The government has set the destination for non-domestic MEES. But the three words attached to it – "where cost effective" – quietly decide what each portfolio owner has to spend, building by building. The five-year deadline is far tighter than it looks, given the scale of work to complete.
On 18 June 2026, the Department for Energy Security and Net Zero published its interim response on Minimum Energy Efficiency Standards in the non-domestic private rented sector. After years of uncertainty since the 2019 and 2021 consultations, portfolio owners finally have a clear direction of travel.
From 2031, the government intends that all privately rented buildings over 1,000 square metres in England and Wales will need to reach EPC B, where cost effective. Buildings below 1,000 square metres stay at the current EPC E minimum, with no current deadline to go further. The previously proposed interim EPC C milestone for 2027 has been dropped. The part deserving far more attention than it is getting is the existing flexibility mechanism, including the seven-year payback test and the exemptions regime, which remains in place.
It is worth being precise about what this is and isn't. It is an interim response, not law: the EPC B requirement only takes effect once secondary legislation passes through Parliament, and a fuller government response is still to come. For some assets, the "where cost effective" qualifier means the standard required in practice will sit below a full EPC B. None of that is a reason to wait, because the policy architecture is now clear enough to plan against, and everything hinges on cost-effectiveness.
Why the government drew the line at 1,000 square metres
The threshold isn't arbitrary. Larger buildings cover a large proportion of where the energy (and the carbon) actually sits. According to the government's National Energy Efficiency Data-Framework, buildings over 1,000 square metres make up only around 7% of non-domestic premises in England and Wales, yet account for roughly 61% of electricity consumption and 71% of gas consumption across the sector. A small slice of the stock drives the overwhelming majority of the energy use.
By targeting the largest buildings, the government captures most of the available energy and carbon savings while leaving the long tail of smaller premises – high-street shops, small offices, SMEs – on the existing EPC E standard. It is why DESNZ can credibly estimate up to £360 million a year in tenant bill savings by 2031 from a requirement that, by building count, touches a minority of the market. For owners of larger rented assets, it also means there is nowhere to hide: if you hold buildings over 1,000 square metres, you are squarely in scope. For those owning smaller buildings, whilst the regulations don't demand a shift, there is still demand for energy efficiency and cost reduction – it just means the measures applied might be different.
"Where cost effective" is not a loophole – it's a test you have to pass
The instinct is to read "where cost effective" as a get-out. It isn't. It is a condition, and the burden of proof runs the wrong way for anyone hoping to do nothing.
Under the existing MEES framework, an owner who wants to let a sub-standard building without improving it has to register a valid exemption – and the most relevant one here is the seven-year payback test. To claim it, you generally need evidence, including installer quotations, showing that the expected energy-cost savings from a measure would not pay back its installation cost within seven years. You don't get to skip a measure because it feels expensive; you have to demonstrate, with numbers, that it doesn't pay back. No evidence, no exemption – and an exemption, once registered, is time-limited and tied to the specific measures assessed.
This flips the planning problem. The question is no longer simply "how do I get this building to EPC B?" It is "for each viable measure on each building, what does it cost, what does it save, and does it pay back inside seven years?" Some measures will clear the bar comfortably and become required work. Others won't, and those are the ones that underpin an exemption. Either way, you cannot answer the compliance question without first doing the cost-and-payback analysis. The economics are the regulation.
Importantly, the payback calculation isn't static. It moves with energy prices, with the cost of measures, and with the order you do the work in – bundling a marginal measure with a strong one can change whether the package pays back at all. Getting this right is the difference between over-spending on work you were never required to do and under-preparing for work you can't avoid.
Five years is not the runway it looks like
The government frames 2031 as a fair and proportionate timetable, and for an individual building it is. For the market as a whole, it is tight – and the binding constraint is not the date, it is capacity.
Moving a large building to EPC B is rarely a single measure. It typically means fabric improvements, lighting, controls, and in many cases a move away from fossil-fuel heating toward heat pumps – coordinated around lease events, tenant occupation and capital cycles that don't bend easily to a regulatory date. Multiply that across thousands of assets competing for the same finite pool of qualified retrofit contractors, heat-pump installers, EPC assessors and surveyors, and the picture changes. Supply chains for heat pumps, insulation and electrical infrastructure are not sized for a synchronised national rush. If every affected landlord starts serious planning in 2029, the cost of materials and labour will climb exactly when demand peaks – and the assessment-and-design bottleneck will form long before the installation one does.
This is why the cost-effectiveness analysis can't wait until 2030: capacity is the reason. The deadline is the same for everyone, but the advantage goes to whoever knows, first, which of their buildings need a decision and which can wait. MEES has quietly become a portfolio sequencing problem – not a checklist of measures, but a question of what to do, where, in what order, and on what evidence. And sequencing problems reward the organisations that start with a clear view of their own exposure.
There is upside in that constraint for the prepared. Buildings that move toward EPC B are more lettable, more financeable and more defensible at valuation and disposal. The gap between efficient and inefficient stock – the "brown discount" – widens as the deadline approaches, and the assets improved early capture the value while avoiding the cost spike that late movers will face.
Where to start is the whole game
For a portfolio owner, the first question after an announcement like this is rarely "how do I retrofit this one building?" It is "across everything I own, where do I even begin – and where is my capital actually required?"
That is the question Building Atlas exists to answer. Starting from nothing more than addresses and whatever asset data you already hold, we evaluate each asset, assess its rating position and trajectory, and rank exposure across the whole portfolio. Then, for each building, we model feasible measures with their costs, savings, payback, and the resulting movement in rating, energy use and emissions – in minutes rather than months.
That is exactly the intelligence the "where cost effective" clause demands. The buildings over 1,000 square metres that need to reach EPC B can be identified and prioritised now. The measures that clearly pay back – and so become required – can be separated from those that don't. Where a measure fails the seven-year test, you have an early, evidence-based view of the exemption case rather than a scramble for installer quotes at the deadline. The same analysis tells you where to spend first, what to plan against a lease event, and where not to spend at all.
Crucially, the output is built to be trusted by everyone in the decision. Asset managers, finance teams, lenders and advisers all need to see what sits behind a recommendation, so we make the assumptions visible: data sources, confidence levels, building constraints, measure logic, cost ranges and payback. A retrofit plan – and an exemption claim – is only as good as the assumptions people can scrutinise.
The work to do now
Nothing about the legislation is final, and the detail still matters. But the cost-effectiveness test is already at the centre of the policy, and it rewards the prepared. The owners who come out of this well won't be the ones who waited for Royal Assent. They'll be the ones who use the next eighteen months – while contractors and assessors still have capacity – to work out, building by building, what pays back, what doesn't, and where to start.
That work begins with a clear map of which buildings need a decision and what each measure is worth. If you want one for your portfolio, that's what we do.