Quarter of commercial properties at risk of EPC-related fines

One in four non-domestic properties currently falls below the minimum Energy Performance Certificate (EPC) rating of ‘C’, according to research from commercial property consultants Vail Williams, which says this leaves thousands of commercial landlords vulnerable to financial penalties if they do not make upgrades to their properties by 2027.

The new analysis of the government’s latest Energy Performance Certificates (EPCs) data by Vail Williams shows that 25% of non-domestic properties still have an EPC rating of below ‘C’. While good progress in the energy efficiency of commercial properties has been made in the last decade, a significant number of commercial landlords are anticipated to need to upgrade their properties by April 2027 to meet the expected new MEES (Minimum Energy Efficiency Standards) and avoid fines.

David Thomas, head of energy & sustainability at Vail Williams, explains:

“In just two short years, commercial landlords could be required to have an EPC rating of ‘C’ or above on their rental properties. By April 2030, the minimum EPC grade is anticipated to rise further to ‘B’ or above. Non-compliance with EPCs by these deadlines can result in hefty fines of between 10% and 20% of the property’s value. With fines capped at £150,000 per breach, most commercial landlords that do not meet the new MEES standards risk facing fines that, in many cases, are likely to outstrip the cost of property upgrades, and could run into the tens of thousands of pounds.”

Landlords considering delaying upgrades in hopes of qualifying for a MEES exemption may find this strategy risky, adds David Thomas. While exemptions do allow landlords to let non-compliant properties under certain conditions, these are temporary and require a complex application process. Exemptions might be granted if, for example, a tenant prevents access for improvement work or if it can be demonstrated that upgrades would significantly devalue the property.

“However, the administrative burden and temporary nature of exemptions underscores the value of investing in energy efficiency improvements now,” adds Thomas. “In most cases it will be better for landlords in the long run to get started on ways to improve their EPC ratings as soon as possible.”

Energy efficiency trends: Progress so far

There has, however, been significant progress on EPCs to date. Between 2008 and 2021, the average annual lodgement hovered at around 87,000. By 2022 and 2023, this had jumped to 113,000 and 140,000, respectively. This upward trend reflects growing awareness among landlords about the importance of EPC ratings and the need for improved energy efficiency in commercial buildings. In 2009, the number of A-rated buildings was non-existent, and as you can see, this is an improving trend:

2019:
No A-rated buildings
7% B-rated; 27% C-rated; 29% D-rated
18% E-rated; 8% F-rated; 10% G-rated

2024:
7.5% A-rated
32% B-rated; 34% C-rated
17% D-rated; 7% E-rated
Less than 1.2% F or G-rated

This improvement is a direct response to regulatory changes, particularly the April 2023 MEES deadline, which made it unlawful to let premises with an EPC rating of F or G.

David Thomas at Vail Williams continues:

“Landlords of commercial properties must assess their portfolios proactively, identifying opportunities to improve EPC ratings and stay ahead of anticipated regulatory deadlines. With compliance windows narrowing and non-compliance penalties escalating, acting now is both a legal imperative and a smart investment. For tailored advice and support in improving your property’s energy efficiency, consult a professional EPC assessor or sustainability expert.”