Rishi Sunak failed to differentiate between – or even specify – residential and commercial landlords when making his U-turn on energy efficiency targets.
Instead, he spoke generally about “some property owners” who would have been “forced to make expensive upgrades in just two years’ time”. This was evidently a reference to private residential landlords who’d feared having to raise their properties’ Energy Performance Certificate (EPC) to a band C – possibly by 2025 – and now have more breathing space after proposals were dropped.
It’s true that by not mentioning commercial landlords, the Prime Minister leaves some unanswered questions – particularly as we’re still waiting on the government to update its 2021 consultation on minimum EPC regulations. However, nothing has changed for commercial landlords. As the three little pigs in our ‘EPiC Fairy Tale’ illustrate, they will likely need to achieve an EPC C by 2027 for the purposes of MEES, followed by a minimum B rating from 2030.
Although it’s unclear whether the government intends to scrap proposed upgrades for the commercial sector, there’s no reason to expect that the dates will be pushed back. Of course, after a general election, either party might decide to reactivate the deadlines and focus on commercial buildings.
For reference, since 1st April, it’s been unlawful for commercial landlords to grant a new lease or continue to let a property if the EPC rating is below an E without carrying out improvements and/or registering an exemption – and it applies to any existing leases, not just new ones. A landlord won’t need to bring the property up to an E standard until a new EPC is triggered, such as when the lease is renewed, or the tenant carries out alterations to the property.
However, irrespective of changing dates and regulations, tenants – attracted by lower running costs and a comfortable environment – increasingly want more energy efficient buildings, while investors value these greener buildings. So my advice is ‘don’t take your foot off the gas’ (pardon the pun). Delaying action could leave you on the back foot, and any previous preparation would have gone to waste – you might even have to start from scratch. Getting a comprehensive assessment now and working steadily towards compliance in good time will also help spread the costs of any necessary improvements and means you’re in a good place whenever the proposed targets kick in.