Commercial property and net zero: MEES for non-domestic properties – where are we now, and where are we going?

Introduction – What are MEES?

Minimum Energy Efficiency Standards or MEES were brought into force by The Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 and seek to impose minimum energy efficiency standards for properties.

MEES do this by reference to the Energy Performance Certificate (“EPC”) rating of a property. Therefore, for MEES to apply a property must have an EPC. EPCs rate a property’s energy efficiency from A-G. A being reserved for the highest performing buildings and G for the lowest.

MEES therefore apply to privately rented properties that are required to have an EPC and are let under a relevant tenancy. Broadly, this captures leases of more than six months and less than 99 years (although some shorter lettings may also be caught where, for example, the tenant has renewal or extension rights or remains in continuous occupation).

Unlike the EPC Regulations, MEES only apply on lettings and not on sales.

In relation to commercial property and MEES:

1.Where are we now?

For applicable non-domestic or commercial properties, MEES have taken effect in two stages. Therefore, unless an exemption applies:

1. From 1 April 2018 all in scope properties must have a minimum energy efficiency standard of EPC rating E or above before they can lawfully be let.
2. From 1 April 2023 where a lease is already in place, a landlord must not continue to let a property with an EPC rating lower than an E.

In 2019 and 2021 the Government carried out consultations on MEES in the non‑domestic private rented sector. These were distinct, sequential consultations.

The 2019 paper consulted on the future trajectory for non-domestic MEES, presenting options and impact analysis, with the Government’s preferred option being to raise the standard to EPC Band B by 2030 (where cost effective). The 2021 paper followed on to consult on how to implement and enforce that EPC B trajectory. It included proposals for a phased approach with “compliance windows” – EPC C by 2027 on the route to B by 2030. This consultation also covered strengthened enforcement, exemptions, a registration database, and related landlord duties.

Commercial property landlords have therefore spent more than five years in uncertainty waiting for the Government’s response to these consultations.

Finally, on the 18 June 2026, the UK Government provided their interim response and at last confirmed its intention to give the commercial sector clearer direction.

Under the updated proposals:

• From 2031, all private rented commercial buildings over 1,000 sq m in England and Wales will be required to meet EPC B, where cost effective.
• Buildings below 1,000 sq m will remain subject to the current EPC E minimum.
• The previously proposed 2027 interim EPC C milestone has been dropped, giving landlords and tenants more time to plan improvements.
• Existing flexibility mechanisms, including the 7-year payback test and exemptions, will remain in place.

Crucially, these changes will only take effect once secondary legislation passes through Parliament, meaning this is policy intent, not yet binding law. The Government has also confirmed that further details on these proposals will follow, providing additional clarity as the policy develops.

Landlords of commercial properties now it seems will have five years to understand the new requirements and plan upgrades accordingly. Therefore, for those holding or refurbishing larger assets, it is recommended that the next investment cycle must anticipate the EPC B threshold as standard.

Exemptions

The Government’s interim response did not give much away about any changes in relation to exemptions, other than to state that: “existing flexibility mechanisms, including the 7-year payback test and exemptions, will remain in place ensuring that only improvements that are practical, affordable and cost-effective will be required”.

What if a landlord does not comply?

There are financial penalties for breaching MEES. For commercial properties, the minimum penalty is between £5,000 and £10,000 to a maximum cap of £150,000. The penalty is calculated using either 10% or 20% of the property’s rateable value. The higher rateable value will be used to calculate the penalty where the breach has been in existence for more than 3 months at the time the penalty notice is served.

There is of course also the risk of reputational damage for landlords who are found to have flouted the rules.

How has the real estate market responded to the Government’s interim response?

The announcement has generally been welcomed for bringing clarity, but it also raises concerns.

• There are fears about creating a two-tier market. Larger assets now face a steep and immediate challenge to reach EPC B, while smaller buildings remain on a more flexible path. Some note that with the threshold set at 1,000 sq m (around 10,000 sq ft), many buildings that would not typically be considered ‘large’ are now captured. With more than four in five commercial buildings currently below a B rating, the scale of improvement required is significant.
• Others take a more positive view, seeing the update as providing the certainty needed to plan and invest ahead of 2031. It is also framed as a targeted transition plan, directing effort where it will have the greatest impact.
• For many, the “by 2031” deadline may effectively accelerate decision-making. Any refurbishment planned in the next few years will need to be ambitious enough to future-proof the asset for long term ownership. In practice, the new investment cycle must assume an EPC B target as standard.
• Government modelling suggests that raising standards for larger premises could save tenants around £360 million per year in energy costs by 2031. For occupiers in larger buildings, it remains to be seen whether this will offer meaningful protection against rising bills and future energy shocks.
• The UK Green Building Council (UKGBC) has described the announcement as an “important milestone” while emphasising that close collaboration between industry and the Government will be essential to deliver improvements at scale. The UKGBC maintains that improving the performance of existing commercial buildings is critical to meeting climate goals, and that greater clarity on future standards will help unlock investment.

2.Where are we going?

As stated above, the Government’s MEES response was only an interim response. The proposed changes will only take effect once secondary legislation passes through Parliament, meaning this is policy intent, not yet binding law. The Government has also confirmed that further details on these proposals will follow, providing additional clarity as the policy develops.

Landlords should however appreciate that whilst it is predicated that the existing MEES regime only affects about 10% of the non-domestic rented stock (as most building have EPCs of E or above), the new proposals requiring a minimum EPC of B could pull around 85% of non-domestic rented stock in the category where improvements and/or exemptions will be required.

Therefore, if they have not already done so, landlords should start to look at their portfolios now. They need systems in place to monitor their portfolios to identify properties that will fall below the EPC B rating. They then need to plan when and how to deal with these in the most cost effective way.

In addition, the partial MEES response should be considered in conjunction with the Government’s January 2026 response on the energy performance of privately rented homes (to see our article on the update for private rented homes click here) and the Government’s March 2026 partial response to reforms to the energy performance of buildings regime (which covers both domestic and non-domestic property). Some key proposals include:

• Continuous requirement to have a valid EPC: The Government proposed that there would be a continual requirement to have an EPC if letting. Currently, once an EPC expires after ten years, a new, valid EPC is only required when the property is re-let or sold (arguably, not when a tenancy is renewed or extended with the same tenant in situ). The detailed implementation of this proposal remains subject to the reformed EPC regime.
• Letting agents and online platforms must have an EPC before marketing: Currently letting agents have an exemption of up to twenty-one-days which can enable them to market a property before an EPC has been obtained. It is proposed this exemption should be removed.
• Heritage buildings would need an EPC: Currently officially protected buildings are not required to have an EPC in so far as compliance with certain minimum energy performance requirements would unacceptably alter their character or appearance. The proposal is that all heritage buildings are required to have an EPC where they are let.

If you have any questions about this topic, please get in touch info@ts-p.co.uk.