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The regulatory framework to decarbonise real estate is tightening across the UK, with a review of Minimum Energy Efficiency Standards (MEES) for buildings. The overall target is for all non-domestic buildings in England and Wales with existing and new leases to achieve an EPC B rating by 1 April 2030. Incremental steps are in place to reach this, including that from April 2023, landlords should not have any ongoing lettings at a property below a band E rating unless a valid exemption applies.

With the UK government committing to reach net zero carbon by 2050 and with the built environment directly responsible for 25% of the total UK carbon footprint, improving the EPC rating of buildings is one way to achieve net zero. To align this target with the realities of the market and the continuous decarbonisation of the national electricity grid, the EPC methodology and associated carbon factors were updated in June 2022. Electricity is now seen as a preferred heating fuel over natural gas for the first time. This and other changes to the interpretation of building fabric and lighting have profoundly impacted historic EPC ratings, which may no longer be accurate. While EPCs are not a perfect metric of a building鈥檚 energy credentials, these updates will now encourage buildings to degasify, moving towards an electric heating system that can be net zero-ready.

Improving a building鈥檚 EPC to comply with future MEES EPC B targets can be expensive and challenging to implement, with custom solutions often required. However, it can be achieved with value added to the asset, showing its positive EPC credentials 鈥� an important attribute for prospective occupiers.

While the responsibility of a building鈥檚 EPC will fall on the landlord, occupiers can still influence the overall rating, which will help them attract and retain the best talent for their business. An occupier can help improve an EPC rating by moving away from all forms of gas heating and hot water, installing highly efficient electric heating sources, such as air source heat pumps and fitting modern LEDs with smart controls.

If you have any questions relating to MEES, please get in touch with Joe Warren, Associate, in our Project & Building Consultancy and Energy & Sustainability teams.