EPBD Makes Low-Performing Buildings a Portfolio Priority

The revised Energy Performance of Buildings Directive (EPBD) is often discussed as another broad regulatory step in Europe’s push to decarbonise the built environment. But for investors and building owners, one part of the directive stands out more than most: its focus on the worst-performing parts of the existing building stock.

This matters because this is not only a long-term policy signal, but also the start of a more direct intervention in building performance. Under the revised framework, Member States must put in place National Building Renovation Plans, and for non-residential buildings they must introduce Minimum Energy Performance Standards (MEPS) designed to improve the worst-performing stock over time. In practice, that makes weak-performing assets a strategic portfolio issue, not just a technical one.

While MEPS will drive near-term pressure on the worst-performing buildings, the EPBD recast also introduces broader structural changes. These include the transition to zero-emission buildings as the new standard for new developments, the gradual phase-out of fossil fuel heating systems, stronger and more harmonized EPC frameworks, and new tools such as renovation passports.

Together, these measures extend the impact of the directive beyond underperforming buildings, influencing development strategies, capital planning and technology choices across the entire portfolio.

From Long-Term Ambition to Near-Term Pressure

One reason the revised EPBD feels more consequential than earlier policy iterations is that it links long-term decarbonisation goals to nearer-term delivery mechanisms. The Directive entered into force in May 2024. By May 2026, EU countries need to transpose it into national law, and by the end of 2026 they are due to submit their national building renovation plans. Those plans are expected to set out roadmaps, policy measures, financing needs and milestones for 2030, 2040 and 2050.

For investors, that creates an important shift. As explained in EVORA’s latest white paper “The Delivery Gap“, this regulatory framework shapes compliance risk and transaction pricing across EU portfolios.

The question is no longer whether national approaches will emerge, but how quickly they will begin to affect the buildings most exposed to underperformance. Even where the exact national thresholds are still being shaped, the direction of travel is already clear. Waiting for every detail before acting risks leaving owners with too little time to prioritise, budget and execute.

Why the Worst-Performing Buildings Matter First

The Directive’s approach to non-residential buildings is especially important because it is explicitly aimed at the bottom end of the market. Member States must establish MEPS for non-residential buildings, with at least 16% of the worst-performing stock to be renovated by 2030 and 26% by 2033.

The directive also makes it clear that buildings must be upgraded to meet defined minimum performance thresholds, rather than relying on incremental or marginal improvements.

That changes the nature of the problem. A poorly performing building is no longer just a building with higher energy costs or weaker sustainability credentials. It may become an asset that demands earlier capital expenditure, tighter planning and more active decision-making around hold periods, refurbishment timing and leasing strategy. In other words, performance gaps start to look more like portfolio management issues than isolated engineering issues.

A Directive Framework with National Variation

There is still flexibility in how this will be implemented. Member States can define exact thresholds and pathways, and certain exemptions may apply, including for some historic or technically constrained buildings. National renovation plans will also sit within broader national energy and climate planning, which means investors operating across markets should expect variation rather than a single uniform model.

But that flexibility should not be mistaken for softness. The policy intent is explicit: to progressively improve the worst-performing stock and support the transition to a highly energy-efficient, zero-emission building stock by 2050. For investors, the practical implication is that portfolio visibility becomes more valuable. Owners need to know which buildings are most exposed, what level of intervention may be required, and where national implementation could accelerate pressure. The sooner that picture is clear, the more room there is to make deliberate choices rather than reactive ones.

How EVORA Can Help

The EPBD recast makes one thing clear: low-performing buildings can no longer sit unnoticed within portfolios. They are likely to be among the first assets exposed to regulatory pressure, rising capex requirements and potential value impacts.

EVORA helps investors move from uncertainty to action. We assess portfolio exposure, identify the buildings most likely to be affected by MEPS and national implementation pathways, and develop practical decarbonisation strategies that align regulatory risk with investment priorities.

Now is the time to understand where your portfolio is exposed and what action is required. EVORA can help you prioritise your highest-risk assets, plan interventions with confidence, and turn EPBD compliance into a more resilient portfolio strategy.