The Government’s latest update on Minimum Energy Efficiency Standards (MEES) provides clarity but not comfort for real estate investors:
- By 2031 all privately rented commercial buildings over 1,000m2 in England and Wales must achieve EPC B
- That’s 1 in 4 larger buildings needing to be upgraded in just 5 years
- Interim target of EPC C by 2027 has been removed
The Implications
Such a tight timeline means the removal of the proposed 2027 EPC C milestone does not release any pressure. As the deadline draws nearer, the regulations will increasingly impact value, reduce liquidity and affect occupier demand. Buildings that fall short, risk becoming progressively harder to let, refinance or exit, particularly in more competitive or institutionally driven sectors.
The Challenge
Moving from EPC D to B rarely comes from incremental change. It typically requires fabric and system upgrades, decarbonising heat and cooling and enhancing lighting and controls. Such retrofits are complex, capital intensive, disruptive and often dependent on tenant alignment and lease events, limiting the pace of delivery.
Energy performance must therefore be embedded across the asset lifecycle. At acquisition, investors should price in EPC B and net zero pathways. Asset managers should identify stranded assets and align capex with deliverable upgrade plans, while delivering improvements through management, leasing, fit outs and refurbishments.
The challenge is as commercial as it is technical: integrate energy strategies with wider asset and repositioning plans and use lease events to unlock value.
Not all assets will justify EPC B investment. A portfolio approach is essential; prioritising where to invest, hold or dispose, balancing compliance risk with returns to protect value.
Delivering impact
As building consultants, we have been encouraged by the progress made over the past decade; and are proud to have played our part in supporting clients to embed EPC B as a refurbishment standard.
The political and economic landscape has however introduced some uncertainty over recent years, and so the Government’s renewed clarity and ambition is a welcome step to refocus the industry on urgent carbon reduction.
But as we do so, it is critical to focus not just on asset ratings; but on reducing energy use and emissions in practice. This requires looking beyond the EPC rating to performance led design, consideration tenants’ fit outs and how buildings are used, managed and controlled. The exciting part for us is that this will drive a shift beyond purely technical solutions towards greater collaboration between landlords, tenants and the wider supply chain.
The takeaways for Investors
For investors, the direction of travel is now clear. The window to act is tight, EPC B is firmly embedded as the benchmark, and assets that can demonstrate a credible, lifecycle-led pathway to delivery will increasingly outperform. Those that cannot – risk falling behind, facing higher capital requirements, reduced income resilience and weaker exit positions as 2031 approaches.
Want to learn what this means for you? Our expert teams across the UK are ready to help. Find your nearest office here.