Why the Warm Homes Plan has left commercial landlords out in the cold

The recently published Warm Homes Plan turned out to be cold comfort for England’s commercial landlords. There were plenty of announcements on upgrading domestic buildings and some clarity for residential landlords on domestic EPC reform and on future minimum energy efficiency standards (MEES) for the private rented sector.

However, there was next to nothing on how the government plans to decarbonise commercial buildings or cut bills for commercial tenants and, once again, ministers kicked the can down the road on making a decision on future MEES for the non-domestic private rented sector.

So how did we get here? In 2021, the then government published a consultation paper on new MEES for commercial buildings, proposing that commercially-let buildings would need to achieve at least an EPC C rating by 2027 and EPC B by 2030.

That was five years ago. Since then, we’ve had a change of government, several changes in prime minister and around half a dozen changes in the relevant secretary of state, but one thing that hasn’t changed is the lack of any response to the 2021 consultation paper.

In some ways, it felt like the Warm Homes Plan was our last hope. This was a real opportunity to provide clarity to the commercial property sector and set out a roadmap for commercial buildings. In the end, however, there was nothing on non-domestic MEES and next to nothing on decarbonising commercial real estate more broadly.

So why? Why won’t government set out its position on non-domestic MEES? Well, that’s the $64,000 question, and one that only ministers can ultimately answer.

However, I wonder if the lack of a response on MEES speaks to a wider disinterest from government in commercial real estate. The Committee on Climate Change, the government’s own expert advisor on net zero, has highlighted the lack of policy development under this government on decarbonising commercial buildings, and this lack of interest isn’t limited to policy on sustainability.

More generally, there seems to be little focus from ministers on the critical role of commercial real estate in economic growth and little understanding of how the sector is key to delivering large parts of the government’s broader policy agenda. For example, the government’s new industrial strategy has identified eight growth industries, all of which will need world class commercial buildings exactly of the type built and owned by British Property Federation (BPF) members.

So where do we go from here? The first thing to say is that the proposals in the 2021 consultation paper are now entirely unrealistic.

The BPF publish annual statistics looking at the EPC ratings of commercial buildings. The latest data shows that 81% of commercial buildings in our major cities are currently rated below EPC B and 50% below EPC C. The data shows some progress over the last 12 months – with a one or two per cent improvement in the proportion of commercial buildings rated EPC B or above compared to 2024 – but progress is very slow.

So, EPC C by 2027 and EPC B by 2030 is clearly unachievable. But secondly, every government consultation must surely have a shelf life, and a 2021 consultation must now be nearing its expiry date? It’s no longer credible for government to continue to say they are “reviewing responses” or that they will respond “in due course”.

It’s time for government to come clean. Will there be new minimum energy efficiency standards for the non-domestic private rented sector or not? Because, let’s be honest, the longer the silence drags on, the louder the chatter across industry that government want to drop these proposals entirely. And if that’s the case, then the sector deserves to be told.