Minimum energy efficiency standards
for commercial buildings
Most people are already familiar with the Energy Performance Certificate (EPC) system, commonly seen when buying or letting property or household appliances. However, in the commercial and rental sector, the Minimum Energy Efficiency Standards (MEES) set out a series of minimum legal requirements that landlords must now comply with.
In recent years, the spotlight on energy efficiency in the built environment has intensified. With the UK Government’s commitment to achieving Net Zero carbon emissions by 2050, regulation has moved beyond new-build standards to focus heavily on raising the performance of existing stock. MEES are at the heart of this shift, placing legal obligations on landlords while also influencing investors, occupiers, and lenders. For many, compliance is no longer just a legal hurdle – it is now a key factor in protecting asset value, marketability, and access to finance.
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What is the Minimum Energy Efficiency Standard (MEES)?
The Minimum Energy Efficiency Standards (MEES) were introduced by the UK Government to improve the energy performance of the nation’s older building stock. The regulations make it unlawful for landlords to grant or renew a lease on certain properties that fall below defined Energy Performance Certificate (EPC) ratings unless an exemption applies.
- Since April 2018, the minimum threshold has been an E rating for new lettings and renewals.
- From April 2023, the rules tightened: landlords may not continue letting a sub-standard property (below E) unless a valid exemption is registered.
- Looking ahead, the Government has proposed further tightening:
- EPC C rating required by 2027
- EPC B rating required by 2030. From April 2018, the minimum standard was set at E-rated EPCs; however, the regime has since tightened.
Under the regulations if you are a landlord of a commercial building you will not be able to renew or grant a new lease or tenancy if the building doesn’t meet the minimum EPC rating.
What properties are caught by MEES?
The standards apply to most rented non-domestic buildings that are required to hold an EPC. However, the following are excluded:
- Buildings that do not require an EPC (e.g. certain industrial sites, workshops, some listed buildings, properties with very low energy demand).
- Properties with no EPC or with one over 10 years old.
- Short-term lettings (leases of less than six months with no renewal rights).
- Very long leases (over 99 years).
Exemptions
Even where the regulations apply, landlords may be able to register an exemption on the Government’s PRS Exemptions Register if:
- The ‘seven-year payback test’ (Golden Rule): An assessor concludes that relevant improvements have been made, or that any further improvements would not pay back in energy cost savings within seven years.
- Devaluation: A surveyor confirms that carrying out the improvements would reduce the property’s market value by more than 5%.
- Third Party Consent: The necessary consent for works (from tenants, lenders, superior landlords, or planning authorities) has been refused or granted subject to unreasonable conditions.
Exemptions are valid for five years, after which the position must be reassessed. Importantly, exemptions remain non-transferable — a new landlord cannot automatically rely on the previous owner’s exemption.
What does this mean for landlords?
For landlords, the biggest risks are the capital costs of improvements and the potential loss of income if a building cannot be legally let.
There remains debate about whether costs of compliance can be recovered through service charge provisions, but in most cases MEES compliance is treated as a landlord’s responsibility. Forward planning is essential: landlords should assess their portfolios now, budget for improvements, and put in place a roadmap to meet the 2027 and 2030 targets.
Freehold Reversions
If you own the freehold of a building but have granted a very long lease (typically more than 99 years), you are generally not the party directly responsible for MEES compliance. Instead, it is usually the leaseholder landlord who must comply.
However, non-compliance at property level can still impact your investment value. A building with poor energy performance is harder to finance, refinance, or sell, and risks long-term devaluation as the 2030 EPC ‘B’ target approaches.
Lenders
For lenders and funders, EPC performance is now central to risk analysis. A building that falls below the MEES threshold presents problems:
- It may not be legally lettable, reducing its income stream.
- It can suffer from “brown discounting” — where poor sustainability credentials lead to lower valuations.
- Many banks and institutional lenders have ESG lending policies that prevent them from backing non-compliant properties.
As 2027 and 2030 targets draw closer, lenders will expect landlords not only to demonstrate current compliance but also to have a credible pathway for reaching higher EPC ratings. Without this, refinancing options could be severely restricted.
Looking Ahead
The MEES regime is no longer “new law”; it’s an established part of the commercial property landscape. Enforcement is expected to increase as the UK moves towards its Net Zero 2050 commitments, and the tightening deadlines mean that “wait and see” is no longer a viable strategy.
Landlords, occupiers, investors, and lenders should now treat MEES compliance as part of core asset management. Planning for 2027 and 2030 upgrade requirements is both a regulatory necessity and a vital step in protecting long-term asset value.
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