PART 1 – MEES reform for commercial property: government confirms EPC B target for larger buildings by 2031

The UK Government has published its long-awaited interim response to consultations on strengthening the Minimum Energy Efficiency Standards (MEES) framework for the non-domestic private rented sector in England and Wales.

In a notable shift from earlier proposals, the Government has confirmed a more targeted and flexible approach to raising energy efficiency standards across commercial property.

The response provides clear policy direction but leaves important detail to be addressed in a fuller response and future legislation.

This Part 1 looks at the Government’s interim response on MEES reform for larger commercial buildings. Part 2 explores what the proposals could mean in practice for landlords, investors, and occupiers.

WHAT ARE THE PROPOSALS?

The interim response confirms the following:

• EPC B by 2031 for larger buildings: The Government intends that all privately rented non-domestic buildings over 1,000 sq m will be required to achieve an Energy Performance Certificate (EPC) rating of B or above by 2031, where cost-effective.
• No change for smaller properties: Buildings below 1,000 sq m will remain subject to the existing minimum standard of EPC E, with no immediate requirement to improve further.
• Interim EPC C milestone dropped: The previously proposed EPC C requirement by 2027 will not proceed, giving landlords and tenants more time to plan upgrades.
• Flexibility mechanisms retained: Existing safeguards – including the 7-year payback test and exemptions regime – will continue to apply, ensuring only cost-effective measures are required.
• Legislation still to come: Implementation will depend on future secondary legislation being introduced and brought into force.

A CLEAR CHANGE IN POLICY DIRECTION

This interim response marks a departure from earlier ambitions to apply an EPC B requirement across the entire non-domestic rented stock by around 2030. Instead, the Government has adopted a “targeted” model, focusing on larger buildings where it considers the greatest energy and cost savings can be achieved. The shift reflects feedback from industry on practical delivery challenges, particularly for smaller landlords and more diverse property types.

WHY THE FOCUS ON LARGER BUILDINGS?

The focus on larger premises reflects the Government’s view that these buildings account for a disproportionate share of energy consumption and offer the greatest potential for bill savings and emissions reduction.

It estimates that improving larger premises could deliver up to £360 million in annual energy bill savings for tenants by 2031.

Smaller premises – including many high street and SME-occupied units – are afforded greater flexibility and a longer runway for future upgrades.

OUTSTANDING GAPS AND UNCERTAINTIES

The interim response reflects a balancing act between net zero ambitions and energy security goals, and commercial realities across a diverse property market.

While the direction of travel is now clearer, the interim response leaves several key issues unresolved:

• Legislative timing and detail: The EPC B requirement will only take effect once further secondary legislation is introduced, and no implementation timetable has yet been confirmed.
• Scope and methodology: The Government has not provided any further update on possible reform of the EPC regime itself, including the way ratings are calculated for non-domestic properties.

• Future trajectory for smaller buildings: Although currently unchanged, it remains unclear whether tighter standards will be introduced for sub‑1,000 sq m properties over time.
• Practical delivery and enforcement: Further detail is expected in a full Government response addressing implementation and compliance.

The targeted approach arguably prioritises impact over uniformity, but may also raise questions about whether the reforms go far enough to drive sector-wide decarbonisation.

KEY TAKEAWAYS

• The Government has moved away from a sector-wide uplift in MEES standards and is instead targeting larger non-domestic rented buildings, where it considers the greatest energy and cost savings can be achieved.
• Privately rented non-domestic buildings over 1,000 sq m are expected to need an EPC rating of B by 2031, where cost-effective and subject to secondary legislation.
• The proposed interim EPC C milestone for 2027 will not proceed, giving landlords and occupiers more time to plan improvement works.
• Smaller premises will remain subject to the current EPC E minimum standard for now, although their longer-term position is still unclear.
• Existing flexibility mechanisms, including the 7-year payback test and exemptions regime, are expected to remain central to limiting mandatory works to cost-effective measures.
• Significant detail is still awaited, particularly on the legislative timetable, enforcement arrangements, and any future direction of EPC reform.

Although many aspects of the new regime remain subject to further legislation, landlords, investors, and occupiers should begin assessing their exposure now. To discuss how the reforms may affect your property portfolio, leasing arrangements, or investment strategy, contact Commercial Property partner Vijay Patel.