Non-Domestic MEES: UK Government Confirms EPC B Target for Larger Commercial Buildings From 2031
On June 18, 2026, the UK government published its long-awaited interim response to the 2019 and 2021 public consultations on raising the Minimum Energy Efficiency Standards ("MEES") for non-domestic privately rented property in England and Wales. The response, accompanied by a Written Ministerial Statement (HCWS126), confirms a revised trajectory for the non-domestic sector that is more targeted than originally proposed. For landlords, investors, and asset managers with commercial real estate interests, the announcement provides overdue clarity on the compliance landscape—though several critical implementation questions remain unanswered.
Background
Under the current MEES framework, established by the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015, it is unlawful for a landlord to let a non-domestic property with an Energy Performance Certificate ("EPC") rating below E unless a valid exemption has been registered. The 2019 consultation proposed that the minimum standard should be raised to EPC B by 2030. A further consultation in March 2021 proposed a phased approach—an interim milestone of EPC C by 2027, followed by EPC B by 2030—alongside reforms regarding enforcement, tenant obligations, and exemptions.
Key Confirmed Proposals
EPC B for larger buildings from 2031. The government has confirmed that, from 2031, all privately rented non-domestic buildings exceeding 1,000 square metres must achieve a minimum EPC rating of B, where cost-effective. This represents a more targeted approach than the original proposal, which would have applied the higher standard across the entire non-domestic stock regardless of size. The deadline has been extended by one year from the originally proposed 2030 date. Initial government modelling suggests that tenants in affected buildings could save up to £360 million per year on energy costs.
No interim EPC C milestone. The previously proposed interim requirement for properties to achieve EPC C by 2027 has been dropped. The government's stated rationale is that this provides landlords and tenants with additional time to plan investment and retrofit works in a manner that suits their buildings and lease structures.
Smaller buildings remain at EPC E. For non-domestic properties below 1,000 square metres, the minimum standard will remain at EPC E, with no set deadline to meet a more stringent standard. The government has framed this as providing additional flexibility to small and medium-sized enterprises and high-street landlords to upgrade their buildings over time.
Retention of flexibility mechanisms. The seven-year payback test and the existing exemptions regime (including consent, devaluation, and temporary exemptions) will remain in place. Only improvements that are practical, affordable, and cost-effective within the seven-year payback period will be required.
Outstanding Issues and Next Steps
The interim response is expressly not the government's final position. A full response to the consultations is expected later in 2026, which will address several significant issues left open. These include whether enforcement mechanisms and penalties (currently up to a maximum of £150,000 per breach) should be strengthened, whether a six-month exemption should apply to shell-and-core-let buildings, and whether statutory tenant obligations—including a duty not to undermine an EPC rating and a duty of mutual co-operation with the landlord—should be introduced (which may require primary legislation). The question of whether reforms to the requirement for three quotes for the payback test will be implemented also remains outstanding. Until secondary legislation amending the 2015 Regulations is passed through Parliament, the existing MEES framework remains in force.
Portfolio Considerations
Landlords and investors with larger assets should take action now to review portfolio EPC ratings, assess the cost and deliverability of energy efficiency works, and factor MEES compliance into lease negotiations, valuations, and acquisition due diligence. While the removal of the 2027 interim deadline reduces near-term compliance pressure, owners of properties exceeding 1,000 square metres still face a firm 2031 target. The capital costs of achieving EPC B for many larger commercial buildings are likely to be significant—potentially requiring external fabric improvements, replacement glazing, and heating system replacements. For smaller properties, there is no immediate compliance burden beyond EPC E, but owners should not assume that minimum standards will remain static indefinitely. Mixed-use portfolios should note the divergent compliance regimes: the domestic sector and the non-domestic sector now operate on separate timelines and metrics.
