This can materially reduce abortive work and disruption.
Preserve evidence
Keep quotations, surveys, calculations, consent requests, professional reports and correspondence.
This material may support investment decisions, demonstrate reasonable planning or form part of a future exemption application.
Reassess after meaningful works
An EPC is not automatically updated when improvements are completed.
Where works have materially affected the building’s energy performance, arrange a new assessment to establish the revised rating.
Common mistakes commercial landlords should avoid
The first mistake is assuming that EPC B is already law for all commercial buildings. It is currently a proposed 2031 standard for larger privately rented non-domestic buildings and still requires legislation.
The second is assuming that all commercial buildings will need EPC B. The Government’s current intention is to apply the higher standard to buildings over 1,000m², while maintaining EPC E below that threshold.
The third is ignoring the existing EPC E duty. Current non-compliance does not disappear because a future policy has been announced.
The fourth is waiting for 2030 before assessing complex assets. Major works, tenant negotiations and plant replacement cannot always be completed quickly.
The fifth is carrying out isolated upgrades without modelling the effect on the EPC. A technically worthwhile project may produce less rating improvement than expected if other building factors dominate the calculation.
The sixth is assuming an exemption applies without registration. Under current guidance, an exemption must be registered before it can be relied upon. (GOV.UK)
The seventh is treating the EPC as the entire asset strategy. EPC compliance should sit alongside maintenance, leasing, valuation, tenant requirements and investment planning.
What should commercial landlords do now?
For owners of privately rented buildings exceeding 1,000m², the recommended next step is not necessarily immediate construction work.
It is to establish reliable information.
Landlords should know:
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Which buildings are likely to fall within the threshold
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Which assets already hold EPC B
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Which buildings are currently below EPC E
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Which certificates are missing or approaching expiry
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Which properties may require costly upgrades
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Which works can be aligned with existing budgets
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Which assets may require consent or exemption evidence
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Which lease events create the best opportunity for improvement
From there, each building can be assigned a practical status:
Compliant now and likely ready for 2031
No immediate major intervention may be required, but the EPC and building condition should still be monitored.
Compliant now but below proposed EPC B
A modelled improvement pathway and budget should be developed.
Potentially non-compliant under current rules
Immediate investigation is required.
Uncertain because of missing or outdated information
A commercial EPC or MEES audit should be commissioned.
Potential exemption case
Evidence should be reviewed and preserved before registration is considered.
This classification makes portfolio decisions clearer and helps ensure capital is directed towards the assets carrying the greatest regulatory and commercial risk.
How MEES Compliance can support your commercial property
MEES Compliance helps commercial landlords, property managers, investors and portfolio owners understand both their current obligations and their future improvement pathway.
Our support can include:
The objective is not simply to issue another certificate.
It is to establish where the property stands, identify the relevant risk, create a realistic compliance pathway and help protect the building’s ability to generate rental income.
Final position
The June 2026 Commercial MEES update gives larger commercial landlords a clearer direction.
The Government intends privately rented non-domestic buildings over 1,000m² in England and Wales to reach EPC B from 2031 where cost-effective. Buildings below that threshold are expected to remain at EPC E, and the previously proposed EPC C milestone for 2027 has been removed.
The proposal is not yet enforceable law. Secondary legislation and further implementation guidance are still required.
Nevertheless, the strategic message is clear.
Owners of larger commercial buildings should begin identifying affected assets, verifying EPC data, modelling improvement pathways and coordinating future works with lease and maintenance cycles.
Waiting for the final deadline may convert a manageable improvement programme into an urgent capital project.
A measured review now provides time to make better decisions, gather evidence, align expenditure and protect the long-term lettability of the asset.
To assess an individual building or commercial portfolio, use our MEES Compliance Checker or contact MEES Compliance for a property-specific review.
This article provides general information and does not constitute legal advice. Commercial landlords should review the final legislation and official Government guidance before relying on the proposed 2031 requirements for a specific property.
