Non-domestic Minimum Energy Efficiency Standards

I am pleased to provide an update on the Government’s approach to strengthening minimum energy efficiency standards in the non domestic private rented sector, following our previous consultations and extensive recent engagement with industry, investors, local authorities and other stakeholders.

The Government consulted in 2019 and 2021 on proposals to raise non-domestic PRS MEES to EPC B, reflecting the role of energy efficiency in cutting bills, strengthening energy security and supporting the transition to net zero. Since then, we have continued to engage closely with stakeholders on how these proposals would work in practice across a diverse commercial building stock.

Listening carefully to that feedback, the Government have now confirmed their intention to implement a revised and proportionate approach that maintains ambition where it delivers the greatest benefits, while providing greater flexibility for smaller businesses and landlords.

In practice, this means that from 2031 it is proposed that private rented non-domestic buildings over 1,000 square metres in England and Wales will be required to meet a higher energy efficiency standard of EPC B, where cost-effective. This offers a more targeted approach compared with the original proposal, which would have applied across the entire non-domestic building stock. Initial modelling suggests that raising the standard for the largest premises could save those tenants £360 million per year on their energy costs by 2031.

The intention is for buildings below 1,000 square metres to continue to be subject to the current EPC E minimum standard.

The previously consulted interim EPC C milestone for 2027 will not be taken forward, giving landlords and tenants more time to plan investment and retrofit works in a way that suits their buildings and lease structures.

Existing flexibility mechanisms, including the seven-year payback test and exemptions, will remain in place, ensuring that only improvements that are practical, affordable and cost-effective will be required.

The changes to raise MEES to EPC B for larger buildings will take effect following the successful passage of secondary legislation through Parliament.

This targeted approach focuses action where it delivers the greatest benefits, helping tenants in the largest buildings to save energy and reduce bills, protecting them from future energy shocks. While continuing to improve the poorest performing buildings through the existing EPC E standard, we are giving additional flexibility to our SMEs and high streets to upgrade their buildings over time, with no set deadline for going beyond this level. With a fair and proportionate timetable, the policy supports business investment, reduces exposure to volatile energy prices and strengthens UK energy security.

We will publish the Government’s consultation response in due course, setting out further detail on the policy and implementation of the threshold, and aim to introduce legislation and supporting guidance at the earliest opportunity.

We will continue to work closely with industry and other stakeholders to ensure that the pathway to EPC B is fair, clear and deliverable.

We look forward to continuing the dialogue with industry as we move into the next phase of delivery.

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