Earlier this year we published our thoughts on the anticipated changes to domestic energy efficiency standards — a topic that has been moving through consultation and legislation for some time. The commercial picture has been following a parallel but distinct path, and on 18 June 2026 that path reached a significant milestone.

The Department for Energy Security and Net Zero published Written Statement HCWS126 — its long-awaited interim response to consultations on minimum energy efficiency standards for non-domestic buildings, first launched in 2019 — confirming its intended direction for commercial property in England and Wales.

This article sets out what the June announcement means for commercial landlords, where the market currently stands, and what we think landlords should be doing now. If you manage residential property, our January 2026 piece on domestic energy efficiency standards covers the separate legislative track.

The Background: Years of Regulatory Uncertainty

The direction of travel on commercial EPC standards has been clear since the Government’s Energy White Paper in December 2020. Unlike the domestic sector — where the equivalent legislation has moved through several stages and is now well established — the commercial picture has been subject to a lengthy and at times frustrating consultation process, with the sector waiting years for a definitive Government response.

A formal consultation in March 2021 proposed a phased approach: an interim milestone of EPC C by 2027, followed by EPC B by 2030. What followed was an extended period of regulatory uncertainty. The Government consulted, engaged with stakeholders, issued partial responses — and repeatedly delayed publishing its final position.

By early 2026, the British Property Federation’s annual analysis of commercial EPC ratings in major English cities found that 81% of commercial buildings across London, Birmingham, Bristol, Leeds, Liverpool, Manchester and Newcastle still fell below EPC B, with progress described as slow and hampered by the ongoing failure to provide policy clarity.

Rob Wall, Assistant Director of the British Property Federation, said at the time: “We have been waiting for five years for a decision on future minimum energy efficiency standards for the non-domestic private rented sector.”

Source: British Property Federation annual EPC analysis, published February 2026. This statement predates the June 2026 announcement and is used here as context for the regulatory backdrop.

That wait ended in June. The announcement was not quite what the sector had been expecting — but it provided the clarity that landlords and investors had been asking for.

What the June 2026 Announcement Confirmed

The Government’s interim response confirms its intention to implement the following.

From 2031, all privately rented non-domestic buildings over 1,000 square metres in England and Wales will be required to achieve an EPC rating of B, where cost-effective.

Buildings below 1,000 square metres will continue to be subject to the current minimum standard of EPC E, with no commitment to raise this threshold. The Government’s stated aim is to give SMEs and high street landlords of smaller properties flexibility to upgrade their buildings over time, with no set deadline to go beyond EPC E.

Three further points are significant.

First, the previously proposed interim EPC C milestone for 2027 has been dropped entirely. This is a meaningful concession to the practical realities facing landlords — and it means the 2031 deadline is now a single end point rather than a staged compliance pathway. It also represents a one-year extension from the EPC B by 2030 deadline originally proposed in the 2021 consultation.

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

Third, and critically: this is a statement of intent, not enacted law. The changes will only take effect following the successful passage of secondary legislation through Parliament. Further detail on the proposals and implementation of the 1,000 square metre threshold will be set out in the forthcoming Government response to the public consultations.

Source: GOV.UK Written Statement HCWS126, Department for Energy Security and Net Zero, 18 June 2026.

Where the Market Currently Stands

Analysis by Easy EPC of the government’s non-domestic EPC register provides a clear picture of how far the market currently sits from the proposed 2031 standard.

As of 31 May 2026, there were 797,175 currently valid EPCs for commercial buildings in England and Wales. The median commercial EPC rating is C.

Breaking this down by band: just 26.7% of buildings currently achieve EPC B or above (A+ 0.3%, A 4.6%, B 21.8%). A further 59.1% are rated C or D (C 34.6%, D 24.5%), while 14.2% sit at E, F or G (E 12.2%, F 0.9%, G 1.1%).

Source: Easy EPC, Commercial EPC Statistics for England and Wales. Data updated 31 May 2026.

In practical terms, almost three quarters of assessed commercial stock currently falls short of the proposed 2031 standard. The BPF’s February 2026 analysis of major city stock found the same picture — 81% of commercial buildings across seven major English cities below EPC B.

The Government’s own modelling suggests that lifting the standard for the largest premises could save tenants in those buildings around £360 million per year on their energy costs by 2031. The Government notes this figure is subject to refinement as the policy develops.

Source: GOV.UK Written Statement HCWS126, 18 June 2026.

What This Means in Practice for Landlords

The practical implications depend significantly on where a building currently sits on the EPC scale.

Based on Weir Bank Group’s experience, improving a commercial property from EPC C to B can often be relatively straightforward, subject to the building’s age, construction and existing systems. Measures such as lighting upgrades, improved controls and targeted insulation improvements can frequently deliver the required rating uplift within a manageable budget.

Upgrading buildings with ratings of D or below is typically more challenging and may require significant capital investment — particularly in older properties where fabric and building services may need more substantial intervention. With 38.8% of currently assessed commercial buildings rated below C, a considerable proportion of affected landlords face a more demanding and costly compliance journey.

It is also worth noting that the compliance obligation will only apply to buildings above 1,000 square metres. For the majority of smaller commercial properties — retail units, small offices, studios and similar — the current EPC E minimum standard continues to apply, with no current deadline to go further.

The Seven-Year Payback Test: A Meaningful Protection

The retention of the seven-year payback test is one of the most significant elements of the June announcement for landlords with older or more complex buildings.

Under this mechanism, a landlord may register an exemption where the cost of the required improvement works exceeds the projected energy cost savings over a seven-year period. A devaluation exemption also remains available where implementing the required works would reduce the property’s value by more than 5%. A further exemption applies where all relevant improvements have already been made and no further cost-effective measures are available.

These exemptions are not automatic — they need to be properly evidenced and registered on the PRS Exemptions Register. They should not be treated as an informal workaround. But for landlords with buildings where improvement costs are genuinely disproportionate to the energy saving benefit, they provide a practical route to compliance without the requirement for unviable capital expenditure.

Landlords should begin assessing their position against the payback test now, well in advance of 2031, to allow time for the necessary professional assessments and, where appropriate, exemption applications.

Our View

Weir Bank Group supports the objective of improving the energy efficiency of commercial buildings. Better-performing buildings reduce energy costs for occupiers, support the UK’s net zero commitments, and are increasingly influencing tenant and investor decision-making in the market.

The removal of the 2027 EPC C interim milestone is, in our view, a pragmatic decision. It acknowledges the practical challenges facing landlords — particularly those with older properties — and provides more realistic timeframes for planning and delivery of improvement works. We welcome it.

However, we question whether the proposed 2031 timetable is achievable for all affected landlords. Retrofit projects for commercial buildings routinely take 12 to 18 months from assessment to completion. For older or more complex properties, the timeline is often longer. With almost three quarters of assessed stock currently below EPC B and secondary legislation still to follow, the effective window for planning and delivery is shorter than it appears.

As Crowe UK noted in their analysis of the June announcement, the policy update is best read as greater clarity, not reduced urgency. We would echo that view. The direction is confirmed. The clock is running.

Source: Crowe UK, Commercial EPC B by 2031, June 2026.

A more explicitly phased approach — with interim reporting milestones, practical guidance on improvement pathways, and clearer support mechanisms for smaller landlords — would better serve the market and the Government’s long-term net zero objectives. We hope the fuller consultation response, when published, will address these questions.

What Landlords Should Do Now

While the legislation is not yet enacted, the direction of travel is clear and the 2031 deadline is closer than it appears once planning and delivery timelines are factored in. Landlords with commercial properties over 1,000 square metres in the private rented sector should take the following steps.

Commission an up-to-date EPC assessment if one is not already in place or if an existing certificate is approaching expiry. The EPC is the starting point for all compliance planning.

Understand the current rating and what improvement to EPC B would require for each affected property. The pathway from C to B is very different from the pathway from E or F — early assessment prevents late surprises.

Engage with energy consultants and building surveyors to scope potential improvement works and model payback timelines against the seven-year test. This work takes time and should begin now, not in 2029.

Review lease structures. For buildings where improvement works will be substantial, the timing of lease renewals, lease breaks and service charge provisions are all relevant considerations. Landlords should also be aware that the English Devolution and Community Empowerment Act 2026 introduces a ban on upwards-only rent reviews in commercial leases — not yet in force, but with a retrospective element already catching renewal arrangements entered into on or after 17 March 2026.

Monitor secondary legislation. The 1,000 square metre threshold, compliance routes, enforcement approach and updated guidance are all still to be confirmed in the forthcoming fuller Government response. We will publish an update when that response is available.

Further Reading

For more information on the Government’s June 2026 announcement, the primary source is the GOV.UK interim response:

Minimum Energy Efficiency Standards (MEES) in the non-domestic Private Rented Sector: interim response — GOV.UK