EPC for Commercial Properties - Non-Domestic EPC Ratings Explained

An Energy Performance Certificate (EPC) has long been a requirement for domestic property, when selling or letting a home. Recent moves and consultations by the UK Government to standardize performance ratings have extended the scheme to commercial property.

The key objective is to bring together a disparate number of energy assessment schemes under one criterion in order to make it simpler to benchmark commercial buildings. The new EPC regulations for commercial property, in 2025, are now a legal requirement.

Commercial properties will be rated in the same way that domestic properties are rated from A to G. It’s thought that this should make the marketplace easier to negotiate.
You may question how this will affect new builds, conversions, or other commercial or industrial projects. Here’s what we think you need to know in this new age of compliance.

Why is the Government Introducing Commercial EPCs?

Up to now, energy performance has been measured by non-governmental schemes such as BREEAM, NABERS and LEED. These are opt-in schemes that have been used by clients and landlords to set base levels of energy efficient compliance with building regulations.
If a building has been designed and built, paired with these schemes, then compliance with the new commercial EPC should be straightforward. Their introduction is basically a harmonisation of the existing energy efficiency monitoring framework that already exists in the UK.

Who Needs a Commercial Property EPC?

An EPC rating of E and above is required today:

• If you rent or sell a commercial property
• If you complete works on a new commercial construction
• If you make significant changes or improvements to existing heating, cooling, insulation or other building management systems

The UK government believes that this will affect up to a million rented commercial properties in England and Wales over the next five years.

• From 2027 the minimum rating will increase from E to C
• From 2030 the minimum rating will increase further, from C to B

Estate agents in central London have assessed that up to 50% of current commercial rented property will be unlettable by 2027 without upgrades to heating, lighting or insulation. For SMEs that specialise in these areas of work, the next few years could be very busy indeed.

What is Classed as a Commercial Property?

Non-residential doesn’t quite capture the broad sweep of what counts as a commercial property that will need an EPC. Some do not require a certificate to remain compliant, while there are also some exceptions that will require alternative assessment to justify their status.

A commercial property can be defined as any of the following:

• An office block; use categories A1-A5 + A*
  
• A retail or professional unit; use categories A1-A5 + A*
  
• General offices and light industrial unit; use category B1
  
• Heavy industrial or manufacturing; use categories B2-B7 + B*
  
• Hotels and residential institutions; use categories C1-C2 + C*
  
• Non-residential institutions, assembly (theatre/venue) and leisure; use categories D1-D2

All of the above will require a commercial EPC, however, there are a few circumstances where the property may be exempt due to the individual nature of the building, its situation, or use.

Exempt properties may include:

• Storage, warehousing or distribution; use category B8
  
• Places of worship
  
• Temporary buildings with a planned use of less than two years
  
• Any building currently under refurbishment and not occupied or in use
  
• Unheated agricultural buildings

Other buildings that may fall outside the catchment of the new 2025 EPC regulations may include:

• Listed buildings or those in a conservation area
  
• Properties that would be significantly devalued by EPC modifications
  
• Properties that have had the recommended upgrades, but still do not achieve compliance
  
• Properties subject to multiple levels of occupier consent not forthcoming
  

Temporary exemption can be applied for by new landlords for recently acquired property, but in all cases any failure to provide proper justification for non-compliance will face financial penalties.

Even if your property is classed as exempt from a commercial EPC, there will likely be other regulatory bodies with which a landlord will have to comply. In either case, proper records, surveys and energy management data will be required.

Is an EPC Required for Commercial Property With no Heating?

A commercial building that does not have a heating system and cannot use energy to condition the indoor area of a building, does not meet the official criteria for when an EPC is deemed necessary.

However, any building that has the potential for fixed heating, that has a decommissioned heating system, which could, theoretically be put into use, will be required.
Likewise, if there is evidence that an alternative fixed heating system is a potential future option, has been ordered, or left off the refurbishment contract an EPC could still be needed for the building to be let or sold on.

How Much Will a Commercial EPC Cost?

Most commercial EPC assessors and providers will have a base cost to cover most types of property, with a per square metre uplift for larger, more complex buildings. The assessment will need to deliver a far more complex analysis than that required for a domestic EPC.

From the materials used to build the property, to the expected, or current daily use and functionality of the space, a commercial EPC has to report on a wide range of factors. These are distilled from the UK government’s Minimum Energy Efficiency Standards (MEES).

1. Expect to pay between £100 and £300 for a smaller office or retail unit from 50m2
   
2. Office blocks, or warehouse, factory, or leisure complexes expect an invoice for between £500 and £1500

How Do I Arrange a Commercial EPC?

The government website that holds a database of all the EPCs current held across England and Wales also keeps a list, by postcode, of local accredited assessors.

You will need to provide access to all areas of your building, including loft access, plant room access, and any plans, specifications or other information held in the building’s health and safety plan.

An EPC remains valid for ten years and may need to be kept on display if your building is open to the public and has a total area in excess of 500 metres. It will include suggestions on how to improve the energy efficiency of the building, tailored to commercial property.

What do the EPC Ratings Mean?

The EPC ratings range from G, at the bottom of the scale, which indicates a poorly performing property, up to A+, which is used to indicate a building that has achieved net zero. These ratings are similar to those used for domestic EPCs, but the improvement recommendations may differ.

The Standard Assessment Procedures (SAP) apply, but where a property is large, or complicated in that it has multiple users, other requirements (and costs) may apply.
There are three levels for non-domestic buildings:

• Level 3; Existing commercial buildings, such as small shops or restaurants
  
• Level 4; More complex structures, such as large shops or office buildings, also newly built commercial property
  
• Level 5: Major commercial developments such as skyscrapers, malls and airports that will require specialist modelling software to ensure accurate EPC calculations

What is the Seven-Year Payback Test?

The seven-year payback test can be grounds for an exemption under the current system, if it can be demonstrated that any improvement, or upgrade, will take more than seven years to recoup the cost of the work.

The cost-benefit system should be consulted prior to any works, and it is rare that the cost will not be recouped in the suggested timeframe. All calculations and substantiation will have to be presented and accepted in order for an exemption to be granted.

The PRS exemptions register manages and monitors exemptions, which are usually only valid for five years, after which they will have to be renewed.

How Can I Improve my Commercial EPC Rating?

In much the same way as domestic EPCs, the commercial equivalent will summarise improvements and upgrades from the most achievable, to those requiring the biggest investment of time, money and planning.

The simplest upgrades will include swapping out lighting for energy efficient LEDs, servicing and renewing heating systems, and adding insulation to existing.

Complex upgrades such as installing a Building Management System (BMS) or adding renewables such as solar panels, or a ground source heat pump, will cost more, but can ensure a much higher rating.

Next Steps

An EPC rating is a benchmark for landlords that can tell prospective buyers or tenants what they can expect in regard to the energy usage of a property. Getting an assessment for your building is straightforward, and inexpensive.

At Wade, we can help you with the materials necessary to improve and upgrade your EPC. Whether you require retrofit insulation, or compliant materials for new builds and extensions, talk to our professional team today.

FAQs

Do All Commercial Properties Need an EPC?

Yes, almost all commercial properties in the UK will need an EPC when either sold, rented, or constructed.

Can I Sell a Commercial Property Without an EPC?

Unless there is a registered exemption, it is not legal to sell a commercial property that does not have an EPC.

I Live in Scotland. Does This Apply to My Building?

There are separate arrangements in Scotland that are quite similar to those set out for England and Wales. In the same way that there are variations in regard to Building Regulations, the different regulatory environment North of the border necessitates a slightly different approach.

What is the Minimum EPC Rating for my Commercial Property?

The minimum EPC rating for commercial properties is currently at E, though this will change over the next five years to 2030.

How Much Will my Commercial EPC Cost?

What you pay for a commercial EPC will depend on the size, complexity, and location of the property. A small shop or office building may be just a few hundred pounds, whereas a larger commercial property could set you back several thousand pounds.

Is an EPC a Legal Requirement for my Commercial Lease Renewal?

An EPC is almost always required for a commercial lease renewal unless the building qualifies for a specific exemption.

Is an EPC the Tenant’s or the Landlord’s Responsibility?

The landlord is usually the duty holder in regard to obtaining an EPC, however, they will often require support from a tenant with regard to access to areas requiring inspection or upgrade.

Any changes made by a tenant that may affect the energy performance of a building may make them liable for any costs for renewal of an EPC, or upgrade.