End of MEES uncertainty for commercial landlords

Prop-Search, the commercial property specialist, has welcomed the Government’s latest announcement on Minimum Energy Efficiency Standards (MEES), bringing an end to more than five years of uncertainty for commercial landlords.

Since 2019, the sector has awaited clarity on whether and when the current minimum EPC E requirement would be tightened.  While the residential sector has already been set a clear trajectory through the Warm Homes Plan, requiring EPC C by 2030, commercial property owners have until now lacked equivalent direction.

The Government has now confirmed that, from 2031, privately rented commercial properties over 1,000 sq m in England and Wales will be required to achieve an EPC rating of B, where cost effective.  The change will be implemented through secondary legislation.

Smaller commercial buildings under 1,000 sq m will remain subject to the existing EPC E standard, giving landlords additional flexibility and more time to plan improvements.  The current framework will also remain in place, including the seven-year payback test and established exemptions, allowing landlords to defer works where they are not financially viable.

“Samantha Jones, Associate Director at Prop-Search, said: “‘After years of uncertainty, the Government’s interim response provides much-needed direction for the commercial property market, particularly for owners of larger assets who now have a clearer long-term target with the shift to an EPC B requirement by 2031.  This gives landlords a defined trajectory that can be built into investment and asset management strategies.”

“However, important questions remain around how the new standards will be implemented in practice, whether the current EPC methodology will evolve, and the absence of detailed legislation and firm timelines.  As a result, there is still a significant degree of uncertainty across the market.”

“Landlords and investors should not wait for full clarity before taking action.  This window should be used to review portfolios, assess upgrade requirements and costs, and factor MEES compliance into asset management and transactional decisions to protect value and ensure future lettability.’”

Prop-Search advises that while the Government’s announcement has been broadly welcomed as a positive step towards improving building performance and reducing emissions, further detail, legislation, and guidance is still to come.  

In the meantime, landlords effectively have a five-year runway to prepare.  Early action will be critical, including reviewing portfolios, assessing upgrade requirements and costs, and integrating MEES considerations into leasing, asset management, and acquisition strategies to protect value and ensure future compliance.

While smaller buildings may benefit from short-term stability, EPC E should not be viewed as a long-term benchmark.  Across the sector, MEES considerations are becoming increasingly central to decision-making, influencing transactions, lease negotiations, and long-term asset strategies.

With the regulatory landscape continuing to evolve, Prop-Search recommends that all stakeholders closely monitor developments and begin preparing now to maintain competitiveness and ensure compliance as the new regime takes shape.