Which Commercial Properties Are Covered By MEES?
The non-domestic MEES regulations generally apply to rented commercial properties that are legally required to have an EPC. However, not every lease or building falls within the regulations.
For example, the government guidance excludes certain tenancies with a term of six months or less, subject to conditions, and tenancies granted for 99 years or more. A property that is not legally required to have an EPC may also fall outside the MEES regulations.
Where a property is genuinely outside the regulations, a landlord does not need to register a MEES exemption simply because the building would otherwise have an F or G rating. Where it is covered, the current legal minimum is EPC E.
The Seven-Year Payback Exemption
One of the most important differences between domestic and commercial MEES is the way improvement costs are treated. Commercial properties do not use the domestic £3,500 cost cap.
Instead, an improvement is generally considered relevant for non-domestic MEES purposes where it satisfies the seven-year payback test. In simplified terms, a recommended energy-efficiency measure fails the test where the expected value of the energy savings over seven years is less than the cost of purchasing and installing the measure.
Where a recommended measure or package of measures does not satisfy this test, the landlord may be able to register a seven-year payback exemption.
Evidence is essential. Current government guidance requires three quotations from qualified installers together with the relevant cost calculations demonstrating why the measure fails the seven-year payback test.
The exemption normally lasts for five years. At expiry, the property must be reassessed and the landlord must try again to bring it up to the required standard or register a further exemption if the qualifying circumstances continue to apply.
All Relevant Improvements Have Been Made
Some commercial properties can undergo every relevant cost-effective improvement and still fail to achieve EPC E.
In this situation, an “all improvements made” exemption may apply. The principle is straightforward: if all relevant energy-efficiency improvements have genuinely been completed, or there are no relevant improvements that can be made, the regulations do not require the impossible. However, the landlord still needs to register the exemption and supply appropriate evidence.
The EPC recommendation report may form part of this evidence. If the landlord relies upon another professional report to demonstrate that all appropriate improvements have been completed, that report should also be provided. This exemption normally lasts for five years.
Wall Insulation Exemption
Wall insulation can present difficulties in both domestic and commercial buildings, particularly where older construction techniques or sensitive building fabric are involved.
Where the only relevant improvements are cavity wall insulation, external wall insulation or internal insulation to external walls, an exemption may be available if independent expert advice shows that the measures could negatively affect the fabric or structure of the property or the building of which it forms part.
This is a technical exemption. A landlord cannot rely on a general concern that insulation may be inconvenient, disruptive or visually undesirable. Written expert evidence explaining the risk is required. Once registered, the exemption normally remains valid for five years.
Third-Party Consent
Commercial properties frequently involve several parties with legal interests in the building.
An improvement may require the consent of a tenant, superior landlord, lender, freeholder or planning authority. Lease provisions can also restrict alterations to the building fabric or services.
Where consent is genuinely required and the landlord has made reasonable efforts to obtain it, but the third party refuses consent or imposes conditions that the landlord cannot reasonably satisfy, a third-party consent exemption may be possible.
Evidence is again central to the process. The landlord should be able to demonstrate why the consent was required, that it was actually sought and how the third party responded.
Most third-party consent exemptions last for five years. However, where the exemption depends upon the current tenant refusing consent, it will generally cease when that tenancy ends or is assigned. A change of tenant can therefore change the property’s compliance position.
Property Devaluation
Some improvement measures can potentially affect the market value of a commercial building. The MEES regulations provide a property devaluation exemption where an independent surveyor on the RICS Register of Valuers advises that installing the relevant measures would reduce the market value of the property, or the building of which it forms part, by more than five per cent. This is a relatively high evidential threshold.
A landlord’s opinion that an alteration could make the property less attractive is not sufficient. A formal report from an appropriately qualified independent RICS valuer is required.
The exemption relates to the relevant measures covered by the valuation. Other cost-effective measures that are not covered by the report may still need to be undertaken. The exemption normally lasts for five years.
Temporary Exemption For Certain New Landlords
There are limited circumstances in which someone who has recently become a commercial landlord can qualify for a temporary six-month exemption.
The purpose is to allow time to deal with an unexpected or unusual change in landlord status rather than immediately putting the new landlord in breach. This is not a general exemption available to every purchaser of an F or G rated investment property.
Where the defined circumstances apply, the landlord has six months from becoming the landlord. When that period expires, the property must either comply with the EPC E minimum or another valid exemption must have been registered.
An Exemption Must Be Registered
Possessing evidence that an exemption might apply is not the same as having a valid registered exemption. Government guidance makes clear that an exemption must be entered on the PRS Exemptions Register before a landlord can rely upon it. The exemption applies from the point it is registered.
Supporting information depends upon the type of exemption, but the landlord will generally need property and landlord details together with the specific evidence supporting the claim.
The exemption register can be searched publicly, and enforcement authorities can investigate the information provided. False or misleading information can itself lead to enforcement action.
Do Exemptions Transfer When A Commercial Property Is Sold?
Generally, no. If a commercial property is sold or otherwise transferred, an exemption registered by the former landlord does not simply become the purchaser’s exemption.
A new landlord intending to continue letting the property must establish the compliance position themselves. That could mean carrying out relevant improvements or registering a new exemption if the appropriate qualifying conditions exist.
This makes MEES particularly important during commercial property due diligence.
A buyer looking at an F or G rated investment should establish why the building is below E, what exemptions have previously been relied upon, when they expire and what it could cost to bring the building into compliance.
What Happens If An Exemption Expires?
Most of the principal commercial exemptions last for five years. Expiry does not mean that the exemption automatically renews.
The landlord must reassess the building and determine whether it can now reach the minimum standard. Technology, costs, energy prices and available improvement measures may all have changed during the previous five years.
Where the building can be improved, the relevant measures may then need to be completed. If it still cannot meet the standard and an exemption continues to be justified, a further exemption may potentially be registered with the necessary evidence.
What About The New 2031 Commercial MEES Proposals?
Commercial landlords should also be aware of a significant government announcement made in June 2026. The government now intends that, from 2031, privately rented non-domestic buildings over 1,000 square metres in England and Wales will need to achieve EPC B where this is cost-effective.
Buildings below 1,000 square metres are intended to remain subject to the existing EPC E minimum. This replaces the previous broader trajectory towards EPC B and means that the earlier proposed EPC C milestone will not be taken forward.
However, the new 2031 requirement is not yet the law. The government has stated that secondary legislation will be required. For now, EPC E remains the current minimum for relevant commercial rented properties.
For owners of buildings over 1,000 square metres, though, the proposed change means that improvement and exemption planning should increasingly look beyond today’s E threshold. A building that is compliant today could require substantial additional work under the future standard.
Conclusion
Commercial MEES exemptions are there to deal with genuine situations where achieving the minimum energy-efficiency standard is not cost-effective, technically appropriate or possible because of circumstances outside the landlord’s control. They should not be treated as an alternative to assessing the building properly.
Understanding why a commercial property has an F or G rating is the first step. From there, the landlord can establish what cost-effective measures are available, whether those measures could bring the property to E and whether a recognised exemption genuinely applies. With the government’s proposed EPC B requirement for larger commercial buildings from 2031, understanding the longer-term performance of a building is becoming increasingly important.
EPC Pro provides non-domestic EPC assessments and practical energy-performance guidance for landlords, agents and property owners across London and surrounding areas. If you have an F or G rated commercial property, or need to understand its MEES position before a letting, lease renewal or purchase, contact EPC Pro to arrange an assessment.
