Commercial Landlords: Improve Property Energy Efficiency
Following the EPC regulation changes introduced on 1 April 2023, commercial landlords are no longer able to let properties with an EPC rating below ‘E’ unless a valid exemption applies.
If your property is rated F or G, you won’t be able to grant new tenancies unless it’s registered on the PRS Exemptions Register.
Are You Ready for the Changes?
If your property falls short, now’s the time to act.
Improving energy efficiency might mean upgrading insulation, replacing heating systems, or making other structural improvements — but these upgrades can bring long-term benefits.
Not only can they reduce running costs, but they also make properties more attractive to tenants and support the UK’s net-zero targets.
What Happens If You Don’t Comply?
As of April 2023, it is now an offence to rent out a commercial property that doesn’t meet the minimum EPC standard.
Penalties can range from £10,000 to £150,000 per breach, and details of non-compliance may be made publicly available.
Looking ahead, regulations are expected to tighten further, with minimum standards likely increasing over time, meaning landlords should think beyond short-term fixes.
The Cost of Energy Efficiency Improvements
One of the biggest concerns for landlords is the cost.
Energy efficiency upgrades can require significant upfront investment, particularly for older or inefficient buildings.
This is where funding becomes a key consideration.
Some landlords explore options such as refinancing or short-term funding to cover improvement costs — particularly where speed is important.
For example, short-term solutions like a bridging loan can be used to fund refurbishment works before refinancing onto a longer-term facility.
Why Acting Early Matters
Although these regulations have been in discussion for some time, many landlords are still unprepared.
Delaying improvements can lead to:
Lost rental income
Difficulty refinancing
Reduced property value
Starting early gives you more flexibility — both financially and operationally.
Energy Efficiency as an Investment
While the upfront costs can seem daunting, these improvements should be viewed as long-term investments.
Benefits include:
In a market where tenants and investors are placing increasing importance on sustainability, energy-efficient properties are becoming more competitive.
Planning Your Next Steps
If you haven’t already, now is the time to:
Understanding the cost of bridging finance or comparing longer-term commercial mortgage rates can help you decide the best route forward for your situation.
Final Thoughts
EPC regulation changes are reshaping the commercial property landscape.
While they may present short-term challenges, they also offer an opportunity to improve asset quality, reduce long-term costs, and align with future market expectations.
The key is preparation.
Next Steps
If you find yourself in this boat, we explain how you can make the required improvements here.
In any case, we urge property owners to start preparing now for these new regulations. The earlier you start making energy efficiency upgrades, the smoother the transition will be.
Chloe Rule
