How Investors Are Pricing Energy Risk in 2026

Energy performance is no longer just a sustainability consideration. For commercial property investors, landlords and asset managers, it is becoming a financial one.

The market increasingly recognises that inefficient buildings carry future risks, including higher operational costs, increased capital requirements and potential challenges around occupier demand. The result is that energy risk is becoming financial risk.

As the sector moves towards the proposed MEES 2031 requirements, investors are looking beyond the EPC certificate and assessing what a building’s future energy performance means for long-term value.

Energy performance is becoming a pricing factor

Historically, EPC ratings were often viewed as a compliance requirement. Today they are becoming part of wider investment decision-making. Investors are asking:

• What future investment will this building require?
• How resilient is this asset as energy standards continue to evolve?
• Will this building remain attractive to occupiers and lenders?

Buildings with strong energy performance are increasingly viewed as lower-risk assets. Buildings with poor performance may face increased scrutiny and potential valuation adjustments.

Low EPC assets are being discounted

One of the biggest changes in the market is the growing recognition that poor energy performance represents future capital expenditure. A building with a lower EPC rating may still be a viable investment, but investors are increasingly factoring in the cost of future improvement works.

Considerations include:

• Future retrofit costs
• Plant replacement requirements
• Decarbonisation investment
• Compliance risk
• Disruption to occupiers

Rather than viewing these costs as a future problem, many investors are pricing them into acquisition decisions today. The question is no longer simply what the building is worth today. It is what investment will be required to keep this building competitive.

Efficient buildings are attracting greater demand

Energy-efficient buildings are increasingly being recognised as more resilient assets. Benefits can include:

• Lower operational costs
• Stronger occupier appeal
• Reduced future compliance risk
• Improved ESG credentials
• Greater investor confidence

For occupiers, energy efficiency can support reduced running costs and better operational performance. For investors, it can provide greater certainty around future asset performance. This does not mean EPC alone determines value, but buildings that perform well both operationally and environmentally are increasingly viewed more favourably by the market.

Lenders are paying closer attention

The relationship between building performance and finance is becoming increasingly important. Lenders and investors are placing greater focus on the future resilience of commercial assets, and energy performance can influence considerations such as:

• Long-term asset risk
• Future capital requirements
• ESG reporting
• Portfolio exposure
• Investment strategy

A building requiring significant future investment may face greater scrutiny compared with an asset that already has a clear pathway towards improved performance. This is why understanding future energy requirements is becoming an important part of due diligence.

Why MEES 2031 matters to investors

The proposed EPC B requirement by 2031 is accelerating the conversation around energy performance. Forward-thinking investors are not waiting for deadlines. They are already assessing which assets require investment, where capital should be prioritised, which buildings carry the greatest future risk, and how improvement programmes align with wider asset strategies.

The strongest portfolios will be those that understand energy performance before it becomes a forced investment decision.

Where the regulations actually stand

Worth stating plainly, because it affects how the risk should be priced. EPC B by 2031 is a proposal rather than law, and it would apply to rented commercial buildings over 1,000 square metres in England and Wales. It still requires secondary legislation before it takes effect. Below that threshold the minimum standard stays at EPC E, which is law today. Scotland and Northern Ireland have no minimum EPC band to let a commercial building at all.

EPC is only part of the picture

As covered in our previous article on EPC ratings versus actual energy use, an EPC does not measure real consumption. A building’s true performance depends on how it operates in practice, and investors are increasingly looking at wider performance indicators:

• Actual energy use
• Operational efficiency
• Carbon performance
• Building management effectiveness
• Future improvement requirements

The market is moving beyond simply asking what the EPC rating is, towards asking what the long-term performance and risk profile of the asset looks like.

Smaller commercial buildings should not be overlooked

Whilst current MEES proposals focus primarily on larger rented commercial properties, investors and landlords should avoid assuming smaller assets will remain outside future energy performance expectations. The direction of travel across the market is clear, and occupiers, lenders and investors are increasingly interested in building performance regardless of size.

Poor energy performance can affect tenant demand, operating costs, asset attractiveness and future investment decisions. Portfolio owners who assess all assets strategically will be better positioned to respond to future market changes.

Energy risk equals financial risk

The commercial property market is changing. Energy performance is no longer a separate sustainability issue. It is becoming part of investment risk, asset management strategy and long-term value protection. The landlords and investors who understand this shift will be better placed to protect their portfolios.

Because in the future, the question will not simply be whether the building is compliant. It will be whether the building is resilient.

How Vital Direct can help

At Vital Direct, we help commercial property owners, landlords and asset managers understand the relationship between EPC performance, future investment requirements and long-term asset value.

Our EPC Plus advisory service provides clear pathways for improving energy performance, supporting decarbonisation strategies and planning towards EPC B, all-electric operation and Net Zero in Operation objectives. By combining technical expertise with strategic asset planning, we help clients understand where risk exists, where investment is needed and how to create the most cost-effective pathway forward.

Because energy risk is no longer just an operational issue. It is an investment issue.

Call the Vital team on 0345 111 7700 for more support.