Understanding Energy Performance Certificate (EPC) requirements for commercial tenants has never mattered more. Whether you’re signing a new lease or approaching a renewal, energy performance now shapes cost, risk and negotiating power for every business occupying commercial space in England and Wales.
The rules are changing, but not in the way many expected. In June 2026, the government published its interim response on Minimum Energy Efficiency Standards, softening the timetable for smaller buildings while confirming a tougher target for larger ones. For tenants, this means EPC requirements for commercial tenants now vary significantly depending on the size and type of building you occupy.
This guide explains the current rules, what changed in 2026, and what it means in practice if you’re negotiating a new lease, sitting mid-term, or heading towards a renewal in the next few years.
What are MEES regulations and why do they matter?
MEES regulations set the minimum energy efficiency standard a commercial property must meet before it can be let. Under the current rules, a landlord cannot grant a new tenancy, renew an existing one, or continue letting a property that falls below an EPC E rating, unless a valid exemption is registered.
For tenants, MEES regulations are not just a landlord’s problem. A poorly rated building often means higher running costs, less attractive premises, and a weaker position if the property later needs to be vacated for compliance works. Knowing where a building sits against MEES regulations before you sign is essential due diligence.
What changed in the government’s 2026 announcement?
On 18 June 2026, the government confirmed a more targeted approach to MEES regulations. The previously proposed EPC C milestone for 2027 has been dropped entirely. Instead, only privately rented non-domestic buildings over 1,000 square metres in England and Wales will need to reach an EPC B rating, and not until 2031.
- Buildings over 1,000 sqm: must reach EPC B by 2031
- Buildings under 1,000 sqm: remain at the existing EPC E minimum, with no fixed deadline to improve further
- The seven-year payback test and existing exemptions continue to apply
- Landlords relying on an exemption must still register it on the PRS Exemptions Register
Current EPC requirements for commercial leases
Right now, the minimum standard for a lawful commercial letting is an EPC E rating. If a property is rated F or G, a landlord cannot lawfully grant, renew or continue a tenancy unless they hold a registered exemption. This baseline hasn’t moved, even though the longer-term targets have been reshaped.
For smaller premises, this softer timetable buys time. But for tenants in larger buildings, EPC requirements for commercial tenants are about to become considerably stricter, with roughly five years to prepare for the shift to EPC B.
It’s also worth remembering that an EPC is valid for ten years and doesn’t automatically renew when a tenancy changes hands. Always check the certificate’s expiry date rather than assuming the rating you’re shown is still accurate.
Why the change creates a two-speed market
Larger, better-quality buildings are likely to see faster investment in energy efficiency, while smaller or secondary stock may lag behind. If you’re a tenant weighing up a lease in a smaller building, don’t assume the pressure has disappeared entirely; it has simply moved further down the road.
How green lease clauses affect commercial tenants
Green lease clauses are contractual provisions that set out how a landlord and tenant will manage a building’s energy performance and sustainability over the life of a lease. They’re becoming a standard feature of commercial leases, not an optional extra.
A typical set of green lease clauses might cover access rights for energy efficiency works, cost allocation for improvements, data-sharing on energy consumption, and obligations around service charge contributions. Because MEES regulations are tightening for larger buildings, green lease clauses increasingly need to plan for change over time rather than solving a single compliance problem.
- Landlord’s right of access to carry out energy efficiency works
- Who pays for improvements, and how costs are apportioned through the service charge
- Tenant obligations to share energy usage data
- Provisions addressing disruption during works
- Alignment with any EPC rating targets agreed for the building
Before agreeing to green lease clauses, it’s worth having your lease reviewed by a solicitor who understands where the obligations fall and how they might affect your occupation costs. Careful review of your lease before you sign, ideally with support on lease drafting and review, can prevent disputes further down the line.
What EPC requirements mean for lease renewals
Lease renewals are a natural pinch point for EPC requirements for commercial tenants. If a building’s EPC rating has dropped, or the lease is due for renewal close to a compliance deadline, tenants can find themselves negotiating from a position of real leverage.
A poor EPC rating, particularly an F or G, gives a prospective tenant a strong negotiating position. You can reasonably ask the landlord to carry out recommended improvements, or negotiate a reduced rent to reflect higher running costs. Even a building with a reasonable C rating may still have scope for cost-effective upgrades worth raising during renewal negotiations.
Questions to ask before renewing
- What is the current EPC rating, and when does it expire?
- Does the recommendations report identify low-cost, high-impact improvements?
- Who is responsible for the cost of any future upgrade works?
- Could MEES regulations affect the building before the new lease term ends?
- Are green lease clauses proposed, and do they fairly allocate risk?
Getting these answers early makes lease renewal negotiations far more productive. Our team regularly supports tenants through lease renewal negotiations to make sure obligations are fair and clearly documented.
Are you approaching a lease renewal or facing a dilapidations claim?
If your lease is coming up for renewal, or a landlord's dilapidations claim references energy efficiency works, it's worth getting advice before you respond. Our team can talk you through your options and help you plan next steps with confidence. Get in touch with our team for a straightforward conversation about your position.
What happens if a landlord doesn’t comply with MEES regulations?
A landlord who lets a sub-standard property without a valid exemption is in breach of MEES regulations and can face financial penalties, alongside reputational risk. For tenants, a landlord’s non-compliance can also affect dilapidations claims at the end of a lease.
Where a landlord’s planned works would replace an inefficient system a tenant would otherwise be liable to repair, the tenant may have a defence based on “supersession”. This is a technical area, and outgoing tenants facing a dilapidations claim linked to energy efficiency works should discuss landlord and tenant disputes with a solicitor to see how MEES regulations interact with their repair obligations.
Practical steps for commercial tenants in 2026
- Check the EPC rating and expiry date before signing or renewing
- Ask for the recommendations report and factor likely costs into negotiations
- Review any green lease clauses carefully, especially cost allocation
- Confirm whether the building is over or under 1,000 square metres, as this now determines the compliance timeline
- Take advice on how MEES regulations might affect the building during your lease term
- Keep records of any energy efficiency discussions in case of a later dispute
The government has indicated a fuller consultation response is still to come, so some detail may change. For the latest official position, tenants and their advisers can review the government’s interim response on MEES regulations, published alongside the June 2026 announcement.
Ready to review your lease for EPC and green lease clause risks?
Whether you're negotiating a new lease, approaching a renewal, or responding to a dilapidations claim, understanding EPC requirements for commercial tenants puts you in a stronger position. Our solicitors can review your lease, flag green lease clause risks, and help you negotiate terms that work for your business.