A surge in non‑compliance with energy standards is putting the UK commercial property sector on high alert.
Research from Knight Frank recently revealed that 70% of commercial floor space in England and Wales currently holds an EPC rating of C or below, placing approximately £700 billion worth of real estate at risk of becoming stranded assets if further regulations are enforced.
Regulatory changes specifying a two-year compliance window are being introduced by the Government that will see all lodged EPCs needing to achieve a minimum rating of C in 2027 and B in 2030. These proposals are in step with the Government’s strategic energy objective for its Net Zero target by 2050.
The above highlights the urgent need for landlords to accelerate energy efficiency upgrades or risk falling foul of compliance rules. Since April 2023, it has already been illegal to let any commercial property rated EPC F or G unless a valid exemption has been officially registered.
The available compliance data makes for grim reading.”
The available compliance data makes for grim reading. Over 13,000 commercial rentals remain in breach of current EPC E regulations, representing approximately 5% of the leased commercial stock. With progress having largely stalled, the data suggests widespread inaction and under-preparedness across the sector – putting both assets and income streams at risk as the stricter energy regulation regime comes into focus.
Despite a clear trajectory towards greener standards, many landlords are underestimating the speed and scale of the change. The British Property Federation estimates that over 80% of commercial stock in key urban centres already falls short of the future standard. Waiting until 2027 or indeed 2030 to act is not a viable strategy.
Commercial landlords and agents need to take a proactive stance: audit their portfolios now, assess energy efficiency risks, pursue available exemptions, and invest in future-proofing measures well before the 2027 and 2030 thresholds take hold. This is not just about compliance – it’s about protecting long-term income-yielding assets and capital value.
Consequences
Commercial landlords now face significant financial and legal risks if they fail to meet EPC requirements. Non-compliant properties can incur fines of up to £150,000 per building, particularly for breaches that extend beyond three months.
Additionally, the market impact is already being felt, with annual rental income losses projected to exceed £1 billion from properties that remain below the required energy efficiency standards. These consequences highlight the urgent need for landlords to address compliance gaps before enforcement intensifies further.
Recommended actions
To protect their assets and income, landlords must take proactive steps toward EPC compliance. First, audit each property to identify leases associated with buildings rated D, E, F, or G. From there, upgrade strategically, aiming to reach EPC C by 2027 and planning ahead to meet EPC B standards by 2030.
If necessary, landlords can register exemptions (see the Government website for applicable exemptions), but these are only valid for five years and should be treated as temporary solutions. To ease the financial burden, landlords should also explore available government incentives, including grants and cost caps (e.g. £15,000 per property).
Finally, it’s vital to partner with expert solicitors and certified EPC assessors early in the process, ensuring that all compliance measures are legally sound and cost-effective.
Uba Ngenegbo is Associate Commercial Conveyancing Manager at RG Law.