"Landlords of commercial properties must assess their portfolios proactively, identifying opportunities to improve EPC ratings and stay ahead of anticipated regulatory deadlines"
- David Thomas - Vail Williams
1 in 4 EPC-rated non-domestic properties are currently rated below ‘C’, according to new research by commercial property consultants Vail Williams, leaving thousands of commercial landlords vulnerable to significant financial penalties if they do not make upgrades to their properties by 2027.
The new analysis of the government’s latest Energy Performance Certificates data by Vail Williams shows that 25% of non-domestic properties still have an EPC rating of below ‘C’.
While good progress in the energy efficiency of commercial properties has been made in the last decade, a significant number of commercial landlords are anticipated to need to upgrade their properties by April 2027 to meet the expected new MEES (Minimum Energy Efficiency Standards) and avoid hefty fines.
“In just two short years, commercial landlords could be required to have an EPC rating of ‘C’ or above on their rental properties," explained Vail Williams' head of energy & sustainability, David Thomas, "By April 2030, the minimum EPC grade is anticipated to rise further to ‘B’ or above. This is significant for landlords, as 1 in 4 commercial properties currently have an EPC below ‘C’ and non-compliance with EPCs by these deadlines can result in hefty fines of between 10% and 20% of the property’s value."
He adds, "With fines capped at £150,000 per breach, most commercial landlords that do not meet the new MEES standards risk facing fines that, in many cases, are likely to outstrip the cost of property upgrades, and could run into the tens of thousands of pounds.”
Is a MEES exemption a lifeline for commercial landlords?
“There is risk for commercial landlords in avoiding property upgrades in the hope that they might qualify for a MEES exemption," comments David, "A MEES exemption allows a landlord to continue letting properties that don't meet the minimum EPC. However, these only offer a temporary reprieve in specific circumstances and securing one is a rigorous and time-limited process.
He explains, "Examples where MEES exemptions may be granted include when a tenant denies access for improvement works or if you can prove that the works would devalue the property. However, the administrative burden and temporary nature of exemptions underscore the value of investing in energy efficiency improvements now. In most cases it will be better for landlords in the long run to get started on ways to improve their EPC ratings as soon as possible.”
Energy efficiency trends: Progress so far
However, significant progress has been made on EPCs to date. Between 2008 and 2021, the average annual lodgement hovered at around 87,000. By 2022 and 2023, this had jumped to 113,000 and 140,000, respectively. This upward trend reflects growing awareness among landlords about the importance of EPC ratings and the need for improved energy efficiency in commercial buildings. In 2009, the number of A-rated buildings was nonexistent, and as you can see, this is an improving trend:
2019
No A-rated buildings
7% B-rated; 27% C-rated; 29% D-rated
18% E-rated; 8% F-rated; 10% G-rated
Fast forward to 2024, and the shift is clear
7.5% A-rated
32% B-rated; 34% C-rated
17% D-rated; 7% E-rated
Less than 1.2% F or G-rated
This improvement is a direct response to regulatory changes, particularly the April 2023 MEES deadline, which made it unlawful to let premises with an EPC rating of F or G.
Commercial landlords urged to take action now
David concludes, “Landlords of commercial properties must assess their portfolios proactively, identifying opportunities to improve EPC ratings and stay ahead of anticipated regulatory deadlines. With compliance windows narrowing and non-compliance penalties escalating, acting now is both a legal imperative and a smart investment. For tailored advice and support in improving your property’s energy efficiency, consult a professional EPC assessor or sustainability expert.”
