The EPC rollback: relief or risk for commercial landlords?

Is the government’s rollback on Minimum Energy Efficiency Standards (MEES) a pragmatic compromise or a missed opportunity to drive real change?

The government’s long-awaited response to consultations from 2019 and 2021 MEES is now emerging, with a clearer direction on how minimum energy efficiency standards for non-domestic properties will evolve. The headline change is a rollback from the consultation proposals, removing the 2027 EPC C milestone and narrowing the scope of tighter requirements. This may provide immediate comfort to some landlords, easing short-term compliance pressure, but it also transfers more of the burden to the market, not regulation. As tenant expectations, investor scrutiny and energy costs continue to rise, landlords who delay action risk falling behind. With much of the country under a red weather warning, are the changes ambitious enough?

What does this mean for landlords?

If you own commercial property over 1,000 square metres in size, you now have a clear (but tight) deadline – you need to get to EPC B by 2031. The clock is already ticking, and given the challenges of improving ratings while tenants are in occupation, early action matters.

Buildings below 1,000 square metres can remain at the current minimum level of E, leaving a huge proportion of properties with no obligation to increase energy efficiency above current levels.

The existing affordability, or seven-year payback test, will remain, as will the current exemptions.

For many portfolios this shifts focus from upgrading works only to meet compliance requirements, to more strategic asset decisions, for example where to invest, where to hold assets and where they may become harder to let.

Next steps for landlords

• Identify which of your properties are over 1,000 metres squared.
• Assess EPC ratings of those properties – improving them to a B rating is likely to take time, particularly if you have tenants in place.
• Look into where the seven-year payback test comes in, and if there are any exemptions that apply.
• Consider access arrangements and what the lease says about rights to enter to carry out energy improvement work.
• Review service charge provisions – who will pay?

But don’t let smaller properties fall off your radar. Regulation for smaller properties is likely to follow (we don’t know when) but this could mean that the current exemption for buildings under 1,000 metres square may be temporary. Aside from regulatory requirements, properties that don’t meet tenant expectations risk becoming harder to let, commanding lower rents, or sitting vacant. Today’s tenants are increasingly choosing greener buildings – to cut energy bills, attract and retain talent, and meet their own sustainability commitments. If your smaller properties can’t deliver that, they could fall behind in the market.

What does this mean for tenants?

Even though the obligation to reach EPC B sits with your landlord, you cannot ignore it.

• If you want to grant a sub-lease, the obligations will hit you, as intermediate landlord.
• Your lease will determine whether your landlord can access the property to carry out works, how much disruption you'll have to tolerate while they do, and whether the cost ends up on your service charge bill.

For tenants in properties below 1,000 square metres, don't assume that regulatory breathing space means your landlord will pause their improvement programme. Many landlords are likely to press ahead with improvements. The question for you will be the same - who pays, and what does your lease say about it?

What does this mean for lenders?

A property that can't reach EPC B by 2031 could become unlettable under the proposed regulations. This will impact on rental income, which puts loan repayments at risk. So that chain of consequence runs directly to your security.

For properties below 1,000 square metres, the regulatory floor stays at EPC E for now. But, if the wider market is improving its ratings, properties that stand still will fall behind, affecting occupier demand, rental yields, and the long-term value of your security.

TLT's view

The government’s interim response reflects the practical challenges of delivering widespread change across the commercial property market. But it is not a reason to halt energy efficiency improvement works. While the revised approach provides short-term flexibility, it increases longer-term risk. With no interim 2027 milestone, and no requirement for many properties to be improved at all to be lawfully let beyond 2031, the pace of improvement will be driven less by legislation and more by tenant demand and rental value. For landlords, the question isn’t just “what does the law require?” but "what position do we want our portfolio to be in by 2031 and beyond?”

Further detail will be in the full response, and changes to raise the MEES to B for larger buildings will need secondary legislation to bring it into effect. The businesses that use this period to plan and prioritise are more likely to stay competitive as expectations – and temperatures - continue to rise.

TLT has extensive experience in advising on the MEES Regulations. To discuss what this interim response means for you, please get in touch.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at June 2026.  For more information see our terms & conditions.