HOWEVER, FROM 2031 all privately rented non domestic buildings over 10,764 ft2 in England and Wales will be expected to meet EPC B, where it is cost effective. Buildings below this threshold can remain on the current minimum EPC E. The Department for Energy Security and Net Zero has stated that the changes will only take effect after Parliament has passed secondary legislation.

MEES energy efficiency regulation changes, which applies to all privately rented property, makes it an offence to continue to let a commercial space with an Energy Performance Certificate (EPC) worse than an E, even in the middle of a lease term. By 2031 this needs to be a B or above for larger buildings.

Currently some 60% of warehouse space – 404 million ft2 – will struggle to reach EPC B even if the revised deadline has been extended from 2030 to 2031.

There is a get out clause for landlords in that existing exemptions, including the 7-year payback test, will remain in place. Landlords are not expected to spend unlimited funds on upgrades. If energy efficiency measures cannot pay for themselves through energy savings within seven years, a valid exemption can be claimed.

But what effect will this have on occupiers? Confirmation of the 2031 target date and scope of affected buildings, after waiting since the 2021 consultation for clarity is surely a relief and the removal of the 2027 interim does give breathing room but as Shoosmiths’ partner and head of national Corporate Occupier real estate team Beth McArdle, said: “The revised MEES trajectory [while providing  helpful clarity] does not remove the underlying commercial and operational challenges. A confirmed 2031 target for EPC B gives occupiers greater visibility when planning estate strategies, refurbishments, and relocations, and should support more informed lease negotiations and alignment with corporate ESG commitments. There is also a clear upside in terms of reduced energy costs and increased resilience to price volatility as more efficient buildings come forward.

“However, the shift to a single end-date without an interim EPC C milestone risk compressing delivery into a shorter window, potentially leading to disruption around key lease events as landlords accelerate works closer to the deadline.

“For occupiers, this heightens the need to manage business continuity, particularly where improvement works require access, equipment replacement or reconfiguration of occupied space.”

And in the end the cost of it all will remain a key concern. As McArdle noted: “While the obligation to improve sits primarily with landlords, the extent to which upgrade costs can be recovered through service charges or reflected in rents will depend on lease drafting and may ultimately be expected to be borne (in whole or in part) by corporate occupiers.”