Five years is not five years

01 Sep 2026

The Government intends larger rented commercial buildings to reach EPC B by 2031. David Jones, Compliance Manager at Inteb, on why that is a shorter runway than it looks, and what the time is actually for.

On 18th June 2026 the Government set out how it intends to strengthen minimum energy efficiency standards for rented commercial property in England and Wales. From 2031, privately rented non-domestic buildings over 1,000 square metres are expected to need an EPC B rating, where reaching it is cost effective. Buildings below that threshold are expected to stay at the current EPC E minimum, with no new deadline attached.

The interim EPC C milestone previously proposed for 2027 has been dropped.

This was an interim response rather than the final one, and the secondary legislation has not been introduced, so EPC B is not yet the legal minimum. But the direction is now considerably clearer than it has been at any point since the consultations opened in 2019.

The reaction I keep hearing is a version of the same sentence. We have got until 2031.

For anyone holding a portfolio, that is a misreading of the calendar.

Five years is not five years of construction time

Before a single improvement is installed, a building has to go through survey and assessment, modelling, an asset management appraisal, budgeting, internal approval, design, procurement, tenant consultation, lease review, and then wait for a contractor who is available. Delivery and commissioning come after all of that.

Across a portfolio, run in sequence, that is not a few months. And the closer the market gets to 2031, the worse each of those steps becomes, because everybody else will be doing the same thing at the same time. Assessors get booked, contractors price accordingly, and the buildings that left it latest pay the most for the least choice.

Five years of notice is not five years of working time. It is roughly two or three, once everything in front of the work is accounted for.

Four assets, four sets of documents, and an EPC certificate in the foreground with a question mark where the rating should be. The 1,000 square metre threshold is the point at which that question mark becomes a compliance obligation rather than a choice.

Why 1,000 square metres

The threshold is worth understanding, because it tells you what the policy is trying to do.

Larger buildings are a small proportion of the non-domestic stock but account for a very large share of its floor space and energy use. Targeting them reaches most of the energy without imposing the same obligation on every high street shop and small industrial unit. The Government estimates the approach could save tenants in those larger buildings up to £360 million a year on energy bills by 2031.

Two consequences follow. If you hold larger assets, the requirement is aimed squarely at you rather than at the market generally. And if your buildings sit below the threshold, EPC E still applies today and enforcement of it has not gone anywhere, with penalties for non-domestic breaches running to £150,000 per breach depending on rateable value.

The certificate may be wrong before you spend anything

Here is the step most portfolios skip, and it is the one that can change the size of the bill.

A commercial EPC is a model, not a measurement. Where the assessor has no evidence of construction, insulation, glazing, plant or controls, the software applies default assumptions, and those defaults are deliberately conservative. A building can therefore be rated worse than it actually performs, purely because nobody produced the paperwork.

Supplying that evidence and modelling the building properly can improve a rating without any physical work at all. This is not gaming a certificate. It is making the assessment reflect the building that exists rather than a cautious guess about it.

On a single unit that is a useful saving. Across a portfolio running to hundreds of thousands of square metres, establishing where the certificate is wrong before committing capital is the difference between a considered programme and an expensive one.

Four buildings, four different right answers

The mistake would be to treat this as one problem repeated across a portfolio. It is not.

A building rated D, fully let, with plant replacement already programmed for 2028. The question is not whether to run an EPC project. It is whether that replacement can be specified to contribute towards a B pathway rather than swapped like for like. The money is being spent either way.

A building rated E with a refurbishment planned for 2029. Energy improvements belong in that design and that capital programme, not in a separate project that disturbs the same tenants twice.

A building rated D with a major lease event in 2028. The works, the reletting strategy and any tenant fit-out should be considered together rather than in sequence.

A building rated E that needs substantial investment, in a portfolio heading for disposal. The right question may not be what it costs to reach B. It may be how the EPC position affects pricing, marketability and what a buyer’s due diligence will find.

The principle underneath all four is the same. Do not create an EPC project if the requirement can be built into something that was going to happen anyway.

An exemption requires evidence. The Plant Specification, the Refurbishment Drawing, the Lease Document, the Valuation Summary and the Exemption registration itself are all part of what makes it hold. None of those stacks are there by accident.

An exemption is not the same as being safe

The Government has said the standard will apply where cost effective, and intends to keep the existing flexibility, including the seven year payback test and the current exemption routes. That is a genuine and sensible limit on what landlords can be required to spend.

It is also where I would sound a note of caution.

An exemption means a building can lawfully be let. It does not mean the building is in good commercial health. A property that qualifies for an exemption because the improvements do not pay back within seven years is, by definition, a property that is expensive to run and difficult to improve. Occupiers notice that. So do lenders, investors and anyone conducting due diligence on a purchase.

The consequences show up as softer demand, longer voids, larger incentives, more scrutiny at valuation and pressure on rent. None of those are enforcement matters, and all of them cost money.

Compliance and commercial resilience are not the same thing, and a portfolio strategy built only on the first will find out about the second at the worst moment.

What the next twelve months should look like

None of this requires committing capital in 2026. It requires knowing enough to commit it well.

Establish the baseline first: which buildings are over the threshold, what they are rated, when those certificates expire, where exemptions already sit, and where the underlying assessment data is thin enough to be worth challenging.

Then model the routes to B for the buildings that matter, so each one has a rating, a set of measures, an indicative cost and a sensible date attached. That is what turns a regulation into a line in a capital plan rather than a problem to be dealt with later.

For multi-let buildings, this is also the point to be clear about what is landlord capital expenditure and what may be recoverable through service charge, subject to the leases. Occupiers would far rather hear about that two years out than discover it in a budget.

2031 should be the year the strategy finishes, not the year it starts.

The value of starting now is not extra time. It is choice.

Start now and you can decide which buildings to improve, which improvements to fold into work already planned, which assets warrant an exemption and which are telling you something about whether to hold them at all. Leave it to 2030 and most of those decisions get made for you by whatever the market has left available.

The objective is not to reach EPC B by 2031. It is to use the time between now and then to make the right decision for each building.

If it would help to know where your portfolio actually stands, we are happy to look at it with you.

FAQs

When does the EPC B requirement apply to commercial property?

The Government intends it to apply from 2031 to privately rented non-domestic buildings over 1,000 square metres in England and Wales, where improvements are cost effective. It is not yet law. Secondary legislation is still required.

Does EPC B apply to buildings under 1,000 square metres?

No. Those buildings are expected to remain subject to the current EPC E minimum, and no deadline for raising that has been announced. EPC E applies now and is enforceable now.

What happened to the proposed EPC C requirement for 2027?

It has been dropped. The Government confirmed in June 2026 that the interim EPC C milestone will not be taken forward.

What if a building cannot reach EPC B cost-effectively?

The Government intends to retain existing flexibility, including the seven year payback test and current exemption routes. An exemption allows a building to be let lawfully, but it does not remove the commercial effects of a poor rating on demand, voids and value.

Can an EPC rating improve without physical works?

Sometimes. Where an assessment has relied on default assumptions because evidence of construction, plant or controls was unavailable, supplying that evidence and remodelling can produce a more accurate and often better rating.