Decarbonisation is often a polarising topic. There are many reasons why some decarbonisation policies do not work or why the effect of them is not obvious from a data perspective (e.g. worldwide fossil demand and use is increasing, when many people expect to see the opposite; there are other factors at play such as rapid growth in population, industry, and urbanisation in developing countries). This leads to scepticism as to the impact of policies, especially when they have upfront cost implications for a longer-term gain. When the economy is unstable and cost sensitivity is high, clean energy initiatives tend to fall down the list of priorities. Nevertheless, we are undergoing a rapid transition, and the UK has numerous policies in play that impact on investors of UK real estate. As the UK continues its journey to net zero, legal and regulatory developments are reshaping how property is developed, managed, and financed. Our Commercial Property partner Vijay Patel highlights the key drivers currently impacting real estate.
- Energy performance and building regulation reform
There is an ongoing overhaul of the Energy Performance of Buildings (EPB) regime in England and Wales. In late 2024, the UK Government launched a consultation proposing wide-ranging changes to how Energy Performance Certificates (EPCs) are calculated and applied for both domestic and non-domestic buildings. Proposed reforms include updating EPC metrics, refining minimum energy efficiency standards (MEES), improving data quality, and strengthening quality controls, with potential future requirements for higher EPC ratings for rented property.
For commercial property, there has been industry discussion around raising the MEES minimum standard to an EPC “C” by 2027 and possibly “B” by 2030, a change that would bring many buildings into scope for upgrades (i.e. it would not be legal to let such properties unless compliant).
There is also a plan to increase enforcement, through greater monitoring and also reducing the validity period of an EPC.
Consequently, retrofitting is a dominant theme in managing existing properties to improve energy efficiency. Owners need to consider how best to approach funding of such capital improvements. The benefit of green lease provisions (noted below), tax allowances, and potentially preferential funding options should be considered. Compliance failures risk fines and could have an impact on valuation at financing or exit.
- Green leases
In the private sector, green leases are becoming prevalent. A green lease contains additional provisions that allocate responsibilities for energy performance improvements, sustainability practices, and data sharing. Although not yet legally required, these clauses help landlords and occupiers share risks and incentives related to energy efficiency, renewable integration, and ESG reporting.
From an owner perspective, such provisions can be helpful in providing a clearer pathway to pass on cost to occupiers. Occupiers need to consider the cost consequences of agreeing to such provisions weighed against the positive implications for ESG reporting, as well as reduced longer-term energy costs. These provisions are likely to be looked at more closely as part of due diligence and negotiations.
- Roof-top solar, heat pumps, EV, and permitted development
Policy changes, such as proposals under the evolving Future Homes Standard, are expected to require features like rooftop solar panels on most new homes, boosting clean energy generation directly from property assets. The Solar Roadmap sets further targets for wider rooftop deployment in commercial buildings and other built structures.
Although not yet statute, there has also been political and administrative momentum toward simplifying the installation of technologies like heat pumps, with financial incentives being considered and removing planning red tape that previously hindered uptake, similar to permitted development rights.
Permitted development rights have certainly assisted the rapid installation of EV charge points on many sites, with many occupiers/users expecting EV infrastructure to be available for use.
There is growing regulatory encouragement to facilitate buildings becoming “energy assets”, which can create additional revenue for an investor, as well as ensure greater stability on energy costs to make the asset more attractive to occupiers. Investors may need guidance with heat networks, district heating arrangements, and power purchase agreements, integrated to existing occupier agreements.
- Planning reform and renewable deployment
The UK’s planning system is undergoing reform to support the deployment of clean energy infrastructure, including onshore wind, solar, and energy storage. The Planning and Infrastructure Bill introduced in 2025 seeks to streamline approvals for renewable energy projects and adjust thresholds for Nationally Significant Infrastructure Projects (NSIPs), which determine whether projects are decided by central government or local authorities.
Related planning law mechanisms such as the Planning and Energy Act 2008 continue to empower local planning authorities to require aspects of energy efficiency and renewable contributions in new developments, although such local policies must align with national planning policy.
An increasing number of large-scale renewable energy projects will likely come forward to the next stages beyond planning. Projects that incorporate on‑site renewables or storage are viewed as increasingly viable amid the anticipated regulatory acceleration.
- Special legislation
In 2025, Parliament enacted the Great British Energy Act 2025, creating Great British Energy (GBE), a publicly owned entity tasked with accelerating clean energy infrastructure deployment and delivering value through partnership with private investors and local authorities. This law provides statutory authority for GBE to invest in and operate renewable energy assets, reinforcing government commitment to building clean power capacity.
Whilst developers of clean energy will be keen to utilise this source of government funding to drive large-scale projects forward, other real estate investors are positioning to capture value in regions benefiting from clean‑energy industrialisation, such as coastal areas, innovation hubs, and grid‑upgrade corridors. There are a wide range of co-location opportunities that suit different industries.
Legal developments in UK clean energy and real estate law are not peripheral; they are real and core to preserving and growing value. With regulation tightening and expectations shifting toward net-zero performance, investors who integrate energy strategy into investment decision-making will drive returns and meet future tenant demands in an evolving market.
If you have questions or concerns about your commercial property and clean energy, please contact Vijay Patel.