What does the second half of 2026 have in store for the commercial real estate sector in England?

From sweeping residential renters' reform to banning upwards only rent reviews in commercial leases, ongoing uncertainty around energy efficiency standards, new transparency requirements for developers, evolving building safety rules and planning modernisation, the second half of 2026 looks likely to offer a substantial and varied agenda for the English real estate market. Against a backdrop of geopolitical turbulence, this wave of legal change across multiple fronts is creating a complex and fast‑moving landscape for occupiers, investors, developers and lenders.

Commercial leases and occupiers 

Ban on upwards only rent reviews becomes law

The ban on upwards only rent reviews in commercial leases in England and Wales (where the reviewed rent cannot be pre-determined) has now been enacted through the English Devolution and Community Empowerment Act 2026. However, implementation timing is yet to be confirmed, save that certain renewal leases granted pursuant to "lease renewal arrangements" (essentially renewal options and agreements) entered into from 17 March 2026 will be caught.

A consultation on caps and collars is anticipated. It is hoped that official confirmation will follow on how reviewed rent will be calculated where more than one reference method applies (for example, the higher of market rent or indexation). Landlords should review existing portfolios and monitor market responses, as there may be a shift towards alternative rent and leasing structures prompted by the ban.

Security of tenure and consultations on landlord and tenant law reform

The Law Commission is reviewing key landlord and tenant legislation, with the aim of modernising existing frameworks and addressing unintended consequences of the original Acts.

A second consultation on reforms to the security of tenure regime under Part II of the Landlord and Tenant Act 1954 is under way. The contracting out model is to be retained, but its operation is to be overhauled, with the current notice and declaration procedure potentially replaced by prescribed wording built directly into the lease. Proposals also include raising the minimum term to qualify for protection, excluding periodic tenancies granted to new tenants, and reforming possession grounds F (redevelopment) and G (landlord occupation), as well as the rules relating to renewal terms, rent and compensation. A new procedure for agreements to surrender is also under consideration.

While reform remains a medium-term prospect, recent case law has provided useful clarity in respect of the current regime. The Court of Appeal has confirmed that a tenant's option to renew a business lease is not an "agreement for the grant of a future tenancy" under section 28. Contractual options to renew will not remove a tenant's ability to pursue a statutory renewal unless and until exercised. The High Court has also clarified that landlords who seek to rely on the redevelopment ground to oppose a statutory renewal have only limited flexibility in meeting the timing requirement to commence works on termination of the tenancy. In that case, the landlord planned to submit a contentious planning application several months after the hearing, leaving a substantial gap before works could start. Landlords and developers should factor this into their project timetables and planning strategies.

The anti-avoidance provisions of the Landlord and Tenant (Covenants) Act 1995 are also under review. The Law Commission is consulting on proposals to address the difficulties these rules currently pose for intra-group assignments and group guarantors, and for partnerships, with a view to enabling and simplifying what ought to be straightforward commercial transactions. As part of the same consultation, the Commission is also undertaking a targeted review of the right of first refusal under the Landlord and Tenant Act 1987, to address legal uncertainties for commercial lettings in mixed-use premises. It provisionally proposes to exclude the grant of leases of exclusively non-residential parts of mixed-use buildings from triggering the right. However, shared areas that are used by residential tenants would remain protected. The proposals should therefore reduce the need for complex ownership structures in mixed-use developments that are often used to manage this risk.

A review of the law governing the maintenance, repair and upgrading of leased commercial buildings will also be undertaken, including an examination of the rules relating to dilapidations, service charges and environmental sustainability of buildings. Timings for the project are yet to be confirmed, although current indications are that the reviews of legislation relating to security of tenure and business tenancies will proceed first.

Commercial MEES

The government's response to the 2021 consultation on commercial minimum energy efficiency standards (MEES) is expected imminently. The previously proposed deadline for achieving a minimum C rating by 2027 is widely expected to be pushed back, but the revised timetable remains unclear.

The ongoing uncertainty has been widely criticised for undermining decarbonisation efforts and deterring investment, with the risk that significant volumes of commercial space become stranded assets. Investors and landlords should consider early action on upgrades, securing consents and commissioning assessments ahead of a potential surge in demand once deadlines are set.

Business rates

Changes to multipliers, rateable values and pub relief that came into force this spring are now filtering through the market.

Broader reform remains on the horizon, with the November 2025 call for evidence exploring proposals including a "slice" tax structure (ratable values split into fixed bands with increasing multipliers applied), enhanced Small Business Rates Relief, reformed Empty Property Relief and a shorter antecedent valuation date gap. Occupiers and investors should factor potential changes into their financial modelling.

Security duties at public venues

Enhanced security measures at premises hosting public events will come into force in April 2027. Owners and occupiers of qualifying premises and other duty holders should plan ahead and allow sufficient time to implement new practices and policies.

Development and housebuilding

New register of contractual controls

A new public register of contractual control agreements is to be launched by the Land Registry. New disclosure and registration obligations will apply to beneficiaries of qualifying agreements conferring a right to acquire land, including options, pre-emptions, conditional contracts and promotion agreements. Details of qualifying agreements entered into from 8 June 2026 or where rights are varied or assigned from 6 April 2027 (when the regulations come into force) must be registered once the register opens for applications next year.

Although the policy primarily focuses on improving transparency in the housebuilding sector, the regime is significantly wider in scope and will apply to all commercial agreements meeting the registration criteria. Significant concerns remain around the commercial sensitivities of publicising transaction information, including the risk of giving advance notice to objectors, which could deter landowners from bringing land forward for development.

Social and Affordable Homes Programme

The Social and Affordable Homes Programme was launched earlier this year as successor to the previous Affordable Homes Programme. This ten-year funding initiative aims to accelerate the development of around 300,000 homes, while mitigating risks for developers. Detailed guidance from Homes England sets out the assessment criteria, which places strong emphasis on early delivery capability.

Future Homes and Buildings Standards

The long-awaited Future Homes and Buildings Standards have been published, aiming to make new homes and buildings more energy efficient, lower carbon and cheaper to run.

The standards will apply from 24 March 2027, with a longer lead-in for higher-risk buildings until 24 September 2027, and subject to transitional arrangements. Housebuilders and developers should begin integrating the new requirements into schemes, particularly those not yet at detailed design stage.

Building safety

Building safety levy

The building safety levy will apply to qualifying developments where the building control application is submitted from October 2026.

The government has also been consulting on proposals to require all new-build dwellings using the local authority building control route to submit full plans applications (rather than building notices), with mandatory plans certificates for new dwellings and buildings subject to the Regulatory Reform (Fire Safety) Order 2005. These proposals are intended to be in place in time for the levy's introduction. Developers should review their building control submission processes accordingly.

Second staircase

New second staircase requirements will apply from 30 September 2026 for residential buildings over 18 metres. The height threshold has been criticised on viability and proportionality grounds, but there is no indication the government intends to revisit it. For buildings caught by the new rules, floor plate efficiency could be materially reduced, with potential knock‑on effects for profitability and scheme viability.

Building Safety Regulator: new strategy and targets

The Building Safety Regulator (BSR) has published a one‑year strategic plan, setting targets including tightened response times for non‑complex Gateway 2 and cladding remediation applications, a review of the Approved Documents, and a fundamental reassessment of building regulations guidance. Together with improvements in the Gateway 2 backlog and ongoing government measures to strengthen the regime (including a call for evidence on professional competencies and the government's response to the Building Control Independent Panel’s report on commercial interests), these steps signal welcome progress. However, approval backlogs remain and developers should still allow for extended timescales in programmes.

Remediation liability

A new Remediation Bill, confirmed in the King's Speech, will enable developers, contractors and others to pursue manufacturers of unsafe construction products and speed up remediation by imposing new duties to identify, assess and remediate defects. A new backstop will allow Homes England (and others) to step in where those responsible fail to act, backed by criminal sanctions. A new national database of 11-18 metre buildings is also to be created to help identify buildings within this bracket which require remediation.

Litigation also continues to drive the development of building safety law, particularly in the highly contentious area of who bears liability for defect remediation.

In Edgewater (Stevenage) Ltd & Ors v Grey GR LP (2026), the Upper Tribunal clarified that multiple associated companies can be held jointly and severally liable under remediation contribution orders (RCOs), that participation in the development is not required, any level of building safety risk can qualify, and technically unnecessary remediation costs may still be payable. This significantly broadens the potential exposure of corporate groups with interests in affected developments.

In Crest Nicholson v Ardmore (2026), the High Court confirmed that anticipatory Building Liability Orders (BLOs) can be made pre-trial. A second BLO was made against associates of an insolvent contractor to enforce an adjudication award, which was held to create a "relevant liability" for the purposes of the BLO. The decision is likely to prompt further BLO applications and further referrals for adjudication of claims under the Defective Premises Act. It also highlights both the strengthened ability of developers and building owners to recover remediation costs and the need for contractors, developers, funders and insurers to consider group-wide exposure to BLOs at an early stage. See this Insight for more information.

Planning

Planning committee reform

Planning committees are to be reformed to accelerate decision-making, taking a two-tier approach depending on the nature of the development. New regulations are expected to come into force from 31 October 2026.

Biodiversity net gain

Biodiversity net gain (BNG) requirements will extend to Nationally Significant Infrastructure Project (NSIP) applications made on or after 2 November 2026, with a minimum 10% gain mirroring other developments in England. Delivery can be on-site or off-site. Developers must submit an outline gain plan at application stage, with updated plans before works begin.

Changes to BNG rules are also to be introduced for minor, medium and brownfield developments, which will likely be welcomed by smaller developers and housebuilders, for whom BNG compliance costs can be particularly burdensome.

Environmental Outcomes Reports

The government has published a roadmap for delivering new Environmental Outcomes Reports by the end of 2027, replacing Environmental Impact Assessments and Strategic Environmental Assessments. The new system aims to give developers greater clarity on requirements while ensuring planners have appropriate environmental detail. Developers should begin planning for the transition to the new system.

Nature Restoration Fund

The first environmental delivery plans (EDPs) are expected later in 2026, initially focusing on nutrient neutrality. In areas and for developments covered by an EDP, developers will be able to contribute to the Nature Restoration Fund to meet conservation liabilities, and rely on the EDP in place of environmental assessments and delivery of site-specific mitigation measures for the relevant features. This should help unblock significant development delays, particularly for housebuilders in nutrient-sensitive catchments.

Construction

Government confirms intention to ban retention payments in construction contracts

The government has confirmed its intention to ban retention payments in construction contracts to address late payments. The implementation timeline is yet to be confirmed. Consultation respondents highlighted the need for alternative performance assurance mechanisms, and the industry will need to develop workable substitutes.

Tackling tax fraud in construction

From April 2026, changes introduced by the Finance Act 2026 to tackle fraud in the Construction Industry Scheme allow HMRC to cancel gross payment status, recover lost tax and impose penalties where a business knew or should have known that payments were connected with fraud.

HMRC has added new guidance to its Construction Industry Scheme Manual on indicators of such knowledge and the due diligence expected when entering into trading relationships. Contractors and subcontractors should review their onboarding and monitoring procedures accordingly.

Residential

Renters' Rights

The first phase of reforms under the Renters' Rights Act took effect on 1 May 2026. Assured shorthold tenancies are replaced with assured periodic tenancies, possession grounds are reformed, rent increases can be challenged, and advance rent payments are restricted. Concerns remain over court capacity to absorb additional possession proceedings, with suggestions of an alternative non-judicial route for initial rent challenge determinations.

The government will legislate in the Finance Bill 2026-27 to ensure that the conversion to periodic tenancies does not trigger a stamp duty land tax (SDLT) charge on the rent. In the meantime, HMRC is expected to take a pragmatic approach and not collect SDLT on affected tenancies.

The second phase of implementation is anticipated from late 2026, with the new PRS (private rented sector) Database to be rolled out in stages by area and landlord registration later becoming mandatory.

The Landlord Ombudsman Scheme will follow, with compulsory membership for landlords expected from 2028. Timings are yet to be fully confirmed for the third stage, which will introduce a new decent homes standard and extend Awaab's Law to the private rented sector.

Decent Homes Standard

Implementation of the new Decent Homes Standard, setting minimum standards of safety, repair and energy efficiency for social and privately rented homes, has been pushed back to 2035 to give landlords sufficient time to prepare. However, those landlords who begin upgrade works early could benefit from spreading associated expenditure over a longer period.

Energy efficiency in the residential sector

The government has delayed planned reforms to Energy Performance Certificates from October 2026 to the second half of 2027. However, the trajectory of Minimum Energy Efficiency Standards remains unchanged, with private residential landlords still expected to reach EPC Band C by October 2030 (subject to proposed exemptions).

Social housing providers will be required to achieve Band C in one of the new metrics by 1 April 2030 and a second metric by 1 April 2039, with a £10,000 ten-year spend exemption from 2030. Landlords should begin planning upgrade strategies to manage costs. The government’s £15 billion Warm Homes Plan, launched to upgrade up to five million homes over five years, is intended to support improved energy efficiency and to reduce fuel poverty.

Long leasehold and commonhold

The government is pressing ahead with plans to reintroduce commonhold, ban new long leasehold flats, cap ground rents in existing leases and abolish forfeiture. The Commonhold and Leasehold Reform Bill is yet to be formally introduced to Parliament, and it remains to be seen how far the draft legislation will be amended to reflect the House of Commons select committee's recommendations and industry consultation responses, which could see the cap on existing ground rents brought forward to late 2027.

Increasing market confidence in commonhold and securing lender support remain essential (given minimal uptake under the 2002 Act). Once enacted, most provisions will not come into force immediately and timings remain unclear for what will be a complex transition process. Developers and investors should monitor progress closely, as the reforms will have a fundamental impact on the structure of and investment in residential development schemes.

Legal challenge

Last year, the High Court ruled that the proposed reforms to leasehold enfranchisement compensation (introduced under the Leasehold and Freehold Reform Act 2024) do not breach human rights law. That decision is now being appealed, which could cause further delays to the reform programme until the decision is handed down.

Legal challenges to the cap on existing ground rents may also follow, which is viewed by some as an unjustified interference with legitimate income streams and established contractual arrangements, going further than necessary to address the acknowledged problems of uncontrolled and excessive charges.

Residential service charges

The Royal Institution of Chartered Surveyors (RICS) has published its Service Charge Residential Management Code (4th edition), effective from 7 April 2026. It incorporates recent legislative developments and is intended to improve standards in service charge management. The code is mandatory for RICS members but does not override unambiguous lease terms.