The government has set a new energy efficiency benchmark for large commercial properties, mandating that buildings exceeding 1,000 square metres in England and Wales achieve an Energy Performance Certificate (EPC) B rating by 2031. This requirement applies to privately rented non-domestic properties and is contingent on the upgrades being deemed 'cost-effective'.
For commercial buildings smaller than 1,000 square metres, the existing minimum EPC E standard will remain in place. This differentiated approach aims to focus efforts where they are expected to yield the most significant benefits in terms of energy savings and reduced operational costs for tenants.
Speaking in Parliament, Martin McCluskey, Minister for energy consumers, articulated the rationale behind the new policy. He stated that this 'targeted approach' would deliver the greatest benefits by helping tenants in larger buildings save energy and mitigate the impact of future energy price fluctuations. The Minister also highlighted that the policy provides flexibility for Small and Medium-sized Enterprises (SMEs) and high street businesses, allowing them to upgrade their premises over time without an immediate deadline to exceed the EPC E level.
The government's objective is to foster business investment, lessen exposure to volatile energy markets, and enhance the UK's overall energy security. Mr McCluskey affirmed the government's commitment to collaborating with industry and stakeholders to ensure a 'fair, clear and deliverable' pathway towards the EPC B standard. Legislation and updated guidance are expected to be introduced at the earliest opportunity, with ongoing engagement on the specific details.
While the announcement has been welcomed by industry bodies for providing clarity, there are calls for immediate action. Propertymark, an industry organisation, cautioned that despite the clearer direction, 'long-term planning' is crucial. They cited previous research suggesting that the commercial property sector was projected to miss the government's earlier 2030 Minimum Energy Efficiency Standards (MEES) target by a decade, potentially achieving full compliance only by 2040. The organisation also noted that over 13,000 commercial rental properties currently hold EPC ratings of F or G, rendering them non-compliant and unlettable under existing regulations, with the pace of upgrades having slowed significantly.
Propertymark advises commercial agents to promptly review their property portfolios to identify buildings over 1,000 square metres, ascertain their current EPC ratings, and initiate discussions with landlords and tenants regarding necessary improvement works. This new target for commercial buildings follows the broader 'Warm Homes Plan', which stipulates that all private rented sector residential properties must meet an EPC C target by 2030.