Reprieve for office developers as government delays energy efficiency targets

Office developers have been handed a reprieve after the government pushed back a requirement for commercial buildings to achieve a minimum energy efficiency rating of EPC B by one year and scrapped an interim target due to come into force next year.

Non-domestic private rented buildings over 1,000sq m will now need to reach EPC B from 2031 instead of 2030 as originally proposed, while an interim target to reach EPC by 2027 has been dropped.

The decision comes in the Department of Energy Security and Net Zero’s (DESNZ) interim response to a consultation on the targets which closed more than five years ago.

The department said it was scrapping the interim target to give landlords and tenants more time to improve the energy efficiency of their buildings “in a way that suits their buildings and lease agreements”.

Existing flexibility mechanisms, including the seven-year payback test and exemptions, will remain in place ensuring that only improvements that are “practical, affordable and cost-effective will be required”, it added.

Secondary legislation will need to be passed through Parliament before the changes can take place.

Andrew Lloyd, managing director of property tech firm Search Acumen, said the delay will “bring a sigh of relief to some in the commercial property sector”.

“The deadline set has been widely criticised as unrealistic. It has already been impacting smaller landlords, who are being edged out, while larger portfolio players and institutional investors who can spread risk and build compliant stock from day one have stepped in,” he added.

However, research carried out by Search Acumen found it could take the sector until at least 2040 to meet the proposed 2030 target at the current rate of building upgrades.

The analysis found that the rate of compliance to the EPC B rating in commercial properties was slowing down, from 26% to 20% year-on-year, amid cooler economic conditions and uncertainty.