FAQs

All commercial property if being sold, leased or newly built (subject to certain exemptions) must have an EPC.

Following the introduction of the Minimum Energy Efficiency Standards (MEES) in April 2018, the required rating in order to validate the lease of a building is E.

Legislation is set to tighten. From 1 April 2023, all new sales, lettings and new build properties will continue to require the minimum E rating. In addition, those properties that are already let prior to 1 April 2023 with an existing valid EPC will also require to be at a rating of E or above. If they are not at E or above it will be illegal for the lease to continue.

For example, if a property was let in 2016 for a period of 10 years with a valid EPC, obtained at the time, having a rating of F or G, as it was prior to the 2018 requirement to be at E, on 1 April 2023 if improvements have not been made and the property hasn’t been re-tested then, subject to certain exemptions, this becomes an illegal letting.

All tenanted commercial properties subject to renewal or creation of a new tenancy must have an EPC rating of band E or above. Band F and G are no longer acceptable (subject to exemptions).

From 1 April 2023, existing tenancies, not just those renewing or reletting, will require valid EPC tests.

It is an offence to continue to let a commercial space with an F or G EPC rating, even in the middle of a lease term.

1 April 2023

From 1 April 2023, the scope of MEES will extend to existing tenancies, not just those renewing or reletting. Both commercial and residential tenanted property will need to be at band E or above.

1 April 2027

The UK government anticipates setting an interim target for commercial property of band C by 1 April 2027.

1 April 2030

The UK government’s anticipated trajectory for commercial property is EPC band B by 1 April 2030 for most commercial property, where it is cost effective to do so. It is estimated that only 12% of commercial properties have an EPC rating of B or above, so there will likely need to be some significant upgrades to existing buildings.

The UK government is proposing two compliance windows in the second half of this decade which are as follows:

Compliance window from 2025 to 2027

As of 1 April 2025, a commercial property landlord is required to register a valid EPC in accordance with MEES regulations to an online database.

From 1 April 2027, the minimum EPC rating is expected to increase to C, so energy performance retrofitting improvements should have taken place by then.

If the commercial property possesses a C rating as of April 2025, the landlord will be in compliance with the regulations. However, if not, the landlord would have a two year compliance window to present a new EPC test result with C rating by 1 April 2027.

Compliance window from 2028 to 2030

From 1 April 2030, it is expected the minimum EPC rating required will increase to B, so energy performance retrofitting improvements should have taken place by then.

If the commercial property possesses a B rating as of April 2028, the landlord will be in compliance with the regulations. However, if not, the landlord would have a two year compliance window to present a new EPC with B rating by 1 April 2030.

Exemptions do apply.

The changes may result in landlords restricting tenants from making alterations or carrying out works which could reduce the EPC rating of the property.

Landlords may also seek to increase service charges to cover the cost of improving the building’s energy efficiency.

An EPC test produces a recommendation report that broadly shows ways in which a building’s energy performance can be improved.

It’s then the job of an energy performance specialist such as EPMaxx to use experience and judgement to interpret the recommendations of the EPC test and to advise on the most cost effective and impactful energy performance retrofitting works required to achieve target EPC ratings.

This process can be detailed and involved, necessitating the review of numerous energy performance retrofitting scenarios, judging the effect they will have on target EPC ratings.

Given all buildings are materially different, there is no set formula for energy performance retrofitting works.

Without specialist advice, the risk is that the wrong retrofitting works are undertaken, not meeting target EPC ratings and thereby increasing costs.

The responsibility for compliance with the MEES legislation rests with landlords and they will be liable if there is a breach.

Financial penalties ranging from £5,000 to £150,000 could be enforced by local trading standards, and repeat penalty notices can be served for a breach, so multiple fines could be incurred.

As ESG and green credentials become ever more important, avoiding the reputational risk associated with occupying or renting out properties with poor EPC ratings will be increasingly important to businesses.

There is also the risk of stranded assets, as investors seek to ensure that their assets are sustainable.

Check whether your properties have a valid EPC rating of band E or better. If this is not the case, then check when any current leases are due to expire.

If the lease is due to expire after 1 April 2023, check whether you have the right to access and undertake the work under the terms of the lease.

If leases expire beyond the 2027 and 2030 milestone EPC rating targets, consider how and if retrofitting works can be adhered to during the lease term.

Include energy efficient modifications in any planned maintenance for properties with a rating of F or G to ensure a minimum rating of E.

It should also be considered that properties currently holding a rating of E could be at risk of falling into an F or G. The software used to produce the EPCs is under constant review to increase consistency of data input by assessors and to reflect current thinking on best practice energy efficiency.

Check the terms of any current leases to establish whether any costs incurred in meeting the EPC rating can be recovered from the tenant.

Building owners and occupiers need to look carefully at their leases to determine the party responsible for the fabric of the building and services, and therefore who should implement and pay for the improvement works.

The following lease events will likely trigger these discussions:

• Agreement for lease / fit out works

• Lease renewal

• Lease end dilapidations liability

• Sale of a property

• Refinancing of a property

• Insuring a property

A ‘green lease’ is a lease that incorporates clauses whereby the owner and occupier undertake specific responsibilities with regards to the sustainable operation of a property, such as compliance with the MEES regulations.

The incorporation of green clauses is not limited to new leases. Where a lease is already in place, the parties can enter into a Memorandum of Understanding which provides a roadmap for co-operation between the parties on improving the environmental performance of the property.

Listed properties, and buildings within a conservation area, will no longer necessarily be exempt from the requirement to have a valid EPC.

Owners will need to show they have considered the options and put in place those which are practical and acceptable to do so. For example, you may not necessarily have to change sash windows for UPVC double glazing, but changing tungsten or halogen light bulbs for LEDs would perhaps work better.

If EPC requirements unacceptably alter the character or appearance of the property then an EPC may not required.

An EPC rating is based on many factors, ranging from the orientation of a building through to construction materials, method of lighting and even analysis of the local mechanical exhaust extract fans within the toilets.

A qualified Non-Domestic Energy Assessor (NDEA) affiliated to an accreditation scheme will inspect, collate, and record data from site and conduct further relevant research on such items as the building services, lighting and glazing in order to assess the energy efficiency grade using approved software.

EPC certificates are graded on a scale of A-G. The best result you can achieve is an A grade (most efficient) and the lowest being G (least efficient). EPMaxx is affiliated with Elmhurst Energy and accredited by Elmhurst Energy - Assessor ID EES/027195.

Insulation

Poorly insulated roofs and walls can have a massive impact on the EPC rating. Extra insulation can be added to solid brick or metal clad properties, especially where there are cavity walls.

Heating and cooling

Old HVAC plant and equipment can be a significant factor in energy emissions. Effective solutions include the installation of more efficient boilers, variable speed heating and mechanical heat recovery ventilation systems.

Lighting

Many commercial properties with a low EPC rating will have inefficient lighting systems. Simple steps like replacing older fluorescent lighting and halogen bulbs with LEDs can produce substantial savings. As with heating, lighting controls can also dramatically reduce energy wastage in unused areas of the property.

Predictive maintenance

Investing in predictive maintenance is crucial. Installing sensors on equipment and distribution networks in a commercial property allows engineering teams to track energy efficiency and calculate when systems may begin to underperform. In turn, these insights provide data-rich evidence required to understand when and how to invest in more energy-efficient systems or renewable energy sources.

Research compiled by the Estates Gazette states almost £2.5bn of rental income is under threat if owners of commercial property that is not up to scratch fail to boost their EPC ratings above an E ahead of the 1 April 2023 deadline.

The Estates Gazette’s research shows that some 120m sq ft of commercial property, the equivalent to 199 Shards across England, will have failing EPCs in 2023.

London landlords face the biggest rental shortfall. Some 24.1m sq ft of EPCs are due to fail in 2023 which could see as much as £1.1bn of rent at risk.

Close behind London is the South East, where landlords of 15.2m sq ft of commercial space with failing EPCs in 2023 potentially risk losing £273.1m of rental income.

As an alternative to a gas boiler, you may want to consider electric heaters or electric storage heaters.

Electric is now more favourable than gas in terms of energy efficiency, as around 60% of the national grid power is generated from renewable energy sources.

You could also consider switching to an air source heat pump. The technology behind these systems has improved significantly in recent years and financial incentives are available for switching from a gas boiler system to a low carbon system through the Boiler Upgrade Scheme.

Once you have an EPC rating and are clear on what retrofitting works are required for your home, you can instruct anyone to carry out the work or even do it yourself if you have the right skills to do so.

However, if you want to obtain any government grants or assistance that may be available, you will have to use an accredited Retrofit coordinator and contractor as they are monitored to make sure works for which government assistance is given are carried out by those trained and approved to fit and install correctly.

If you choose to have the works carried out by a non-accredited tradesman, make sure you receive full paperwork and photographic evidence of the energy performance improvements being carried out, as an EPC assessor when next providing an EPC for you will require clear evidence that the works have been carried out.