Commercial Landlords Unprepared for EPC Legislation Changes
Improving the energy efficiency of Britain’s housing stock is a key part of the Government’s plan to tackle climate change.
However, many landlords remain unprepared.
Research shows that 40% of commercial landlords are unaware that legislation is coming into force requiring rented commercial properties to have a minimum EPC rating of E.
The Cost of Compliance
According to research by Handelsbanken, the average cost of upgrading a full portfolio is expected to be around £95,400.
That’s a significant figure — especially at a time when:
Interest rates are rising
Material costs remain high
Profit margins are under pressure
For many landlords, this raises an important question: how will these improvements be funded?
What Is the Current Situation?
Less than 1% of landlords surveyed have a clear plan in place to improve their EPC ratings.
With the deadline approaching, this lack of preparation is a growing concern.
So what’s holding landlords back?
The Biggest Barriers to EPC Improvements
1. Access to Finance
More than a quarter of landlords cite financial constraints:
This highlights the growing importance of commercial finance solutions, including short-term options like bridging loans.
2. Knowledge Gap
The biggest issue appears to be awareness.
Around 38% of landlords don’t know how to improve their property’s energy efficiency, which is slowing progress across the sector.
How to Improve Energy Efficiency in Commercial Property
If you’re a landlord, there are several practical steps you can take:
Review your energy efficiency ratings here.
Check whether your property is exempt (e.g. listed buildings)
Follow recommendations from your EPC report
Obtain quotes from contractors for improvement works
Speak to your specialist finance partner to get advice on your best options for capital raising, whether that’s via a further advance or short-term finance in the form of a bridging loan. You can compare commercial bridging finance here.
Just as importantly, consider how you will fund these upgrades.
For example, some landlords use short-term funding like a bridging loan to cover upfront costs, particularly where speed is important.
What is the current situation?
Less than 1% of landlords surveyed have a clear plan in place to make sufficient improvements to their EPC ratings. A concerning statistic given that the regulations are due to come into force in less than 12 months.
So, what are the main reasons preventing landlords from making their portfolios more environmentally sustainable?
More than a quarter surveyed cited monetary reasons. With 15% believing they may not be able to access the finance required, and 12% claiming they don’t have the Capex to invest at this time.
This shows we have an important role to play as an industry to educate and support our clients through this transitory period on the path to net zero, and much more needs to be done.
The biggest barrier however seems to be a knowledge gap. 38% of respondents claim they don’t know how to make their property more sustainable.
Planning Ahead: Why Minimum EPC ‘E’ Isn’t Enough
While the current requirement is an EPC rating of E, the Government has already indicated a longer-term goal of achieving B ratings by 2030.
This means landlords should think beyond short-term compliance.
Upgrading further now could:
What Improvements Are Landlords Making?
The most common upgrades include:
Insulation improvements
Energy-efficient boilers
These are often seen as 'quick wins', but perhaps indicative of how difficult the improvements are perceived to be, as 17% are simply planning to sell up.
Lowest on the list of planned improvements are solar panels, although it remains to be seen whether that’s due to the hefty upfront investment required, or a lack of faith in British sunshine.
What Does This Mean for the Market?
Property continues to be seen as a safe haven for investors, and the challenging rate environment doesn’t appear to be deterring investors from adding to their portfolios. Half of all landlords surveyed for the report are planning to invest in new property.
However, energy efficiency is becoming a much bigger factor in purchasing decisions.
Key trends include:
17% of landlords planning to sell inefficient stock as they cannot afford the work required to bring their properties up to scratch
35% of landlords have expressed that going forward, they will aim to only acquire newer, more energy efficient properties, which will lead to difficulties selling older stock without having made EPC improvements first.
This shift could make older, non-compliant properties harder to sell — unless improvements are made.
The Role of Finance in EPC Upgrades
With costs rising, financing these improvements is becoming a key consideration.
Landlords are increasingly exploring options such as:
Understanding the cost of bridging finance, as well as longer-term commercial mortgage rates, is essential when planning these projects.
Choosing the right structure can make the difference between a manageable upgrade — and a financially challenging one.
Final Thoughts
EPC legislation changes are coming — and they will have a real impact on commercial landlords.
Ignoring the issue could leave investors with assets that are difficult to let, refinance, or sell.
But with the right planning, knowledge, and funding strategy, these changes can also present an opportunity to improve asset value and future-proof portfolios.
Next Steps
If you want to understand how landlords are structuring finance for refurbishment and compliance projects, explore more real examples in our property finance case studies.
Taking action early — and understanding your funding options — will put you in a far stronger position as regulations tighten.
Abbie Dickson-Davies
