Last month HM Government released its Net Zero Strategy (Build Back Greener) ahead of COP26. A recent report by Savills Plc estimates that 1.4 billion square feet of retail space (83% of current stock) will need to be improved by 2030 in order to comply with proposals which are expected to become law by then.

Under the Minimum Energy Efficiency Standards (MEES), first introduced in 2018, it is unlawful (save in limited circumstances) for landlords to grant leases (or renew leases) of commercial properties with an Energy Performance Certificate (EPC) below an E. However, from April 2023 MEES will make it an offence (again subject to limited circumstances) to continue to let commercial property with an F or G EPC rating even if the lease has already been granted. The Government's Net Zero Strategy takes this even further with proposals to bring in a minimum B EPC rating for commercial properties by 2030. Whilst this is not yet law the industry is preparing for it to become binding. 

Will the High Street be able to respond? The larger institutional landlords will be considering this issue already and making decisions on the viability of their portfolios. Some commercial property is likely to be converted to residential and for others there will already be plans in place for necessary upgrades. However, for private landlords of small premises in perhaps less prestigious locations these changes are likely to prove challenging. Many leases are unclear on who should pay for for any necessary upgrades and it is likely to fall to landlords to pick up the bill with the result that some landlords may find themselves unable to grant leases of or continue to let premises.