The Government has signalled a new strategy to tighten MEES for commercial lettings. From 2031, the minimum EPC rating will rise from E to B, but only for larger buildings.

Published: 24 June 2026
Authors: Nathan Rees

What is the new strategy?

The Government has issued an update on increasing minimum energy efficiency standards for let commercial buildings. It intends to adopt a proportionate approach, focused on larger buildings.

The headlines are:

• from 2031, it is proposed that all private rented buildings over 1,000 square metres in England and Wales will need to reach a higher standard of energy efficiency of EPC B, where cost effective.
• buildings below 1,000 square metres will continue to be subject to the current minimum standard of EPC E. This is aimed at giving greater flexibility to SMEs and high street landlords of smaller properties.
• the previous strategy included an interim step of a minimum standard EPC C in 2027. This has been dropped to give landlords and tenants more time to improve their buildings.
• existing exemptions, including the 7-year payback test, will remain in place.

When will further details follow?

This is an interim response to consultations issued in 2019 and 2021 on the future for MEES for commercial lettings. A full response to these consultations will follow, providing the finer details of the new strategy.

Additional legislation will be required to implement the proposals, but the Government is aiming to introduce that legislation, and additional guidance, as soon as possible.

How does this differ from the Government’s strategy for residential premises?

The target date for increasing the minimum energy efficiency standard for let residential premises is 1 October 2030, with a lower target of EPC C rating.

The metrics for calculating EPC ratings is also set to change for residential premises. However, the Government has previously announced that the metrics for EPC ratings for commercial premises will remain the same.

Comment: what does this mean for landlords and tenants?

Landlords and tenants will welcome confirmation of the 2031 target date and scope of affected buildings, after waiting since the 2021 consultation for clarity on the Government’s policy for commercial buildings.

Nathan Rees, partner and co-head of Shoosmiths’ Investment group notes that “the removal of the 2027 interim target provides welcome breathing space but should not be seen as a reason to defer action. With a clear end-date now in sight, investors who plan capital expenditure and building upgrades early will be better placed to manage pricing risk, avoid bottlenecks in delivery, and preserve liquidity.

The Government’s more targeted approach brings long-awaited clarity, particularly for institutional owners with larger assets. While further detail is still required, the direction of travel is clear—energy performance is increasingly a core investment metric rather than a compliance issue.”

From a Corporate Occupier perspective, Beth McArdle, partner and head of Shoosmiths’ national Corporate Occupier real estate team, comments “the revised MEES trajectory provides helpful clarity but 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.

Cost allocation will also remain a key concern. 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.

Finally, the targeted focus on larger buildings creates a two-tier market. Occupiers of substantial assets will see increasing pressure both from a regulatory perspective and from investors to occupy higher-performing space, whereas those in smaller units may face less immediate change but greater long-term uncertainty as policy continues to evolve.

Overall, occupiers will welcome the direction of travel but will need to engage proactively with landlords, scrutinise green lease provisions and factor MEES compliance into longer-term occupational and ESG strategies.”