Government inaction making commercial buildings unlettable

Four out of five commercial buildings in England’s major cities will fail to meet future EPC standards without more clarity from the government. 

The British Property Federation is warning that red tape delays surrounding this issue could result in swathes of office and retail property being illegal to let.

A looming crisis 

According to research published by the British Property Federation (BPF), fully 81 per cent of commercial buildings in English cities could fail to meet an Energy Performance Certificate (EPC) Band B rating by 2030. 

That is the threshold the government has indicated will become the minimum legal standard for let commercial property — yet no firm regulatory timeline has been confirmed, and the assessment criteria themselves remain under review.

Since April 2023, commercial buildings in England and Wales must have a minimum Energy Performance Certificate (EPC) rating of E to be legally let, that’s according to the Minimum Energy Efficiency Standards (MEES). 

The EPC ratings range from A (most efficient) to G (least efficient). The minimum requirement is scheduled to rise to C by 2027 and B by 2030.

It is now unlawful to grant a new lease or continue to let a commercial property with an F or G rating, unless there’s a valid exemption. EPCs are valid for 10 years and are required for when you are selling, letting, constructing a new building or refurbishing an existing one.

Properties listed in conservation areas, or for temporary use, may be exempt, but they must be registered on the PRS Exemptions Register. Failure to meet these requirements can result in significant fines.

The implications for landlords and property owners are serious. If the proposed standard is applied as planned there is no doubt, many owners will be in trouble. The overwhelming majority of commercial buildings, either vacant or occupied by businesses throughout England’s cities will be in breach of the law. 

Landlords and owners of these properties face a difficult choice, once the standards are confirmed: either invest in retrofitting or withdraw from the market. Either way they could be faced with sometimes insurmountable difficulties if the properties are currently let.

The BPF’s findings are not an abstraction; they spell out the reality of what will happen if things don’t change. They describe the commercial property market as it stands today. They’ve identified a large gap between the current state of these buildings and the proposed future standards.

Revision of standards

A complicating factor in this mix is the government’s revision programme of the EPC assessment criteria. As of early 2026, the UK government says it is in the final stages of developing a new system. It is currently overhauling the framework for Energy Performance Certificate (EPC) standards through Reforms to the Energy Performance of Buildings regime

The new regime is said to be introduced by October 2026. Domestic EPCs are moving to a multi-metric system, while non-domestic EPCs are to maintain a single carbon-based Environmental Impact Rating (EIR). 

This system is designed to support net-zero goals, with stricter minimum standards aimed at reaching EPC Band B by 2030 for all leased commercial properties.

The main rating (A+ to G) will be based on CO₂ emissions per square metre (Environmental Impact Rating - EIR) rather than energy cost.

The methodology (NCM and SBEM) is being updated to rely more heavily on evidence-based data rather than default assumptions. This means assessors must gather more detailed information on insulation, glazing, and building services with an inevitable increase in EPC assessment costs.

There will be an increased emphasis on the efficiency of heating, ventilation, and air conditioning (HVAC) systems and controls.

It is proposed the exemption for listed/heritage buildings will be removed, meaning they will require an EPC when marketed, let, or sold. And there will be a tightening of exemptions generally. They must be formally registered, evidenced and exemption will not be automatic.

An EPC must now be in place at the point of marketing a property, rather than just upon completion of a lease. For buildings over 1,000m², the validity of Display Energy Certificates DEC recommendation reports is expected to be reduced from 7 years to 5 years. The Air Conditioning Inspection Reports (ACIR) regime for systems over 12kW is also being tightened to improve compliance.

The regulatory system in flux

The Minimum Energy Efficiency Standards (MEES) regulations are being progressively tightened for commercial property in England and Wales. Since April 2023, landlords have been prohibited from continuing to let commercial premises with an EPC rating below E.

But the government’s longer-term plan goes considerably further. Policy statements have indicated a requirement for commercial property to achieve a minimum of EPC Band C by 2027 and Band B by 2030. These targets represent a dramatic raising of the bar. The band B in particular will be difficult and in some cases uneconomic to achieve in commercial buildings.

The problem is that the government has yet to formally legislate for these targets, nor has it confirmed the precise methodology (see above) by which EPCs for commercial buildings will be assessed going forward. 

The EPC framework itself is the subject of ongoing revision, with the consultation process that is leaving landlords and investors “up in the air”, uncertain about the goalposts they are being asked to meet.

Uncertainty has a cost

In any sector, regulatory uncertainty would be costly. In commercial property, where investment decisions are always long-term, and capital expenditure is substantial, planning timescales can be measured in decades

The uncertainty is resulting in delayed action. Landlords and property owners are holding back rather than getting on with doing upgrades. Without firm decisions and guidelines, without knowing what exact standard is required, what methodology will be used, nothing gets done.

It is not beyond the realms of possibility for a landlord to instigate a building upgrade only to find that some aspect has led to a lowering of the EPC rating under a new inspection / assessment regime. Until the rules are settled, the risk of investing in the wrong improvements is too great. 

But the danger is that inaction today will create an almighty rush to meet the new standards in the future, when trades and contractors will be overwhelmed with the demand.  

If it transpires that 81 per cent of commercial buildings need to be upgraded when the deadline is fast approaching, and time is running out, meeting the legal requirements will become impossible. 

The BPF’s appeal

The British Property Federation represents a broad range of commercial property landlords and owners and is one of the most influential voices in the UK commercial property sector. 

It has not published this latest research lightly; its intention is to highlight to the industry and to the government the urgency of the situation and the industry’s frustration with the lack of progress demonstrated by the government on this matter.

The BPF says it is not opposed to the introduction of higher energy efficiency standards and generally accepts the direction of travel on the energy drive, as do most responsible owners. 

Tenants also are increasingly demanding high-quality, low-carbon space as demonstrated by the speed with which higher quality buildings let quickly, as opposed to their low-quality equivalents. Buildings that don’t meet high energy efficiency standards and modern facilities are already struggling to attract and retain occupiers.

The BPF says it is simply asking for clarity. Specifically, it wants the government to confirm its regulatory timeline once and for all. And it wants the government to finalise the revised EPC methodology. Without proper guidance on how landlords are expected to proceed, nothing gets done.

Targets without clarity

It’s all very well for the government to set out ambitious targets on energy efficiency, but without a clear roadmap for its practical implementation, chaos is the likely outcome. 

The BPF argues that from automotive to energy generation, these sectors have benefited from clear timelines and consistent policy signals (arguable!), but with commercial property being left behind. The result is a sector that is broadly willing to proceed with decarbonisation, but simply unable to commit through lack of direction.

Without more action and clarity, the BPF warns, we will have a country with most commercial buildings in its major cities that are unlettable in a few short years’ time.

[Main image credit: Plaxaby]