Energy performance certificate changes ahead for those letting commercial properties

Minimum Energy Efficiency Standards (MEES) are expected to tighten further for commercial property in the future, with an EPC rating of C, or higher, expected to be mandatory by 1 April 2027 and B, or better, by 2030.

With a legally binding commitment to cut net emissions of greenhouse gas emissions by 100%, relative to 1990 levels, by 2050, government policymakers have naturally decided to address the residential energy problem, however rural landlords are likely to feel the impact more than their urban counterparts.

Proposed changes in the “Improving the energy performance of privately rented homes” consultation, which closed two years ago, are still awaiting a response.

These included:

1. Raising the energy performance standard to EPC energy efficiency rating (EER) band C

2. That improvements must be achieved for all new tenancies from 2025 and all tenancies from 2028

3. Adopting a fabric first approach; maximising the performance of materials before considering energy generation

4. Increasing the cost cap on total investment in improvements to £10,000

While Savills Research found 89% of PRS homes could be brought up to an EER band C or above, the leap is far greater for rural properties. In cities and towns, D is the most common band (43% of ratings) followed by C (28% of ratings). Compare this to hamlets, where E is the most common rating (38% of ratings), followed by F (23% of ratings).

Similarly, the government proposed to end new fossil fuel heating installations in homes off the gas grid from 2026 as part of its 2021 consultation on “Phasing out the installation of fossil fuel heating in homes off the gas grid”. This consultation closed on 12 January 2022, but a response is also lacking here.

The Net Zero Review provides no further detail to any of these areas of uncertainty. There is a call to ensure “all homes sold” are “EPC C by 2033”, meaning plans to dispose of underperforming assets may be rendered near-impossible within the next decade.

Market appetite for such properties will inevitably wane prior to then. Exclusions around certain properties are expected, such as for listed properties,, however this may not be such a comforting lifeline if lessons are learned from EPC targets within the private rented sector (PRS).

Energy efficiency strategy, particularly for rural residential asset holders, could become an even more complex issue in the months and years ahead. As these environmental credentials are coming under closer scrutiny, now is as good a time as any for farmers and landowners to evaluate matters – whether that be the disposal of underperforming assets or upgrading of worthy assets – and we are urging owners of farmhouses, cottages or rural commercial property to seek advice as soon as possible.

Article by Samantha Leake, a surveyor in the rural management team at Savills in Telford