Don’t let Energy Performance become a Sticking Point
11 November 2026
By Daniel Moles, Associate and Chartered Building Surveyor
Landlords risk disputes with tenants if they wait until a tenant’s departure to check the building’s Energy Performance Certificate (EPC) rating.
If improvement works are needed at the same time as repairs or refurbishment, it can quickly become unclear who is responsible for what and which costs can fairly be recovered.
We have identified a growing risk of energy efficiency improvements becoming caught up in dilapidations discussions, particularly where a building has been altered during the tenancy or where works are needed before it can be re-let. Addressing these issues early reduces the risk of complex disputes over liability.
Why Energy Performance is becoming an issue
Minimum Energy Efficiency Standards (MEES) set the minimum EPC rating that a building must achieve before it can be let to a new tenant. For most commercial rented buildings, the current minimum is an EPC rating of band E, but the Government is proposing to raise this to band B from 2031 for buildings over 1,000 sq m. Hence planning ahead is essential.
In central London alone, an estimated 12,000 offices require upgrades to meet this new EPC standard.
The direction of travel is clear. Buildings with poor EPC ratings are becoming less attractive to occupiers and investors. Research by Knight Frank found London offices with EPC ratings of C or below were being marketed at rental discounts approaching 40% compared with higher-rated buildings.
The scale of the challenge also remains significant. Analysis published by the British Property Federation found four in five commercial buildings in major English cities are still below EPC B.
- Inspect buildings to identify potential improvements
- Help clients understand who is responsible for any necessary works
- Assess whether any exemptions apply
- Coordinate solicitors, contractors and EPC assessors
- Plan the best time for any improvements
- Tender and administer the works contract
- The condition, type and control of heating and cooling systems
- Lighting
- Insulation
- Glazing
- Tenant alterations
- Planned refurbishment works
Looking at those issues together gives landlords a clearer picture of what action may be needed, what is proportionate and when work should be carried out.
Where disputes can arise with energy efficiency works
At lease expiry, landlords (more usually their surveyors) often prepare a schedule of dilapidations outlining the repairs, reinstatement and redecoration works for which they consider the tenant responsible.
Where a building has a poor EPC rating, this can become more complicated. Landlords may also need to carry out energy efficiency improvements before the property can be re-let.
The key question is whether the works relate to the tenant’s lease obligations, or whether they are landlord upgrades to improve the building for future use.
A landlord may seek to recover costs through a dilapidations claim, while a tenant may argue some works are improvements, statutory upgrades and may be considered betterment so typically not recoverable under most leases.
Without early advice, MEES can become another source of tension when both parties are trying to settle their position.
How DCP helps clients manage the risk
Daniel Connal Partnership helps clients consider MEES alongside the property’s current condition, lease obligations and commercial strategy.
Our advice can include reviewing existing EPC ratings and reports, inspecting premises, identifying likely improvement measures and advising on how those works interact with repair obligations, tenant alterations, landlord works and lease-end strategy.
This early planning can make a significant commercial difference. It gives clients time to identify risks, budget properly – and avoid rushed decisions when a letting is ending or being renewed, or if the landlord is looking to dispose of their asset.
We also support discussions with solicitors, managing agents, EPC assessors, contractors and other professional advisers, so the technical, legal and commercial issues are properly aligned.
This is particularly important where exemptions or limitations may need to be considered, including issues around cost-effectiveness, third-party consent or potential impact on value.
Under the seven-year payback test, landlords may qualify for an exemption where the cost of recommended energy efficiency improvements exceeds the energy cost savings expected over seven years. However, they must provide supporting evidence and formally register the exemption rather than simply decide the work is too expensive.
What commercial landlords need to consider
Energy performance can influence marketability, rental value, investment decisions, funding, insurance, service charge strategy, lease negotiations and dilapidations.
Landlords therefore need to go beyond legal compliance and consider what an EPC rating means for the property, lease obligations, future plans and exposure to dispute.
Daniel Connal Partnership can help landlords address these issues early, reduce risk, protect income and keep their assets compliant, marketable and fit for future occupation.
For more information about how we can help you manage MEES compliance, energy improvement works and related dilapidations risks, please contact Daniel Connal Partnership.
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