There seems to be a climate of non-committal among building owners and landlords around making green improvements so far this year, and the drop in non-domestic EPC lodgements reflects this downturn.

It’s ironic, as Rightmove data for Q4 2024 revealed a 28% surge in demand for commercial property following the fall in interest rates – the biggest year-on-year shift since 2021. Rightmove reports that these tenants want up-to-date space that’s more insulated and efficient in the warehouses needed to support rising online shopping demand, and offices as more staff return.

I appreciate it’s January, a typically slow month – and there are obviously issues such as material and staffing costs at play – but the government’s failure to implement phase 2 of Non-Domestic MEES is knocking investors’ confidence. Phase 1 has been extremely successful, and since 2018 has meant landlords can plan sensible improvements to their buildings. Back in 2015, 200,000 substandard commercial rental buildings were EPC Grade F and G but by 2023 this had dropped to nearly zero. An outstanding result. It’s been helped by the fact that excellent Civil Service drafting means the regulations have a ‘safety valve’ so that improvements costing more than a seven-year payback test (in terms of annual energy cost savings) don’t have to be actioned by the landlord.

In 2021 the government sensibly proposed that all commercial rental buildings should be EPC Grade C by 2027 and EPC Grade B by 2030, which has been widely welcomed by the UK property industry and tenants. Sadly, this draft regulation was sat on by the Conservatives, leaving the Non-Domestic Energy Assessor market, landlords and investors in limbo. Actioning Phase 2 would stimulate immediate economic growth and investment, target the UK’s business space infrastructure and leverage private investment, and doesn’t require any government subsidies.

An energy efficient commercial building reduces energy bills for tenants (often SME businesses), cuts CO2 pollution and improves summer and winter thermal comfort and productivity for staff. Encouraging commercial property investors to improve the performance of their buildings also promotes high value employment opportunities: installing LED lighting employs electricians all over the county, while decarbonising the built environment by replacing inefficient gas boilers with more efficient heating systems such as heat pumps and solar panels on the roofs of warehouses and offices requires fitters, and replacing asbestos industrial roofs with fully insulated steel roofs creates jobs for roofers nationwide.

In June 2022, the commercial EPC software was brought fully up to date to reflect the carbon intensity factors in the National Grid electricity. The roll-out of the world’s largest offshore wind farms in the British North Sea, coupled with the fit-for-purpose commercial EPC measurement system, encourages commercial landlords to move over to low carbon electric heat pumps for winter heating. This is exactly how these systems should be working in tandem to steadily encourage the transition away from gas boilers to electric space heating. Improving the commercial rental buildings MEES standard to EPC Grade B will only reinforce and accelerate this transition.

The UK is constantly criticised for having the worst building stock in the whole of Europe. It doesn’t have to be like this. We have the commercial energy assessors, chartered building surveyors, technology solutions and skilled contractors to massively improve the 1 million+ commercial rental buildings across England & Wales. Plus, in the commercial energy efficiency sector, there aren’t the difficult supply chain issues that affect other industries. The new Labour government has confirmed that they will raise the MEES standard to Grade C by 2030 for domestic rental houses and flats, which is very welcome, but is actually more difficult than the straightforward process needed to improve commercial budlings.

Frankly, like many in the sector, I’ve had enough of waiting and have written to my local MP Lizzi Collinge in the hope she’ll encourage the government to act without delay. If the deadline of 2030 is deemed too difficult to achieve, it would be entirely acceptable to allow for some slippage caused by the last government’s inaction and introduce an implementation date of 2035, giving landlords a 10-year plan to implement energy efficiency improvements. With the government’s repeated insistence that it aims to reach net zero in the next 15 years, it should realise that this particular mission is possible, not mission impossible.