This information should not be interpreted as financial, tax or legal advice. Mortgage and loan rates are subject to change.
Propertymark, the professional body for property agents, has secured confirmation of an important change to EPC targets for commercial property from the Secretary of State for Energy.
The Secretary of State for the Department of Energy Security and Net Zero (DESNZ), Claire Coutinho, confirmed that commercial property landlords will not have to achieve a B grade on their Energy Performance Certificate (EPC) by 2025, which had been a proposal up for consideration.
Unless an exemption applies, the existing minimum requirement for commercial property is an EPC grade “E”.
Will the deadline be pushed back?
A proposed tightening of Minimum Energy Efficiency Standards (MEES) for residential buy to let property was scrapped by Rishi Sunak back in September.
This brought about confusion for commercial property landlords, who were unsure if they too were excused from a higher EPC target. So, Coutinho’s news will be welcome.
However, whilst the 2025 date has been scrapped, the jury is still out on whether the grade B EPC rating will be imposed with a 2030 deadline instead.
The Government ran a consultation in 2021 which looked at how a 2030 grade B target would be implemented. However, there has been no official announcement on the findings of the consultation.
Update from the DESNZ
Coutinho gave her clarification on these points in a letter responding to CEO of Propertymark, Nathan Emerson:
In reference to the non-domestic Private Rented Sector regulations, as you are aware, these were not included in the list of policies the Prime Minister changed in September.
However, given the current economic climate and the time that has passed since our consultation it is essential for us to review the policy design and timelines to ensure they remain fair and proportionate.
The proposed timelines within the original consultation were partly based on our ambition to publish the Government response shortly after our second consultation in 2021.
However, the timelines originally proposed need to be amended. This is both to reflect that the parliamentary timetable can no longer accommodate our original 2025 commencement date and, importantly, to allow for sufficient lead in time for landlords to prepare for the legislation to come into effect once a Government response is published.
In an update published on the Propertymark website, Mr Emerson had the following to say in response to the reply:
We are pleased that the UK Government understands the need to review non-domestic targets, but while they remain in place we will use the opportunity to engage with DESNZ to push for grants and advice for non-domestic property owners as previous engagement with the department alluded to the fact that this was on their agenda.
In the meantime, we encourage property agents and their landlords of both domestic and non-domestic property to consider continuing to improve the energy efficiency of their property. Not only will this reduce the fuel bills for tenants and contribute towards the UK Government’s net zero goal, but landlords need to be prepared for any potential future targets.
The delay in deadlines and the ongoing review of energy efficiency standards for commercial premises reflect the government’s challenge to balance environmental goals with practical considerations for landlords. Commercial Trust will continue to monitor this issue for further announcements.