The first half of 2026 has introduced a wave of legislative updates impacting commercial property. Relying on standard lease precedents from even a year ago now exposes landlords to new statutory risks and leaves tenants missing out on negotiating leverage.
For property investors, developers, and business owners, here are the five practical developments you need to account for in your current negotiations.
1. Mixed-Use Assets and Vacant Possession
If you own high-street retail units with residential flats above, the regulatory framework changed on 1 May 2026. The implementation of the Renters’ Rights Act abolished the Section 21 eviction process, converting existing Assured Shorthold Tenancies (ASTs) into periodic tenancies.
Commercially, this means securing vacant possession of a whole building for sale or redevelopment is now a far more protracted legal process. Landlords must audit the occupancy of their upper floors immediately, as standard commercial timelines for redevelopment will no longer align with the new residential eviction rules.
2. Leverage against Upwards-Only Rent Reviews
The English Devolution and Community Empowerment Bill is progressing through Parliament with a proposal to ban upwards-only rent reviews in new commercial leases.
While the ban is not yet active law, it is already dictating market behaviour. We are seeing tenants actively use the impending legislation at the heads of terms stage to push for index-linked reviews or shorter lease terms. Landlords looking to protect their yields need to adapt their drafting now, looking toward strict stepped-rent agreements rather than relying on traditional upwards-only clauses.
3. The 1954 Act Review and Short-Term Leases
The Law Commission’s ongoing review of the Landlord and Tenant Act 1954 is targeting the six-month threshold for security of tenure. Proposals suggest extending this threshold to up to two years.
If enacted, businesses occupying premises on short-term or pop-up leases (under two years) would lose automatic statutory protection. For landlords, this would eliminate the administrative burden of formally “contracting out” short-term occupants. Both parties should factor this potential shift into their strategy when negotiating leases with terms of under three years.
4. The April 2026 Business Rates Reality
The April revaluation took effect with a restructured multiplier system and the removal of the pandemic-era 40% relief for retail, hospitality, and leisure (RHL) properties.
While smaller RHL premises benefit from a lower multiplier, larger commercial sites are absorbing higher holding costs. Landlords must accurately forecast the liability of empty property rates during void periods, while incoming tenants must ensure their initial cash flow projections reflect the new un-relieved rates.
5. Deadlines and Service Charge Disputes
The government mandate requiring commercial properties to achieve a minimum EPC rating of ‘C’ by 2030 is currently the main friction point in Full Repairing and Insuring (FRI) lease negotiations.
The legal dispute centers on capital expenditure. Modern leases must explicitly dictate who pays for energy upgrades (such as new HVAC systems or insulation). Landlords are pushing for rights of entry to conduct the works and attempting to recover costs through the service charge. Tenants must ensure that landlord-led capital improvements for EPC compliance are strictly carved out of their financial liabilities.
Update Your Lease Agreements
Commercial property transactions require drafting that reflects current statutory realities, not outdated templates. Whether you are managing a mixed-use portfolio, renegotiating rent reviews, or drafting a new commercial lease, the NLS UK team can ensure your legal and financial liabilities are tightly controlled.
Contact NLS Law today to review your commercial property agreements.