Environmental legislation update: The impact for lenders

The government has confirmed that all non-domestic rented buildings will need to meet EPC Band B by 2030.

The Energy Efficiency Regulations initially set a Minimum Energy Efficiency Standard (MEES) of EPC Band E for private rented properties, which has applied to all new tenancies (including renewals) since April 2018. From 1 April 2023 this will apply to all privately rented properties irrespective of whether there is a change to tenancy.

The Government has consulted on proposals to uplift existing MEES regulations, in order to set a new long-term regulatory target of EPC Band B by 2030 (or the highest EPC band a cost-effective package of measures could reach). There has been widespread support in favour of this change and following the release of a new Energy White Paper, the government has confirmed that this tighter long-term regulatory requirement will be put in place.

These changes could have a significant impact on investor requirements to improve carbon performance to meet new regulatory requirements.

We recently ran a webinar for our banking clients to discuss the impact on valuations, retrofit actions and what lenders will need to consider in readiness for new legislative changes. A recording of this session is available below.