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MEES Phase 2 Confirmed: EPC B by 2031 for Larger Commercial Buildings
The Government has confirmed how Minimum Energy Efficiency Standards (MEES) will tighten for larger commercial buildings, setting an EPC B target for 2031 and giving the property industry the clarity it has been waiting on.
The announcement, published as the Government’s interim response to its consultation on the non-domestic private rented sector, sets out a more focused approach than earlier proposals suggested. Rather than applying a blanket uplift across all commercial stock, the new standard targets the larger buildings where the biggest energy savings can be made.
For commercial property owners, investors, managing agents and occupiers, it is a moment to take stock. Here is what has been confirmed, what has changed, and what it means in practice.
What has been announced
From 2031, all privately rented non-domestic buildings over 1,000m² in England and Wales will be required to achieve an EPC rating of B, where the improvements needed are cost-effective.
Buildings below the 1,000m² threshold are not affected by the new target. They remain subject to the current minimum standard of EPC E, with no further uplift proposed at this stage.
The Government estimates that improving the energy performance of these larger buildings could save tenants up to £360 million a year in energy costs by 2031, while cutting carbon emissions and supporting wider energy security goals.
What has changed from the earlier proposals
Two changes stand out for anyone who has been following the consultation.
First, the proposed interim milestone of EPC C by 2027 will no longer be introduced. That earlier date had been a real concern, particularly for owners of older stock who would have faced two rounds of upgrades in quick succession. Removing it gives landlords and tenants more time to plan and to phase works sensibly rather than rushing them.
Second, the focus on buildings over 1,000m² is a more targeted approach than the universal standard originally floated. It concentrates the regulatory effort on the properties with the greatest potential for improvement, and leaves smaller premises out of scope for now.
The result is a clearer and more proportionate path, though one that still asks a great deal of the buildings it covers. An EPC B is a demanding standard, and many larger commercial buildings sit well below it today.
The exemptions and payback test remain
Importantly, the existing framework of exemptions stays in place, as does the seven-year payback test. That test means landlords are only required to carry out measures that pay for themselves through energy savings within seven years. Where works fail that test, or where other recognised exemptions apply, the requirement does not bite in the same way.
In practice, this keeps the obligation tied to what is affordable and sensible. It does not, however, remove the need to understand your position. Claiming an exemption still requires evidence, assessment and proper registration.
What it means for owners and investors
For landlords and investors, the headline is straightforward. There is now a fixed direction of travel and a date to plan against. Buildings that cannot reach EPC B, and cannot rely on an exemption, will face restrictions on letting once the standard takes effect.
That makes EPC performance a factor in acquisition, disposal and refinancing decisions today, not in 2030. A building several ratings short of B carries a future cost that is best understood before it changes hands, not after.
What it means for managing agents and occupiers
Managing agents will be central to getting portfolios ready, coordinating assessments, prioritising works and advising owners on where to spend first. Occupiers have an interest too. Energy efficiency improvements feed directly into running costs, and the £360 million figure the Government cites is money that comes off tenants’ bills.
For occupiers negotiating leases that run towards 2031 and beyond, the energy performance of a building is worth understanding before signing, not after.
Why 2031 is closer than it looks
Five years can feel like plenty of time. For a portfolio of commercial buildings, it is not. Assessments take time. Works take longer. Capital has to be planned and budgeted. And the buildings furthest from compliance are usually the ones that need the most coordinated, phased programmes of improvement.
The proposals still need to pass through secondary legislation before they become law, and detail may yet shift as that process runs. But the direction is now clear enough to act on. Waiting for the final wording before doing anything is the one approach almost guaranteed to leave too little time.
Where to start
The sensible first step is also the simplest. Understand where your portfolio stands today. Establish the current EPC position of each building, identify the ones most at risk of falling short of B, and build a realistic plan for closing the gap well ahead of the deadline.
Vital Direct will continue to monitor developments closely as these proposals move through the legislative process, and to keep clients informed as the detail firms up. If you would like a clear read on where your buildings sit against the 2031 target, and a practical view of what getting there involves, we would be glad to talk it through.