24 March 2026
The new-build provisions of the revised Energy Performance of Buildings Directive (EPBD), including zero-emission buildings, mandatory solar, whole-life carbon disclosure, set clear targets for what gets built from 2030 onwards. But for most European real estate portfolios, the more immediate challenge sits in the existing stock.
The revised EPBD introduces a set of interlocking requirements for existing buildings: national minimum energy performance standards (MEPS) that will force renovation of the worst-performing assets and tightened rules on what happens when a building undergoes major works. For non-residential buildings undergoing renovation, mandatory solar installations are also coming.
This article sets out what the Directive requires, explains what that means in practice for assets across different classes and examines the financial evidence on how energy performance affects value. The case study of a deep retrofit of a 2005 London office illustrates how those regulatory and commercial pressures can be addressed through an investment-led approach.
Key Dates for Existing Buildings
Source: EPBD Recast (EU) 2024/1275, Articles 3, 9 and 10.
What the Directive Requires: MEPS and National Renovation Plans
Under Article 9, Member States must introduce national minimum energy performance standards for non-residential buildings by 1 January 2027. These standards must require that non-residential buildings in the worst-performing 16% of the stock are renovated to at least the applicable threshold by 2030, and 26% by 2033.[1]
For residential buildings, the Directive takes a slightly different approach. Rather than prescribing EPC-based minimum standards, it requires Member States to ensure that the average primary energy use of the residential stock falls by at least 16% by 2030 and by 20–22% by 2035. Critically, at least 55% of that reduction must come from renovating the worst-performing 43% of the residential building stock.[2] This places a clear obligation on Member States to target their policies at inefficient buildings.
Each Member State must also publish its National Building Renovation Plan by 31 December 2026. These plans, submitted as part of integrated national energy and climate plans, must set out the strategy for reaching the energy use reduction targets, identify the worst-performing segments of the stock, and include policies for deep renovation and staged improvement. The Commission will assess the plans and can issue country-specific recommendations.
A renovation passport is a building-specific roadmap that sequences the works needed to bring a building to net-zero energy performance over time. It will not be mandatory for buildings to have, however, but Member States must make passports available, and for buildings subject to major renovation the passport provides a structured basis for phased investment that avoids locking in sub-optimal solutions at each stage.
Who Is Most Exposed?
Europe’s building stock is old and, in energy terms, poorly performing. Buildings account for around 40% of total EU energy consumption and over one-third of greenhouse gas emissions, with approximately 85% of the current stock having been built before 2000. In Italy for example, 55% of residential dwellings were built more than 50 years ago, and 28% of all dwellings sit in the lowest energy efficiency class.
Research on Italian EPC data from Lombardy and Piedmont provides a useful illustration of what the stock profile looks like in practice. In Lombardy, the majority of municipalities have an average EPC in class F, while in Piedmont the most common class is F, followed by G, the two worst-performing categories. This is not an Italian outlier: across the EU, around 75% of buildings have poor energy performance and 85% are expected to still be standing in 2050.[3]
For investors and asset managers, the impacts are direct. Properties at the lower end of the EPC scale face the highest compliance risk: they will be the first subject to MEPS obligations, the hardest and most expensive to bring to standard, and the most exposed to the valuation effects that flow from regulatory pressure and tenant demand.
The Financial Case
The financial evidence on the relationship between energy performance and asset value has grown substantially over the past decade and the research shows higher-rated buildings may command a premium, and lower-rated buildings often face a discount.
Research on the Italian residential market found that properties with the highest EPC ratings command a price premium of approximately 25% over the worst-performing equivalents, though this varies significantly by region.[4] A separate Bank of Italy study estimated an average premium of around 6% per energy class improvement, offering a granular indication of the value uplift available at each step up the EPC scale.[5]
For the commercial sector, evidence from UK and European office markets points in the same direction, with green-certified buildings consistently commanding higher rents and lower yields than comparable uncertified stock. A 2024 study published in the Journal of Sustainable Real Estate, covering UK office market data from 2011 to 2021, consistently found evidence of willingness to pay for energy-efficient office space and a measurable rental discount for buildings at the bottom of the EPC scale.[6]
A University of Cambridge study published the same year, drawing on over 100,000 lease comparables, found that EPC F and G-rated office buildings saw rental declines of 6-8%, with those declines beginning to materialise ahead of MEES enforcement rather than at the point of formal legal obligation. While primarily evidenced in the UK, this pattern is important for EU markets now approaching MEPS deadlines.
Portfolio-level data from investment managers is consistent with this direction of travel. A CBRE IM internal analysis published in April 2022, covering more than 1,200 industrial, office, retail and residential assets across Europe, found that assets with low EPC ratings underperformed on a total return basis by 18.2% in the UK and 13.5% in the Netherlands, after controlling for location and building age. Dutch offices with A or A+ EPC ratings showed statistically significant outperformance relative to lower-rated equivalents.[7]
In addition to rental yields, the evidence shows impacts on costs as well. Research modelling EPBD compliance costs for residential buildings in Lombardy and Piedmont estimated a total expenditure of €118.9 billion to bring those two regions’ residential stock to at least class D, equivalent to 20.2% of the two regions’ combined GDP.[8] On a per-dwelling basis, moving from class G or F to class E was estimated at a median cost of around €82,000 in Lombardy and €85,000 in Piedmont, while the step from E to at least D carried a median cost in the €40,000-57,000 range depending on region.[9]
The annual energy savings from renovation are also material. The same study estimated that households in the two regions could save over €1,100 per year in energy bills from moving out of class G, with aggregate annual monetary savings of €3.3 billion across both regions. For commercial assets, lower operating costs reduce occupier exposure to energy price volatility and feeds through directly to net income.
Major Renovation and Triggers for Compliance
Under Article 8, when an existing building undergoes major renovation, the works must bring both the renovated elements and, where technically and economically feasible, the building as a whole to the applicable minimum energy performance standard. Member States define ‘major renovation’ either as works affecting more than 25% of the building envelope surface, or as works whose value exceeds 25% of the building’s value.
This trigger matters for investment decisions. A refurbishment that crosses the major renovation threshold does not simply require the upgraded elements to meet current standards, it can require the whole building to meet energy performance requirements.
Solar PV requirements also apply when a non-residential building undergoes major renovation or a significant renovation of the roof. Member States must ensure that suitable solar installations are deployed in those circumstances, where technically and economically feasible. For any commercial asset where a major refurbishment is planned, solar readiness and active solar deployment should be integrated from the outset.
What Asset Managers Should Do Now
The first EPBD-related deadlines affecting existing buildings come into force from 2027. But the investment decisions that will determine whether a portfolio is well-positioned or exposed are being made today.
Map your EPC distribution and identify stranded asset risk. EPC data is the starting point. Understanding the distribution across a portfolio and identifying the assets that fall within the worst-performing bands in each national market enables an early understanding of highest risk assets. Assets in the bottom EPC quintile face the most immediate MEPS exposure and the greatest risk of a brown discount being applied to valuations and lease terms.
Reflect EPBD risk in due diligence. Energy performance and retrofit cost should be standard items in acquisition underwriting. The gap between a building’s current performance and the applicable MEPS threshold, as well as the capital cost of closing that gap, needs to be modelled.
Build a phased renovation roadmap. Energy performance requirements for new renovations will require sequencing across multiple workstreams. Renewable energy procurement, grid connection and EV charging infrastructure each have their own lead time and cost implications. Addressing them in isolation, or deferring decisions to later stages, may lock in cost premiums that are avoidable.
Build country-specific renovation roadmaps. MEPS thresholds, energy performance metrics, and renewable energy requirements will be set at national level. A portfolio spanning multiple European markets cannot be managed against a single standard. Country-by-country tracking of transposition progress will be essential for accurate forward planning.
National Transposition Tracking
The EPBD’s existing building provisions will be implemented through national transposition, and the pace and detail of that process varies across Member States. Where transposition is delayed, investors face uncertainty about the exact thresholds and timelines that will apply in each market.
Finland: 3 draft decrees published for public consultation.
France: The DADUE Bill, which includes provisions on energy performance, remains under consideration in Parliament. The BACS obligation for buildings > 70 kW has been postponed from 2027 to 2030.
Germany: Building Modernisation Act: introduces A-G EPC scale which is to be introduced by end of 2029
Italy: There is currently no publicly available information indicating progress on the transposition of the EPBD.
Netherlands: The Dutch government has confirmed that provisions relating to Zero-Emission Buildings (ZEB), renovation passports, and Energy Performance Certificate (EPC) requirements are currently being drafted. Political uncertainty may delay formal transposition. (Source)
Spain: Public consultations on transposition into national law have commenced; however, no draft regulations have been published to date.
Transposition status as reported or publicly available as of March 2026.
Additional Regulatory Updates
United Kingdom: The Future Homes Standard was published 24 March, 2026 and due to come into force 24 March 2027. The standard will require all new residential buildings to be low carbon, meet energy performance standards and install solar panels.
Sources
[1] Regulation (EU) 2024/1275 of the European Parliament and of the Council of 24 April 2024 on the energy performance of buildings (recast), Article 9. OJ L 1275. https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=OJ:L_202401275
[2] Ibid., Article 3(2).
[3] Loberto, M., Mistretta, A. & Spuri, M. (2023). ‘The capitalization of energy labels into house prices: Evidence from Italy.’ Bank of Italy Occasional Papers No. 818.
[4] Forni, L., Fortuna, F., Giarda, E., Giovanardi, F. & Panarello, D. (2025). ‘The “Green buildings” directive: A quantification of its costs and benefits in two Italian regions.’ Journal of Housing Economics 68, 102057. https://doi.org/10.1016/j.jhe.2025.102057
[5] Loberto, M., Mistretta, A. & Spuri, M. (2023). ‘The capitalization of energy labels into house prices: Evidence from Italy.’ Bank of Italy Occasional Papers No. 818.
[6] Ke, Q. & White, M. (2024). ‘Does Energy Performance Rating Affect Office Rents? A Study of the UK Office Market.’ Journal of Sustainable Real Estate, 16(1). https://doi.org/10.1080/19498276.2024.2356715
[7] https://www.cbreim.com/sustainability/the-economic-case-for-sustainability
[8] Forni, L., Fortuna, F., Giarda, E., Giovanardi, F. & Panarello, D. (2025). ‘The “Green buildings” directive: A quantification of its costs and benefits in two Italian regions.’ Journal of Housing Economics 68, 102057. https://doi.org/10.1016/j.jhe.2025.102057
[9] Ibid
