MEES delay highlights stark reality, but the important question is: where now?

The Minimum Energy Efficiency Standard (MEES) regulations are fundamental to the government’s plans to improve the sustainability of commercial (and rented residential) property. However, as the 2030 deadline draws closer, research by Search Acumen suggests progress is markedly stalling.

Fewer A, A+, and B EPCs were registered in 2025 than in the two previous years, down 22% from a 2023 record high. In fact, it has found that it will take until at least 2040 for all rented commercial properties to meet the minimum EPC B requirement, as the race to retrofit continues to slow.

Government policy has (belatedly) caught up to this reality, with the deadline for private rented commercial buildings over 1,000 sq m in England and Wales to achieve an EPC B rating delayed by a year to 2031. It is not clear, however, that this will be enough to make a meaningful difference. The reason is that the costs of retrofitting businesses to meet MEES standards are often all-but prohibitive, often at £100–£200+ per sq ft, which is a high price to meet in a challenging economic climate.

The situation is further complicated by the fact that lenders are penalising inefficient buildings without necessarily being ready to lend the money to fund much-needed upgrades. Access to funding is particularly challenging for smaller landlords who lack the collateral and credit access of their larger counterparts, let alone institutional investors in the sector. We may see smaller landlords increasingly losing their share of the market as a result, as parts of their portfolios are left as stranded assets.

It remains to be said, however, that although upgrades and decarbonisation have slowed in pace, we can expect progress to continue. Not only is energy efficiency a regulatory requirement to be able to lease buildings, but it is undoubtedly a clear commercial advantage too. Rising energy prices will make it harder to rent buildings because businesses faced with higher operating costs will be given a compelling reason to choose the more affordable option. For landlords, it can become a case of adapt or die.

As a result, although the government-imposed deadline is probably unrealistic – even now that it has been extended to 2031 – market forces in the private sector will ensure that the ultimate aim of the MEES regulations is delivered upon at some point. In the public sector, things are much less clear.

A huge number of buildings across the country are owned and managed by local councils, many of which are far from a picture of financial health. Indeed, despite council tax bills increasing to record highs, councils are currently under enormous financial pressure with a number of them effectively bankrupt and reliant on significant support from Westminster just to keep the lights on.

Which is part of the problem, because keeping the lights on in large buildings such as libraries, museums and community centres is becoming increasingly expensive. These buildings often need to be kept at a controlled temperature, are open for most of the day, but were built several decades ago and consequently are poorly insulated by modern standards.

We know that nearly a third of non-domestic buildings within the culture, leisure and community sector lodged one of the lowest EPC grades of either an F or G in the past five years, falling below the minimum standard of E – by far the largest proportion of all commercial property sectors. Local authorities often manage these buildings directly and, with energy prices continuing to rise, this is set to create an additional budgetary strain at a time when there is simply no money to spare.

Market forces naturally have less of a bearing on local authorities that aren’t necessarily renting the buildings they own. Local authorities also can’t go bankrupt in the same way that a private landlord might, creating the risk of councils being saddled with underperforming assets that they can’t sell, rent, or afford to operate. It is less clear how these buildings are to be upgraded in line with MEES regulations, though given the relative penury of most local authorities, the answer will probably have to be central government funding.

So whilst commercial property landlords (and local authorities) are likely breathing a sigh of relief at an extra year on the clock to meet MEES regulations, they should not be under any illusions about how much breathing room they have been given in reality, given the scale of the challenge at hand.

Andrew Lloyd is managing director of Search Acumen