What does the second half of 2025 offer the commercial real estate sector in England?

In the second half of 2025 and beyond, significant legal reforms are expected to affect the commercial real estate market, together with a swathe of consultations paving the way for longer term changes. Key areas include residential long leasehold and commonhold, renters' rights, planning system support and overhaul, and security of tenure reform.

Occupiers and investors

Reform to security of tenure framework

Following feedback to its first consultation, the Law Commission has provisionally decided to retain the existing contracting-out model of security of tenure to avoid disruption to the commercial leasehold market and to achieve the best balance of landlord and tenant interests.

 A second consultation, expected later this year, will examine potential improvements to the regime in more detail. Increasing the minimum term for tenancies to qualify for statutory protection to two years has already been proposed. Simplification of the contracting out, renewal and opposition to renewal processes will be on the wish-list for many stakeholders, and it is hoped that the opportunity will be seized to modernise the regime to allow for more flexibility in lease terms to allow updates such as green clauses and turnover rents where appropriate. However, businesses will have to wait to see what other proposals will form part of the consultation.

Sustainability and energy efficiency

The government has consulted on improving the quality of energy performance certificates (EPC), advising that changes would be implemented in the second half of 2026. The government's response is awaited, but if the implementation timetable is to be met, the sector can expect to see detail on changes to EPC methodology and the rules regarding when certificates are required shortly.

Clarity on the tightening requirements for minimum EPC ratings for commercial lettings are still awaited as part of the government's response to its consultation on minimum energy efficiency standards (MEES) for commercial premises, despite repeated calls for confirmation that the previously targeted minimum EPC C by 2027 standard will not be imposed.

Landlord insurance commissions

In light of the recent High Court case of London Trocadero (2015) LLP v Picturehouse Cinemas Ltd & Ors (2025), there may be an increase in tenant claims for repayment of unreasonable sums paid as insurance rent where landlords have entered into commission-sharing arrangements with their brokers. The case is expected to be appealed, so it remains to be seen how the issue plays out.

Enhanced security measures for public venues

Owners and occupiers of certain qualifying premises used for public events and event organisers must prepare for the extensive new security obligations under the Terrorism (Protection of Premises) Act 2025, to ensure they have compliant plans to address the risk of terrorist attack.

Duty holders are strongly encouraged to begin preparations sooner rather than later to ensure appropriate measures are in place ahead of the April 2027 deadline. The extent of duties depends on the number of people reasonably expected to be present and the nature of the premises, and the rules will have an impact on a variety of sectors.

Penalties for breach include considerable monetary fines and statutory notices which could limit a business's ability to operate.

Building safety

The sector can also expect further developments in the continually evolving area of building safety.

Building Safety Levy

Further details have finally been published, although its introduction has been delayed to autumn 2026. The confirmation of rate calculation methods will assist developers in their financial planning.

Regulator review

The government is "exploring all possible options"  to support the capacity of the Building Safety Regulator amid continued backlogs for gateway approvals. It is hoped this will reduce current construction delays and improve lender confidence in the market.

Second staircase requirements

Developers should also be aware of the new second staircase requirements for residential blocks over 18 metres tall from 30 September 2026, and will be analysing cost and design implications.

Higher risk building classification

There may be regulations amending the definition of  "higher risk building".

An update on the government's plans to review this definition is expected this summer and was driven by recommendations made in the Grenfell Phase 2 Report.  In particular, the review will seek to ensure that the risk to vulnerable people arising from buildings is effectively managed.

An acknowledgement of a need to clarify the legal criteria for determining whether a new building is considered a "higher risk building" has been included in the current government guidance. This was prompted by conflicts between the guidance and a decision of the first-tier tribunal in relation to whether a rooftop garden constitutes a storey for these purposes, although the latter has subsequently been criticised by the upper tribunal on appeal.

Remediation

The government's response to the Public Accounts Committee's report into the remediation of dangerous cladding is still awaited. It could result in changes in policy and law to accelerate the remediation process.

The June 2025 Comprehensive Spending Review extended the right to claim government funding for remediation to social housing providers and many will be looking to take advantage of this as they seek to relieve financial pressures.

Designer duty of care

The Supreme Court judgment  in URS Corporation Ltd v BDW Trading Ltd (2025) offers greater clarity on the scope of the duty of care owed by designers responsible for structural design defects. Consequently, it could prompt a rise in negligence claims brought by housing developers seeking to recover their losses incurred or anticipated for relevant remediation works.

Remediation orders and remediation contribution orders

Two significant Court of Appeal judgments (SVDP & Get Living v Triathlon Homes and Adriatic Land v Long Leaseholders at Hippersley Point) are expected to clarify key issues relating to the scope and statutory processes for obtaining these court orders.

Transparency

Contractual controls on land

Government plans to introduce a new public register of contractual controls on land appear to be moving forwards.

This would require disclosure to the Land Registry of information relating to certain land option agreements, pre-emption agreements, conditional contracts, and promotion agreements. Draft regulations are still awaited, so it is not yet confirmed whether the policy will apply retrospectively to agreements entered into from 2023, as proposed by the previous government (and strongly opposed by many in the industry).

Overseas entities

Companies House has announced that additional duties will be imposed on overseas entities to disclose information about changes in its beneficial ownership which occurred from 28 February 2022 prior to the entity registering at Companies House. Where obtaining this information is not reasonably practical (for example where the entity has changed hands), it is anticipated that a statement can be made to this effect to ensure the entity can remain compliant. This is intended to be imposed from 31 July 2025, so regulations are expected imminently, otherwise there could be a delay in implementation. 

It appears that the government still has no current plans to introduce regulations governing disposals of property by insolvency practitioners appointed on the administration or insolvency of an overseas entity.

Planning and infrastructure

The extensive Planning and Infrastructure Bill principally seeks to speed up and streamline planning processes to accelerate delivery of infrastructure and housing.

It provides for planning committee modernisation with the introduction of a national scheme of delegation, compulsory purchase reform, amendments to streamline the nationally significant infrastructure projects (NSIP) regime, support for clean energy and for the creation of Environmental Delivery Plans and the Nature Restoration Fund. A consultation on the reform of planning committees has been launched.

A series of reforms are also on the horizon to support  the "Get Britain Building" political agenda, with a particular focus on SME builders, and a suite of policy papers and consultations have been published. Proposals include streamlined planning decisions for small sites, creation of a new "medium site" category and simplified biodiversity net gain requirements for minor, medium and brownfield development. Additional funding options and targeted release of land for SME development are also being considered. A raft of measures aimed at driving up build out rates has also been proposed. These include a mandatory build out reporting framework (intended to apply from 2026) and planning and financial sanctions for slow build out.  Many have expressed concern that these add to an already extensive and growing set of  administrative and financial burdens for developers.

The introduction of the Biodiversity Net Gain regime for NSIPs is to be delayed to May 2026, and there is currently an open consultation seeking views on implementation.

Residential

Shift to commonhold

Considerable change is afoot for those operating in the residential and mixed use leasehold markets. The government's stated intention is to see long leasehold replaced with commonhold for both new and existing flats in England and Wales. Flat owners are to hold the freehold interest and collectively manage common parts through commonhold associations. 

Following the publication of the white paper in March, a consultation and a draft Leasehold and Commonhold Reform Bill are expected to follow later this year for industry input. Allaying lender concerns will be essential. The legal framework is likely to be particularly complex for mixed use buildings and plans to convert existing leaseholds to commonhold are also likely to present difficulties.

Transparency and fairness

Leasehold reform-related consultations on achieving transparency and fairness of fees payable by home owners via service charges  on valuation rates to calculate the cost of enfranchisement premiums and to address problems with current private estate management arrangements are awaited. The outcome of a consultation on the limits of what leaseholders can be charged  in respect of building insurance are also awaited, as are details on proposals to regulate ground rents in pre-July 2022 leases and to "remove the threat of forfeiture" as a means of ensuring compliance with lease obligations.

Renters' rights

Landlords in the residential rented sector will be preparing for the sweeping reforms to be introduced by the Renters' Rights Bill, which is expected to become law this autumn.

The headline changes include the abolition of no fault evictions, abolition of fixed terms for tenancies of less than seven years and limits on rent increases. Many have expressed concerns about the impact on investment into the sector.

Calls from landlord groups to address the overburdened court system before implementation look likely to be dismissed and with possession claims and rent challenges requiring court involvement under the bill, further delays may be on the horizon. 

It remains envisaged that purpose-built student accommodation will be exempted from the assured tenancy system, to ensure providers have sufficient flexibility and certainty to manage tenant turnover from one academic year to the next. This is to be subject to a requirement for providers to sign up to a government approved code of management practice.

The exemption does not feature expressly in the bill and is to be introduced through secondary legislation, so full details are yet to be released. See our Insight discussing the potential impact on the student and build-to-rent sectors.

Future Homes Standard

It is expected that the Future Homes Standard will be published this autumn and will require solar panels by default for most new homes. Developers will be hoping that, where needed, the process for agreeing exceptions or reductions to the requirement will be administratively straightforward and will not cause delay.

Affordable and social housing

The June Comprehensive Spending Review included a package of measures aimed at promoting the development of affordable homes and represents a significant uplift on previous spend.

The target of 1.5 million homes over the course of the parliament continues to look ambitious, but social housing providers have welcomed the greater certainty and access to funding.

Tax

Capital goods

As part of the government's aim to simplify the tax system, the Capital Goods Scheme is to be adjusted to increase the capital expenditure limit for land and buildings to up to £600,000 (excluding VAT), thereby increasing the level of VAT which can be reclaimed. Timings are yet to be confirmed.

Autumn Budget

Unless there is a significant uptick in economic performance, autumn may well see tax rises to fund government spending commitments.