The government has said it intends to raise the minimum energy efficiency standard for the largest rented commercial buildings to EPC B from 2031, and to drop the interim EPC C milestone that was due in 2027. Smaller buildings stay at EPC E. If you own, let or rent a commercial building in England or Wales, the practical effect is more time than expected to plan, and a firm direction for what the plan should aim at.
One caveat before anything else. This is a statement of intent, not yet law. The government says the change "will only take effect following the successful passage of secondary legislation through Parliament".
What the interim response says
The interim response, updated on 18 June 2026, sets out four points:
- "from 2031, it is proposed that all private rented buildings over 1,000 square metres in England and Wales will need to reach a higher standard of energy efficiency of EPC B, where cost effective"
- "the intention is for buildings below 1,000 square metres to continue to be subject to the current minimum standard of EPC E"
- "the previously proposed interim EPC C milestone for 2027 will not be taken forward"
- "existing flexibility mechanisms, including the 7-year payback test and exemptions, will remain in place"
It adds that SMEs and high street landlords of smaller properties get more flexibility to upgrade over time, "with no set deadline for going beyond this level". The government estimates tenants in the largest rented buildings could save £360 million a year in bills by 2031, though it calls that figure "subject to refinement as the policy develops".
What applies today
Nothing changes this week. The landlord guidance, last updated on 5 May 2026, says the minimum EPC rating is E, and since 1 April 2023 that has applied to all privately rented non-domestic properties, even where there has been no change in tenancy. A landlord can register an exemption if the cost of a recommended improvement would not be repaid by energy bill savings within 7 years, and that test stays.
The two thresholds matter. A 900 square metre unit and a 1,100 square metre unit now face different futures, so confirm the floor area on the EPC for each building you let.
What it means for heating, cooling and refrigeration plant
The interim response does not mention heating, cooling or refrigeration by name. What follows is our engineering view, not the government's. An EPC rating reflects how the building is heated, cooled, ventilated and lit, so ageing plant is often among the recommended improvements on a certificate. An old split system running on a phased-out refrigerant, a boiler at the end of its life, or an uninsulated cold room in a mixed-use building can all drag a rating down.
The "where cost effective" wording and the 7-year payback test mean an upgrade has to stack up on bills. Efficient plant sized correctly is the sort of improvement that can pass that test, but only a survey of the actual building will say. Before replacing anything, it is worth knowing what you are being asked to improve, and our guide to TM44 air conditioning inspections is a useful starting point if you have air conditioning in the building.
With 2031 being a long runway, the sensible approach is to fit upgrades into the normal replacement cycle rather than rush. The extra years are the point of dropping the 2027 milestone.
What to do now
- Landlords: list each rented building with its floor area and current EPC rating, and mark those over 1,000 square metres.
- For those buildings, read the recommendations on the certificate and note which involve heating, cooling or ventilation plant.
- Tenants: check your lease for who pays for plant replacement and who must consent to works.
- If plant is due for replacement in the next few years, ask for efficiency figures to be priced in, so you are not replacing it twice.
- Watch for the legislation and updated guidance before committing capital specifically to the 2031 date.
We will report when the secondary legislation appears. For related rule changes, see our regulation and compliance news.
