The Latest Regulatory Updates and Implications for Real Estate Investors
After years of delay, the UK government has recently provided fresh insight into the future of Minimum Energy Efficiency Standards (MEES) for commercial properties in England, publishing its interim response to industry consultations in June 2026.
While the proposals are not yet law, they offer the clearest indication yet of how energy performance requirements could evolve across the non-domestic private rented sector. At GreenGen, we’re closely monitoring these developments and helping property owners understand what they mean for compliance, asset value, and long-term decarbonisation strategies.
What is an EPC:
An Energy Performance Certificate (EPC) is a standardized rating that measures a building’s energy efficiency on a scale from A (most efficient) to G (least efficient), based on factors such as energy use, carbon emissions, and building systems.
What Is Changing?
Under the current regulations, most commercial properties require a minimum EPC rating of E before they can be legally let to tenants.
The government’s latest proposal would introduce a new EPC B requirement by 2031 for privately rented commercial buildings larger than 1,000m², where improvements are considered cost-effective. This represents a one-year extension from the original proposal, which envisaged an EPC B requirement by 2030.
Plans for an interim EPC C target have also been dropped following industry feedback, giving property owners additional time to prepare and invest strategically.
Why Does It Matter?
It is estimated that 70–80% of commercial real estate does not currently hold a valid EPC B certificate, meaning that the majority of buildings will require some level of energy efficiency improvement. As demand for retrofit solutions is expected to increase significantly, supply constraints for key technologies, such as heat pumps, are likely to emerge. Taking action early is recommended to secure availability and avoid potential delays.
Beyond regulatory compliance, high-performing buildings are increasingly central to value creation, not just cost control. Efficiency upgrades can reduce operating expenses, lower energy consumption, and increase net operating income, ultimately supporting higher asset valuations. These improvements can also unlock access to green financing and help reduce the weighted average cost of capital, strengthening overall investment performance and expanding the pool of potential buyers at exit.
At the same time, the risk landscape is expanding. Energy price volatility, physical climate risk, and evolving performance expectations are introducing new categories of cost, while also affecting insurability and long-term resilience. A growing group of stakeholders, including regulators, insurers, tenants, and investors, are playing a more active role in shaping building performance decisions. As a result, poorly performing buildings face increasing pressure through higher operating costs, constrained financing options, and reduced competitiveness in the market.
Who Will Be Affected?
The proposed changes target larger commercial properties over 1,000m2 within the private rented sector. Although smaller buildings would remain subject to the current EPC E standard, market expectations around energy efficiency are likely to continue increasing across the industry.
What Should Property Owners Do Now?
While final legislation is still to come, waiting until regulations are introduced may limit available options and increase compliance cost.
Property owners should consider:
- Reviewing existing EPC ratings
The EPC calculation methodology changed significantly in June 2022. If your EPC was issued before this date, consider reviewing it to understand whether the building is likely to achieve the same rating under the current methodology. - Undertaking an EPC improvement study
Common improvements may include:
- LED lighting
- HVAC upgrades
- Insulation improvements
- Renewable energy technologies
- Heat pump installations
- Developing a Long-Term Retrofit Strategy
With 2031 still several years away, owners have an opportunity to align efficiency improvements with planned refurbishments, lease events, and capital expenditure programmes. - Following GreenGen for more updates
With the recent political changes, there is still uncertainty as to whether this regulation will be implemented in full. Moreover, details about exemptions and penalties are yet to be finalised. GreenGen will continue to monitor developments and provide updates as further guidance becomes available.
Looking Ahead
The government’s interim response signals a direction of travel for commercial property: better-performing buildings will play an increasingly important role in the UK’s transition to net zero.
Although the final framework is yet to be confirmed, early preparation can help property owners reduce future compliance risks while improving operational performance and protecting long-term asset value.
For landlords, investors, and asset managers, MEES should be viewed not simply as a regulatory obligation, but as an opportunity to future-proof commercial portfolios and unlock the benefits of a more energy-efficient built environment.