Retrofit First is becoming the next key challenge for repositioning commercial assets in central London

11 Apr 23

Under the MEES, commercial properties will need to achieve a minimum EPC of ‘B’ by 2030, up from a minimum of EPC E from this month.


The policy context commercial property owners now need to navigate to reposition their assets is challenging and complex. One of the emerging trends for 2023 is an increasing reliance on retrofit first as a policy requirement to help meet the UK’s net zero carbon targets. This is something that the industry is supporting, with a call last week from Grosvenor, Peabody and others for the Government to support the creation of a national retrofit strategy to create the workforce needed to support the retrofit of historic buildings.

One of the key drivers for a retrofit-first approach is the upcoming Energy Performance Certificate (EPC) rating requirements, which we wrote about last year with the minimum EPC E requirement, which came into force on April 1 this year. The next challenge will be for buildings to achieve a minimum EPC ‘C’ rating by 2027, and EPC ‘B’ by 2030 before they can be let.

The UK faces a huge challenge to meet these targets, with BNP Paribas estimating that 24% or 10,000 commercial buildings within inner London commercial stock could be unlawful to let from this month onwards. They also estimate that only 23% of inner London commercial office stock is rated EPC B or higher, meaning that over 75% will need to be upgraded before 2030.

The industry has been keen to point out that given the amount of existing stock that won’t meet the standards, is it reasonable that all of the stock will be retrofitted, or will new build office stock also need to be part of the solution? This has recently been set out in a detailed report prepared by The London Property Alliance who are advocating for a retrofit first, not retrofit only approach.

Councils in London are aware of this, and the City of London has recently formally adopted their Whole Life Carbon optioneering guidance which provides a pathway for achieving demolition and rebuild schemes. The City of Westminster are also looking at implementing similar guidelines, and we would expect other central London boroughs to follow suit.

Whilst the policy landscape is challenging, we see this as a great opportunity for investors and landowners to not only upgrade the energy efficiency of their assets but to also reposition their assets to deliver high-quality office space that can stand the test of time. We’re working on several schemes that fall into this category with clients telling us that market demand is rising for highly efficient and low or net zero carbon Grade A office space.

Do get in touch if you want to discuss the implications of this on your project or portfolio.

Lewis Westhoff Director,Planning
Tim Fleming Senior Planner,Planning