Overview: What is an EPC Exemption?

An EPC exemption allows a commercial landlord to legally let a property that does not meet the minimum energy efficiency standard (currently EPC rating E) under MEES regulations, where improving the property is not feasible or appropriate.

Exemptions are not automatic and do not remove the requirement to comply — they provide a temporary, regulated exception where specific criteria are met and properly evidenced.

All exemptions must be registered on the PRS (Private Rented Sector) Exemptions Register before they can be relied upon.

When Are EPC Exemptions Relevant?

EPC exemptions are typically relevant where:

• A commercial property has an EPC rating of F or G

• Energy efficiency improvements are not viable, not permitted, or not cost-effective

• The landlord intends to continue letting the property

• MEES compliance cannot be achieved despite reasonable effort

Without a registered exemption, letting a sub-standard property may result in enforcement action and financial penalties.

7-Year Payback Exemption (Most Common)

This exemption applies where recommended EPC improvement measures do not pay for themselves within seven years through energy savings.

Key points:

• Based on EPC recommendations

• Requires cost and savings evidence

• Applies only where no qualifying measure passes the test

Typical scenarios:

• Older commercial buildings

• Low occupancy or low energy-use sites

• Buildings with limited upgrade options

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All Relevant Improvements Made

If all cost-effective EPC improvements have been carried out but the property still fails to reach EPC E, an exemption may apply.

Key points:

• Evidence of works completed is required

• EPC must be updated after improvements

• Applies where further improvements are not viable

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Third-Party Consent Exemption

This applies where required energy efficiency improvements cannot proceed due to refused consent from a third party.

Examples include:

• Tenant refusal

• Freeholder refusal

• Planning permission refusal

• Listed building constraints

Important:
Consent must be formally requested and refused, with documentary evidence.

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Property Devaluation Exemption

If improvements would reduce the market value of the property by more than 5%, an exemption may be claimed.

Evidence required:

• Independent RICS-qualified valuation

• Clear statement of devaluation risk

This exemption is less common but relevant for certain asset types.

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Temporary Exemptions

Temporary exemptions may apply in limited situations, such as:

• A landlord has recently acquired a property

• Insolvency or restructuring events

These exemptions are time-limited and require action before expiry.