Stricter MEES regime to push larger commercial buildings towards EPC B by 2031

Landlords of larger commercial properties in England and Wales face a significant tightening of energy efficiency rules under government plans to raise Minimum Energy Efficiency Standards (MEES) for the non-domestic private rented sector.

An interim response to consultations launched in 2019 and 2021 confirms that, from 2031, privately rented non-domestic buildings over 1,000 sq m will be expected to meet an EPC rating of B, where this is cost-effective. Smaller buildings would remain subject to the existing EPC E backstop.

The proposals, which still require secondary legislation, mark a shift towards a more targeted regime aimed at larger assets, while stepping back from an earlier proposal for an interim EPC C requirement in 2027.

 

A two‑tier framework

Under the government’s preferred approach:

• Private rented non-domestic buildings with a floor area above 1,000 sq m will be required to reach EPC B by 2031, subject to existing “cost‑effectiveness” safeguards such as the seven‑year payback test and exemptions.
• Properties below the 1,000 sq m threshold will continue to be governed by the current minimum of EPC E, with no fixed timetable for any further uplift in standards.
• The proposed 2027 EPC C milestone will not proceed, easing immediate pressure on landlords and tenants to accelerate works within that timeframe.
• The existing suite of exemptions and flexibility mechanisms will remain in place, limiting the obligation to measures that are practical and economically viable.

The detail of how the size threshold will operate and how the rules will be implemented in practice is to be set out in a full government response to the consultations.

 

Legislative timetable

The new requirements will only bite once secondary legislation has passed through Parliament. Ministers have indicated that they intend to introduce legislation and updated guidance “at the earliest opportunity”, working with stakeholders to get the detail right.

 

What this means for landlords and investors

Although secondary legislation has not yet been laid before Parliament, the direction of travel is clear and the 2031 deadline is not far off. Landlords and investors with non-domestic portfolios, particularly those holding buildings over 1,000 sq m, should begin planning now.

We recommend that clients take stock of their current property holdings, review the EPC ratings across their portfolios and identify any buildings that currently fall below an EPC B rating. Early assessment will allow you to scope the cost and timing of any necessary energy efficiency improvements, take advantage of natural lease events or planned refurbishment cycles to carry out works, and avoid a last-minute compliance burden as the deadline approaches. It is also worth considering how the new requirements may affect investment decisions, asset valuations and lease negotiations – for example, the allocation of obligations to carry out and fund energy efficiency works, and the impact on rent review and service charge provisions.

Even landlords of smaller properties below the 1,000 sq m threshold should be aware that the regulatory landscape continues to evolve and that future tightening of standards cannot be ruled out.

Please get in touch with your usual DLA Piper contact if you would like to discuss how these proposals may affect your portfolio or if you need assistance reviewing your current EPC position.