Multi-Let Commercial Buildings: Solar for Commercial Property

Multi-let commercial property is where the split incentive bites hardest. The landlord owns the roof but consumes almost none of the power; each tenant pays their own electricity bill and has no claim on the asset. Put solar on the roof the naive way and you fund the installation while the tenants take the savings — and you cannot even recover the capital through the service charge. The structure is solvable, but only if you sequence it correctly: start with the load the landlord already controls, then layer tenant supply on top through metered private-wire arrangements. That ordering is the whole game on a multi-let, and it is what most installers get wrong.

Why multi-let is the hardest ownership structure to solarise

On an owner-occupied building, one party owns the roof, pays the electricity and keeps the savings — the economics are clean. A multi-let breaks that into pieces. The freeholder or head-leaseholder owns the building fabric and the roof. Each tenant holds a lease over their demise, buys electricity direct from a supplier, and pays a service charge for the upkeep of shared areas. Solar generation sits on the roof, but the roof is rarely “demised” to any single tenant — it is retained landlord space.

That creates three problems at once. First, the value of self-consumed solar accrues to whoever is buying the electricity it displaces — and on a multi-let that is mostly the tenants, not you. Second, RICS rules block you from simply adding the cost to the service charge. Third, putting panels and cabling across a roof that sits above let space usually needs the cooperation of the tenants below, through the alterations and access provisions of their leases.

The way through is to match the energy to a meter you already own. We solve this in a deliberate order, set out in full in our guide to solving the split incentive:

1. Common-parts and landlord-controlled supply first. Most multi-let buildings have a landlord supply feeding lifts, stairwell and external lighting, communal HVAC, pumps, car-park lighting and any EV chargers. The landlord pays for that power and the landlord consumes it, so there is no split incentive at all on this load. Sizing the first tranche of solar to the daytime common-parts demand gives you electricity you own, displacing grid power at roughly 24–28p/kWh, with no tenant negotiation required. Our common-parts landlord supply guide covers the metering and design detail.
2. Tenant PPAs behind the meter. Once common-parts load is covered, surplus generation can be sold to the tenants below through a behind-the-meter or private-wire power purchase agreement, priced below their grid tariff. The tenant saves; you earn a margin on power you generated; the asset stays yours. This needs MID-approved (Measuring Instruments Directive) sub-metering at each tenant connection so consumption is billed accurately and defensibly.
3. Apportionment for any shared export or shared benefit. Where generation is metered communally and shared, a transparent apportionment basis — usually floor area or a metered allocation — keeps the arrangement fair and auditable across the let.

This sequencing means a multi-let solar scheme can start earning the moment it is energised, on landlord load alone, without waiting for every tenant to sign up.

How one weak EPC on one let can strand the whole building

MEES applies at the unit level, but the exposure is building-wide. Since 1 April 2023 it has been unlawful to continue letting any commercial unit in England and Wales with an EPC below E — that catches sitting tenants, not just new lettings (gov.uk MEES guidance). On a multi-let, every separately assessed demise has its own EPC. A single sub-E unit means that part of the building cannot lawfully be let, and a vacating tenant in that unit leaves you with space you cannot re-let until it is improved.

The penalty regime makes this concrete. A breach of under three months can cost up to 10% of rateable value, capped at £50,000; three months or more, up to 20%, capped at £150,000 — plus publication on a public breach register. On a multi-let with several assessments, the heads of exposure multiply.

Looking ahead, the Government’s interim response of 18 June 2026 confirmed a proposed EPC B target by 2031 for privately rented non-domestic buildings over 1,000 m², only where cost-effective and subject to secondary legislation. This is a proposal, not law, and it is England and Wales only. The earlier “EPC C by 2027” idea was scrapped, and “EPC B by 2030” was never law — be wary of any adviser still quoting those. Solar typically lifts a commercial EPC by one to three bands depending on the building, though we never promise a specific jump. Across a multi-let, a single landlord rooftop array can feed the energy calculation for multiple units’ assessments, which is why the EPC case for solar is strongest precisely where the lettings are most fragmented. Our MEES and EPC guide sets out the rules in full.

The service-charge truth — and how you actually recover the cost

This is the point most owners get wrong. Under the RICS Service Charges in Commercial Property professional statement, 2nd edition (in force 31 December 2025), the initial capital cost of new plant — including a solar installation — is not recoverable through the service charge. The service charge funds the day-to-day running and maintenance of the building; it is not a mechanism for funding the landlord’s capital improvements.

So how do you get paid back? Three routes, none of which rely on the service charge:

• A landlord-to-tenant PPA, selling the generated power to tenants below their grid price. This is the cleanest recovery on a multi-let — the income tracks consumption and needs no lease renegotiation beyond the supply arrangement itself.
• A capped green-lease contribution, where the lease is varied or drafted so that the tenant contributes towards the solar — but only up to the value of the tenant’s own energy saving, so the tenant is never out of pocket. The British Property Federation and Better Buildings Partnership Green Lease Toolkit provides the standard drafting. We cover the mechanics in our green leases and solar guide.
• Rent, where the EPC uplift and resilience the solar provides supports the rental tone at review or on re-letting.

The maintenance and ongoing operation of the system — once installed — can sit in the service charge in the ordinary way; it is only the upfront capital that cannot.

Void periods — the benefit owners overlook

Solar on the common parts keeps working when units are empty. During a void, the landlord still pays for lift power, lighting, security and HVAC in shared areas, and solar directly cuts those holding costs at exactly the moment the building is producing no rent. More importantly, the improved EPC and the demonstrable energy story make a vacant unit easier and faster to re-let — and on the proposed 2031 regime, an unimproved unit may simply be unlettable. Solar bought to lift the common-parts EPC is therefore a re-letting tool as much as an energy one.

Typical sizing, cost and payback (100–500 kW)

Multi-let commercial buildings — multi-tenant office blocks, trade parks, parades with offices above, mixed industrial estates — usually carry roofs that suit a 100–500 kW array, generating roughly 95,000–460,000 kWh a year at a UK yield around 950 kWh/kWp.

Commercial solar installation carries 0% VAT (since April 2022). Payback typically lands in the 5–7 year range on a multi-let, with self-consumption the single biggest lever — the more of the generation that displaces grid power at 24–28p rather than being exported at a Smart Export Guarantee rate of roughly 12–16p, the faster the return. A landlord whose common parts and tenants together absorb most of the daytime output sits at the strong end. Capital allowances help too: solar is a special-rate (integral features) asset, and the 100% first-year deduction comes from the Annual Investment Allowance (£1m, permanent) — note that assets bought specifically to lease do not qualify, so a roof-lease structure relies on AIA plus the 6% writing-down allowance instead. See our cost page for the full breakdown.

A realistic worked example (illustrative)

The figures below are illustrative, to show how the structure works — not a quote.

Consider a three-storey multi-let office and trade building, around 2,400 m², with five tenants and a landlord common-parts supply running lifts, communal lighting and a shared air-source system. The roof suits a 250 kW array.

• Installed cost: £185,000 ex VAT.
• Generation: ~237,000 kWh a year.
• Tranche 1 — common parts: the landlord supply consumes about 70,000 kWh of daytime power. Solar displaces this at ~26p/kWh, saving roughly £18,200 a year with no tenant involvement.
• Tranche 2 — tenant PPA: three of the five tenants take a behind-the-meter PPA at 22p/kWh (below their ~28p grid rate), absorbing a further ~120,000 kWh. At a ~6p margin that is roughly £7,200 a year of PPA income to the landlord, while those tenants save too.
• Tranche 3 — export: the remaining ~47,000 kWh exports at a SEG rate around 13p, about £6,100 a year.

Combined landlord benefit is on the order of £31,500 a year, putting simple payback near six years — before accounting for the AIA tax relief, the rooftop business-rates exemption (100% in England to 31 March 2035), the avoided MEES exposure, and the easier re-letting of any unit that falls vacant. Each input would be confirmed by metered load data, a structural roof-loading survey to BS EN 1991, and a G99 DNO connection assessment, which above ~50 kW is now the real delivery bottleneck.

Common questions

Can I put the cost of solar in the service charge?

No. Under the RICS Service Charges in Commercial Property professional statement, 2nd edition (in force 31 December 2025), the initial capital cost of new plant such as a solar array is not recoverable through the service charge. You recover it instead through a landlord-to-tenant PPA, a capped green-lease contribution (limited to the tenant’s own saving), or rent. The ongoing maintenance of the system, once installed, can sit in the service charge in the normal way — it is only the upfront capital that is excluded.

Do I need every tenant to agree before I can install solar?

No — that is the advantage of sequencing the scheme. Solar sized to the landlord common-parts supply (lifts, communal lighting, shared HVAC, car park, EV chargers) needs no tenant sign-up at all, because the landlord both pays for and consumes that power. You can energise and start earning on that load alone. Tenant PPAs are then added on top, tenant by tenant, as each agrees — so the project is never gated by getting unanimous consent up front. Roof works above let space do still need cooperation under the tenants’ alterations and access provisions, which we handle as part of the design.

How does solar on a multi-let help with MEES?

MEES applies unit by unit, so any single demise below EPC E is currently unlettable under the law that has applied since 1 April 2023 — and a proposed EPC B target by 2031 would raise the bar for privately rented non-domestic buildings over 1,000 m² (England and Wales only, subject to legislation). A landlord rooftop array can feed the energy calculation behind several units’ EPC assessments at once, typically lifting a commercial EPC by one to three bands, though the exact uplift is building-specific and we never promise a fixed jump. On a fragmented let, that single intervention protects the lettability of multiple units. See our MEES and EPC guide, and request a quote when you want the array modelled against your actual roof and tenant load.