Government confirms 2031 EPC B for larger rented commercial buildings

The Government has confirmed that Minimum Energy Efficiency Standards (MEES) for larger rented commercial buildings in England and Wales, will require properties over 1,000 sq m to achieve an EPC B rating from 2031 where improvements are considered cost effective.

The proposal, outlined in an interim response to consultations on non-domestic MEES, represents one of the most significant regulatory interventions in the commercial property market since the introduction of minimum EPC requirements.

If implemented through secondary legislation, the changes would apply to privately rented non-domestic buildings larger than 1,000 sq m, while smaller properties would remain subject to the existing minimum EPC E standard.

The Government has also confirmed that a previously proposed interim EPC C milestone in 2027 will not proceed, providing landlords and occupiers with additional time to plan and undertake energy efficiency upgrades.

Existing flexibility measures will remain in place, including the seven-year payback test and established exemptions, meaning landlords will only be required to undertake improvements deemed practical, affordable and cost effective.

The proposals are expected to have far-reaching consequences across the commercial property sector, particularly for owners of older office, industrial, retail and mixed-use assets that may require substantial investment to meet the higher standard.

While the Government estimates the changes could save occupiers of larger rented buildings up to £360 million annually in energy costs by 2031, the announcement is likely to intensify discussions around stranded assets, retrofit strategies and future building valuations.

For investors and landlords, the proposed threshold creates a clear distinction between larger and smaller commercial assets, concentrating regulatory pressure on the buildings that account for a significant proportion of energy consumption across the rented commercial estate.

The Government said the targeted approach was designed to focus action where it delivers the greatest benefit while avoiding additional burdens on smaller businesses and high street landlords.

Officials argue the policy will help reduce energy demand across the non-domestic building stock, strengthen energy security and contribute to wider carbon reduction objectives.

The proposals arrive at a time when sustainability performance is already becoming an increasingly important factor in investment decisions, lending requirements and occupier demand. Many larger organisations are now seeking premises that align with their own environmental targets, placing growing emphasis on building performance alongside location and rental costs.

For the property industry, the announcement provides greater clarity on the direction of travel for commercial building standards, while also highlighting the scale of investment that may be required over the remainder of the decade to ensure existing assets remain compliant, lettable and competitive.

Further details are expected in the Government's full response to consultation, with legislation and updated guidance due to follow.