The consultation and the June 2026 Interim Response
In 2021 the UK government consulted on raising the Minimum Energy Efficiency Standards for commercial property in England and Wales, proposing a minimum EPC C rating by 1 April 2027 rising to a minimum EPC B rating by 1 April 2030. Responses were overwhelmingly supportive at the time. After a long delay, DESNZ published an Interim Response in June 2026.
The Interim Response materially reshaped the consultation outcome. The 2027 EPC C milestone is no longer being pursued. The proposed EPC B requirement is now scoped to privately rented non-domestic buildings with a lettable area above 1,000 m². Buildings below 1,000 m² remain subject to the existing EPC E requirement. Secondary legislation is still required and the final regulatory framework has not yet been enacted.
For institutional landlords managing large commercial portfolios, this creates a more defined but still incomplete planning environment. The direction of travel for above-threshold stock is clear, but the precise compliance window, the 1,000 m² scope definition and the cost-effectiveness test remain to be settled.
What is law right now
The only confirmed commercial MEES position today remains the EPC E minimum. All privately rented non-domestic properties in England and Wales must hold a minimum EPC rating of E. Landlords cannot grant a new lease or continue to let a commercial property rated F or G without a registered exemption.
This has been in force since April 2023 for both new and continuing leases. Landlords with F or G rated assets that are currently let are already in breach unless an exemption applies.
The proposed EPC B requirement for above-threshold buildings has not yet been legislated. Compliance focus should shift towards identifying affected assets (privately rented, non-domestic, above 1,000 m²) and developing evidence-based investment plans ahead of secondary legislation.
Why the uncertainty itself is a risk
Some landlords have interpreted the absence of confirmed deadlines as permission to defer action. This is a mistake for three reasons.
EPC improvement lead times are long. Fabric improvements — insulation upgrades, window replacement, heating system decarbonisation — require planning, procurement, contractor engagement, and in many cases tenant cooperation. For a large portfolio, a systematic improvement programme takes years to execute, not months. Waiting for regulatory certainty before beginning creates a timing problem that cannot be solved quickly.
The direction of travel is unambiguous for above-threshold stock. Whatever the final compliance window, the policy direction confirmed by DESNZ is that privately rented non-domestic buildings above 1,000 m² will be required to reach EPC B. Every year without an evidence-based investment plan for in-scope assets is a year of lost lead time.
Lease events create hard deadlines regardless of regulation. A lease renewal or re-letting of a sub-B asset above 1,000 m² creates a commercial vulnerability well before secondary legislation lands. Institutional tenants are increasingly asking about EPC ratings at heads of terms stage. Lenders are beginning to reference EPC performance in green finance covenants. The commercial pressure is building independently of the regulatory timeline.
The EPC reform picture adds further complexity
Commercial MEES reform is happening alongside a broader review of the EPC framework itself. The government has been consulting on changes to EPC metrics for commercial buildings — potentially moving away from the current asset-based SBEM model towards metrics that better reflect operational energy performance.
This matters because an EPC rating achieved under the current methodology may not translate directly to a rating under a revised methodology. Landlords who are planning improvement programmes purely to hit a current EPC rating target may find the goalposts shift.
The prudent approach is to focus on genuine fabric and services improvement — measures that reduce actual energy consumption — rather than optimising narrowly for the current EPC methodology. This provides a more resilient compliance position regardless of how the metric evolves.
What the BPF data tells us
Research published by the British Property Federation found that 81% of commercial buildings in English cities could fail to meet an EPC Band B rating by 2030. That is not a marginal compliance problem — it represents the overwhelming majority of the commercial stock.
For portfolio landlords, the implication is that a significant proportion of assets will require material capital investment to achieve EPC B. The question is not whether to invest but when and in what sequence.
What prudent landlords should be doing now
Regardless of when the government publishes its formal response, there are four things institutional landlords should be doing now.
Current EPC audit. Establish the current EPC rating for every asset in your portfolio. Identify which assets are rated E (compliant but vulnerable), D or C (moderate risk), and B or above (well positioned). Many portfolios have EPCs that are out of date or that were produced when the building was in a different configuration — these need to be updated before planning any improvement programme.
Threshold identification and EPC B gap analysis. Identify which assets fall within the proposed above-1,000 m² scope. For each in-scope asset, understand what measures would be required to achieve EPC B under the current SBEM methodology, and at what cost. This gives you the information needed to sequence capital expenditure rationally across the portfolio.
Lease event mapping. Identify which assets have lease expiries, break clauses, or rent reviews in the next three to five years. These are the assets where EPC performance creates the most immediate commercial risk — either because a void would require a compliant EPC to re-let, or because a renewal negotiation with an institutional tenant will surface EPC performance as a point of discussion.
Improvement programme planning. For above-threshold assets with near-term lease events or sub-E ratings, begin improvement planning now. For above-threshold assets rated D or C, develop a programme timed to achieve B ahead of whichever compliance window is eventually confirmed — without leaving it so late that contractor availability becomes a constraint.
The exemptions landscape
Commercial MEES includes a number of exemptions that can apply where compliance is not technically feasible or not cost effective. These include:
- The seven year payback exemption — where the cost of the required improvements cannot be recovered within seven years through energy savings
- The consent exemption — where the landlord cannot obtain necessary consents from tenants or planning authorities
- The devaluation exemption — where a qualified surveyor confirms that the required improvements would reduce the market value of the property by more than 5%
Exemptions must be registered on the PRS Exemptions Register. They are valid for five years and must be renewed. They are not a permanent solution — they are a time-limited deferral, and the underlying compliance obligation remains.
Relying on exemptions as a long-term strategy is not advisable. Lenders and institutional investors are increasingly scrutinising exemption reliance as a negative indicator in due diligence.
Our view
The landlords who will be best positioned — commercially, financially, and reputationally — are those who use the current period of regulatory uncertainty to build a systematic, evidence-based improvement programme rather than waiting for confirmation of deadlines that may arrive with less notice than expected.
The June 2026 DESNZ Interim Response narrows the uncertainty but does not eliminate it. The fundamentals are clear: commercial MEES will tighten for above-threshold privately rented non-domestic stock, the direction is to EPC B, and the majority of the commercial stock in scope does not meet that standard today. Secondary legislation will follow.
NZC Consultants provides commercial EPC assessments and MEES compliance reviews, and portfolio-wide improvement planning for institutional landlords and property funds. We can help you establish where your assets sit today and what a credible improvement programme looks like. Get in touch with our team to discuss your portfolio.