EPC changes for commercial property: What landlords and investors need to know.

At a glance

• The current minimum EPC rating for commercial property is E, and properties rated F or G generally can’t be legally let.

• EPC C by 2027 and EPC B by 2030 are proposed targets, not confirmed law, but they show the likely direction of future regulation.

• 80% of UK commercial properties are below EPC B, making this a widespread issue affecting landlords, investors and lenders.

• Poor EPC ratings can reduce property value, limit rental demand and make refinancing more tricky.

• Upgrade costs can be significant, and delaying action may lead to higher costs and limited contractor availability.

• Funding options include bridging finance and commercial mortgages, depending on your plans.

If you own or invest in commercial property, energy efficiency rules are becoming harder to ignore and potentially more expensive to deal with the longer you leave it.

You might have seen headlines about EPC C by 2027 or EPC B by 2030. It’s easy to assume these are already law, but they aren’t. That uncertainty can make it difficult to know what to do next.

At Together, we’re already seeing landlords and investors thinking more carefully about EPC ratings. Not just because of regulation, but because of what it means for value, rental income and future borrowing.

This guide explains where things stand today, what could change and how you can start planning with more confidence.

What is the current minimum EPC rating for commercial property?

An EPC, or Energy Performance Certificate, rates a building’s energy efficiency from A to G. A is the most efficient, while G is the least.

Under Minimum Energy Efficiency Standards (MEES), most privately rented commercial properties must have a rating of E or above to be legally let. This applies to:

• New leases since 2018

• Existing leases since April 2023

This means if your property is rated F or G, you generally cannot rent it out unless you qualify for an exemption. Penalties can reach up to £50,000 for a short breach and up to £150,000 for a longer breach.

What is an EPC certificate for commercial property?

An EPC certificate is issued by an accredited assessor and is usually valid for 10 years.

You’ll typically need one when selling or letting a commercial property.

It measures how energy efficient the building is, rather than what your actual energy bills look like. It also includes recommendations for improvement. Some of these may be straightforward, while others might not be practical depending on the property.

If you’re planning ahead, it can be a useful starting point for understanding what changes might be needed.

Are EPC C by 2027 and EPC B by 2030 confirmed?

No. These targets are still proposals and haven’t been passed into law. However, they give a clear indication of where regulation is likely heading.

Proposed target	Status
EPC C by 2027	Proposed
EPC B by 2030	Proposed

 

Even though nothing has changed yet, many landlords are already starting to plan.

Waiting might feel like the safer option, but it can create pressure later. Costs may rise, contractors may be harder to secure and lenders may take a more cautious view of lower-rated properties.

At Together, we’re seeing more customers act early so they have more control over timing, cost and funding.

Which commercial properties do EPC rules apply to?

EPC rules mainly apply to privately rented commercial properties.

They don’t apply in the same way to owner-occupied buildings, but requirements can still come into play when a property is sold, let or needs a new certificate.

EPC exemptions for commercial property

Some exemptions exist, but they’re not automatic and usually need to be registered.

For example, listed buildings aren’t always exempt. They may only qualify if improvements would significantly change their character or appearance.

Other possible exemptions include:

• Temporary buildings.

• Small buildings under 50 square metres.

• Demolition cases.

• Certain industrial or agricultural buildings.

• Cases where tenant consent is refused.

• Situations where improvements would reduce property value by more than 5%.

• Recently becoming a landlord.

Many exemptions are temporary and must be registered.

How many commercial properties are affected?

It’s estimated that 80% of commercial properties are currently below EPC B and would be unlettable if the proposed legislation came into effect today.

That means this isn’t a niche issue. It’s something that could affect a significant part of the market, including landlords, investors and lenders.

Some property types may be more exposed than others. Older office buildings and certain retail units can be harder to upgrade, which may increase both cost and complexity.

What does this mean for property value and investment risk?

EPC is now a financial issue. A stronger rating can make a property more attractive to tenants, buyers and lenders. A weaker rating can have the opposite effect.

You might start to see:

• Lower rental demand

• Longer void periods

• More difficult lease negotiations

• Reduced buyer interest

• Fewer refinancing options

This is sometimes referred to as a “brown discount”, where lower-rated properties may be valued less due to their energy performance. The brown discount can be good news for savvy investors looking to pick up properties below market value as it’s often possible to increase the EPC rating, property value and tenant demand with strategic renovations.

Could your commercial property become unlettable?

It’s possible.

If standards increase and your property doesn’t meet them, you may not be able to agree new leases or renew existing ones.

That can have a direct impact on income. A property that can’t be legally let stops generating rent, which can affect both cash flow and long-term plans.

In fact, when the minimum rating changed to an E on 1 April 2023, between 130,000 and 135,000 commercial properties became unlettable overnight.

This is why many landlords are starting to review their portfolios now, rather than waiting for regulation to officially change.

What improvements are needed to meet EPC requirements?

Improving an EPC rating often involves a mix of smaller upgrades and, in some cases, more significant work.

Here are a few improvements landlords can make to boost the EPC rating of commercial property:

• LED lighting
• Heating and cooling system upgrades (HVAC)
• Better insulation
• Improved glazing
• Energy-efficient controls
• Solar panels where suitable

Moving from E to C can sometimes be achieved with relatively moderate changes.

Moving from C to B is often more involved and may require a larger investment, depending on the building.

How much could EPC improvements cost?

Commercial retrofit costs for UK landlords vary widely. EPC improvement costs depend on the property’s age, condition, size, location, current rating and target rating.

For office buildings, upgrade costs can be significant. In London, construction industry estimates suggest that a full EPC upgrade may range from £113 to £268 per sq ft, particularly for older or more complex refurbishments.

Costs are typically lower outside the capital, although the same core drivers still apply.

How can landlords fund EPC improvements?

There are several ways to fund improvements, depending on your strategy and timescales. Options include:

• Using cash reserves
• Additional borrowing
• Bridging finance
• Commercial mortgages
• Secured business loans

Bridging finance can help if you need to move quickly, for example to carry out works before a refinance or sale.

As bridging is a short-term product only, it’s important that you understand the timings of your project, and how and when you intend to repay the bridging loan before the end of the term (known as your exit strategy). Your property, or any other properties used as a security, could be at risk if you can’t repay the loan on time.

A commercial mortgage could be more suitable for longer-term funding, secured against the property.

How lenders assess EPC risk

EPC ratings are becoming a more important part of how lenders assess risk.

Alongside property value and rental income, it’s likely that lenders will start to consider how future regulation could affect the property.

A lower EPC rating could limit your borrowing options or make refinancing more difficult, especially if improvements are likely to be required in the near future.

Should you upgrade, refinance or sell?

Your best option depends on the property itself and your wider plans.

You may consider upgrading if the property is strong and the cost is viable. Refinancing may be the best option if improvements could support future value or rental income. Selling the property may be the answer if the cost of upgrading is too high for your plans.

At Together, we’ll look at your situation as a whole and help you think through what each option could mean in practice.

What should commercial landlords do now?

If you’re not sure where to start, a simple plan can help bring clarity.

You might begin by:

1. Reviewing your current EPC ratings
2. Checking certificate expiry dates
3. Looking ahead to lease renewals
4. Identifying properties most at risk
5. Estimating potential upgrade costs
6. Exploring funding options early

As deadlines get closer, demand for contractors and funding is likely to increase, so acting early can help avoid higher costs and delays.

Common misconceptions about EPC commercial property rules

There are a few misconceptions that can cause confusion.

Misconception	Reality
EPC C by 2027 is already law	It isn’t. It’s still a proposal.
Listed buildings are always exempt	They’re not. Exemptions depend on specific criteria.
Only landlords are affected	Tenants, buyers and lenders can all be impacted.
Improvements always require major work	Some properties can improve through targeted, lower-cost changes.

Your next steps

Current EPC commercial property rules require most rented commercial buildings to be rated E or above. Future targets for EPC C and EPC B aren’t yet law, but they’re a strong signal of what’s ahead.

EPC ratings can affect rent, value, finance and long-term strategy. If you’re thinking about upgrades, refinancing or reviewing your portfolio, starting early can give you more options and fewer surprises.

 

Speak to our team to explore your options for funding improvements or refinancing your commercial property.