MEES and EPC B: have you checked your commercial leases?

The Government has given commercial landlords more time to deal with MEES (Minimum Energy Efficiency Standards). It has not given them a reason to do nothing.

On 18 June 2026, the Government published its interim response to the 2019 and 2021 consultations on strengthening MEES in the non-domestic private rented sector. It confirmed its intention that, from 2031, privately rented non-domestic buildings in England and Wales over 1,000 sq m should achieve EPC B, where cost-effective. Buildings below that threshold are expected to remain subject to the current minimum standard of EPC E. The previously proposed interim EPC C milestone for 2027 will not be taken forward. Existing flexibility mechanisms, including the seven-year payback test and exemptions, are expected to remain. The EPC B requirement will only take effect following secondary legislation.

For landlords, investors and lenders, that may feel like a reprieve. The target is more focused. The timetable is longer. The 2027 EPC C milestone has gone.
But that is only part of the story.

The direction of travel is not new. The Government consulted in 2019 on an EPC B target for non-domestic private rented property. The 2020 Energy White Paper confirmed EPC B by 2030 as the future trajectory, and a further consultation followed in March 2021 on implementation and enforcement.

It has taken nearly seven years to move from the 2019 policy direction to an interim response in June 2026 — and the legal framework is still not in force.

That matters because commercial property decisions are being made now.

Leases granted today may still be in place in 2031. Investors are pricing assets now. Lenders are underwriting business plans now. Lawyers are being asked to draft documents that need to anticipate a regulatory framework which has been formally acknowledged, but not yet implemented.

If secondary legislation arrives in 2027, landlords may have around four years to deliver works before 2031. If the timetable moves again, they may have more time but less certainty. Neither is an ideal basis on which to plan capital expenditure, lease strategy or refinancing.

There is also an unavoidable political backdrop. The policy was developed under a Conservative Government, has now been formally acknowledged by Labour, and lands while the premiership is beginning.

That is not a party political point. Prime Ministers and governments control legislative programmes. A government focused on delivery, housing and growth will still need to decide how this MEES framework fits with retrofit cost, commercial property investment and the practicalities of getting works done.

So the real question is this: has the interim response given investors enough certainty to plan, or has it simply moved the uncertainty from the headline target to the detail of delivery?

Research published by the British Property Federation in February 2025 found that 83% of commercial buildings across seven major UK cities had an EPC rating below B. The analysis covered London, Birmingham, Bristol, Leeds, Liverpool, Manchester and Newcastle. Only 2% of buildings in those cities were rated EPC A and a further 15% were rated EPC B. London was one of the stronger-performing markets, with 19% of commercial buildings rated EPC A or B.

So while the Government has moved the timetable, it has not removed the scale of the task.

The question is no longer just: “What is the EPC rating?” It is: “Does the lease actually let us do the works?”

An EPC assessment may recommend lighting upgrades, HVAC replacement, glazing improvements, new plant, solar PV or works to common parts. On paper, the building may be capable of reaching EPC B.

The harder question is whether the landlord can act on those recommendations.

A lease may tell a more complicated story. The tenant may control the relevant plant. Access may be restricted. Works may be difficult during trading hours. Service charge wording may not clearly allow recovery. The best window for works may be a renewal, break, regear or lease expiry rather than the middle of the term.

At that point, MEES stops being just a technical EPC issue. It becomes a question of timing, cost, income and control.

An EPC D building with clear access rights, proper service charge recovery and an upcoming lease event may be easier to improve than an EPC C building with a long lease, tenant-controlled plant and no practical works window.

That is why MEES planning should move from EPC rating checks to lease deliverability reviews.

Older commercial buildings are not necessarily poor investments. Many still perform well, particularly in strong locations with good tenants. But the route to improvement is often more complicated.

The Government’s longer timetable gives landlords an opportunity to plan properly. It does not remove the need to plan.

If the business plan assumes that an asset can be improved before 2031, the leases need to support that strategy. If they do not, the issue may become a buyer concern, a lender condition or a valuation point.

Not every issue needs to be fixed immediately. Some points simply need to be understood, priced, documented or timed properly. The worst outcome is discovering the problem only when a buyer, lender or tenant solicitor is already reviewing the asset.

Take a landlord with a portfolio of retail assets on Regent Street. The EPC schedule may show which buildings are below EPC B. That is useful, but it does not tell the landlord whether the improvement works are deliverable.

A flagship store may need lighting upgrades, HVAC replacement, glazing improvements or alterations to common parts. A supermarket or food-led occupier may have refrigeration, extraction, service areas and trading arrangements that are central to how the premises operate. A hospitality tenant may have fit-out, kitchen plant, customer areas and brand standards that cannot easily be disrupted.

The landlord may therefore be dealing with more than a works programme. Access, shopfront visibility, servicing, trading hours, tenant plant, scaffolding, customer experience and service charge recovery may all matter.

Turnover rent adds another layer.

If works reduce footfall, obstruct the shopfront, interfere with trading hours or require part of the premises to close, the landlord may be hit twice. It may be funding or managing the works while also receiving reduced turnover rent if the tenant’s sales are affected.

For retail landlords, MEES is not just a compliance issue. It can be an income issue.

The same point applies beyond retail. Offices, logistics units, leisure assets, hotels, healthcare premises and mixed-use buildings can all raise similar questions. The details differ, but the theme is the same: the EPC may identify the works, but the lease determines whether they can be delivered.

The Government has said existing flexibility mechanisms, including exemptions, are expected to remain. Those mechanisms include circumstances where necessary third-party consent cannot be obtained.

In investment property, third-party consent is not just a planning point. Tenant consent may be just as important.

A lease may permit improvement works only with tenant consent. It may allow works but only permit cost recovery if the tenant agrees. It may give the tenant approval rights over timing, method, visibility, access or scaffolding.

That does not mean tenant refusal automatically solves the landlord’s MEES position. It does mean the compliance strategy may be more complicated than the EPC rating suggests.

Cost recovery is likely to be another battleground. Some leases will allow landlords to recover costs relating to repair, replacement, statutory compliance, environmental performance or operational efficiency. Others may exclude capital improvements, cap recovery, restrict recovery to repair and maintenance, or leave room for argument about whether the works are really for the tenant’s benefit or the landlord’s long-term asset strategy.

For investors and lenders, unrecovered capital expenditure affects cashflow, valuation and returns.

A certificate of title may confirm the EPC rating, the EPC expiry date and the main occupational lease terms. That remains important. But it may not, without further analysis, answer the question that matters most for future MEES risk: “If the borrower needs to improve the asset, can it actually do so?”

If a valuation or business plan assumes that a building can be improved, relet, refinanced or sold before 2031, the lender may want to know whether the lease supports that assumption.

Where that is uncertain, MEES risk may become a valuation, liquidity and enforcement issue as much as a regulatory one.

A useful MEES review should go beyond the EPC register.

The first step is identifying which assets are over 1,000 sq m, which are below EPC B, and what works are likely to be needed. But the more valuable exercise is working out whether those works are legally and commercially deliverable.

That means looking at access, consent, cost recovery, tenant-controlled plant, turnover rent, lease events, data sharing, historic licences and any existing breaches or disputes.

The aim is not just to rank assets by EPC rating. It is to classify them by deliverability.

Some assets will be relatively straightforward. Others will involve consent risk, cost recovery risk, income risk, timing risk or lender concern.

Each category needs a different strategy.

The Government’s announcement has changed the timetable, but not the direction of travel.

For larger commercial buildings, EPC B remains the intended destination. Landlords have been given more time, but they are still being asked to plan against a legal framework that has not yet arrived.

The immediate question is not whether a building can technically achieve EPC B.

It is whether the lease lets the landlord get there.

Have you checked whether your commercial leases let you get to EPC B?

We help landlords, investors, developers and lenders turn EPC data into practical asset management and finance risk analysis.

That includes reviewing occupational leases to assess access rights, tenant consent, service charge recovery, capital expenditure exclusions, turnover rent exposure, environmental data sharing, lease events and issues that may need to be reflected in acquisition due diligence, lender reporting, valuation assumptions or portfolio strategy.

If you hold, fund or are acquiring commercial property, the key question is not simply which assets are below EPC B. It is which assets have a credible legal and commercial route to improvement.