Commerical
Commercial Leasehold Law Reform: The Landlord and Tenant Act 1954 and the Law Commission's 14th programme of reform
Business tenancies – the right to renew
The Law Commission is currently working on a project to reform the Landlord and Tenant Act 1954 which governs business tenancies, and in particular the existing statutory right to renew business tenancies under Part 2 of the 1954 Act.
In our last edition of Property Litigation Watch, we reported that the Law Commission had published an Interim Statement following its first public consultation on the right to renew under the 1954 Act. It concluded that the existing "contracting out" model, by which business tenants have the right to renew their lease unless they "contract out" of the 1954 Act security of tenure provisions, should be retained, as it strikes a good balance between landlords and tenants and has broad support among consultees.
The Law Commission is likely to publish its second consultation paper in the first half of 2026, that will canvass consultees' views on proposed amendments to the technical detail of the 1954 Act. This will address matters such as the contracting out procedure, the minimum term for business tenancies, the overlay of new ESG laws with the lease renewal process, the valuation date for renewal leases, and the forum for lease renewal disputes, among others. This will be an opportunity for the public to assist the Law Commission in recommending crucial updates and fine-tuning of the 1954 Act to ensure that it remains fit for purpose, relevant, and effective in supporting and facilitating the modern commercial leasehold market.
Law Commission's 14th programme of reform
On 4 September 2025, the Law Commission published its 14th Programme of Law Reform, detailing ten new projects that have been selected for reform, including the broad category, "Commercial Leasehold".
The Commission's project on "Business Tenancies: the Right to Renew" (set out above), is already addressing one aspect of commercial leasehold law, but it has identified two further projects in the commercial leasehold sphere needing review, namely:
- Issues with the Landlord and Tenant (Covenants) Act 1995. Its rigid anti-avoidance provisions do not accommodate modern commercial leasing practices, and create barriers for businesses, preventing commercially sound transactions and creating fertile ground for litigation. Rights of first refusal under the Landlord and Tenant Act 1987 (relating specifically to commercial premises) are also notoriously complex and technical. Trigger events are unclear and the harsh consequences for landlords who get it wrong can cause significant problems in practice.
- The law governing the maintenance, repair and upgrading of leased commercial buildings, including dilapidations, service charges, and the interaction between environmental frameworks and commercial leasehold law, will initially be the subject of a "scoping project" by the Law Commission. They will investigate concerns that the law in this area is causing confusion and unfairness and has not kept pace with modern priorities (such as improving the environmental sustainability of buildings) and will test whether law reform might offer a solution.
Although these additional commercial leasehold reform projects are in the pipeline, and it would make sense for parts of them to be undertaken alongside the business lease renewal project, there are currently no published timelines for progressing these projects. We will continue to monitor the progress of these reforms.
Proposed ban on upwards only rent reviews
In our last edition we reported that on 10 July 2025 the government introduced the English Devolution and Community Empowerment Bill to the House of Commons that proposes a ban on upwards-only rent reviews in business tenancies across most sectors (exempting some very limited areas such as agricultural leases).
The Bill is progressing through the Parliamentary stages and will have its second reading in the House of Lords on 8 December 2025. It appears that the proposed ban on upwards only rent reviews will stay in the Bill, although there have been some amendments to the relevant provisions during the Parliamentary process, including:
- A business tenancy is caught by the ban even if the tenant is not in occupation (i.e. where the 1954 Act would otherwise apply to the tenancy, but for the tenant's non-occupation).
- A tenancy is caught by the ban if the permitted use includes use for business purposes, even if the tenant is currently occupying for non-business purposes.
- Where a superior tenancy, entered into prior to the commencement of the Act, provides that any sublease must contain upwards only reviews, then that requirement is disapplied.
- The original draft Bill extended the ban to cover put options, i.e. where the landlord can force the tenant to accept a renewal lease. This provision has been extended to a tenant's renewal (call) option. Options entered into before commencement are still not caught by the ban.
This proposed reform (with no pre-warning or public consultation) could have a significant impact on the commercial leasehold market. None of the detail on commencement or timing of implementation is certain as yet, but it is anticipated at this stage that the Bill will receive Royal Assent in 2026, and the provisions concerning upwards only rent reviews will likely take effect in 2027. The government may also consult with the public in 2026 on potential "mitigation measures" (e.g. to allow for caps and collars to be used in commercial leases, and the parameters of their use). We will continue to monitor the progress of this Bill closely.
Residential
Renters' Rights Act 2025
The Renters' Rights' Act 2025 ("the Act") received Royal Assent on 27 October 2025, and on 13 November 2025, the government announced that the "Commencement Date" in the Act will be 1 May 2026, with many of the key provisions of the Act coming into force on that date (detailed below).
On 14 November 2025, the government published its "Implementation Roadmap" setting out its phased approach to the implementation of the Act, providing some detail on the preparations it is making for the Act's implementation, a timetable of "milestone" dates, and a list of secondary legislation required to bring the provisions of the Act into force.
And on 21 November, the government updated its detailed guidance on the Act.
There is a lot of information and change for landlords, tenants, estate agents and other relevant stakeholders to get to grips with over the coming months. Secondary legislation and further government guidance and communications will be published to assist everyone to prepare for this generational change to the private rented sector, in particular the swathe of changes happening on 1 May 2026. On that date, many new and existing residential tenancies will become periodic (open ended) assured tenancies (and with this, the abolition of section 21 "no fault" evictions and new/revised section 8 landlord possession grounds); the rules relating to the payment of rent will change significantly, pet requests cannot be unreasonably refused, prospective tenants on benefits or with children cannot be discriminated against, and local authorities will have new and strengthened enforcement duties and powers to ensure compliance with the provisions of the Act.
According to the government's Implementation Roadmap, the PRS database will be introduced from late 2026 (this is likely to be rolled out at different stages in different regions) , which will bring together key information for landlords and tenants, and in 2028 it will be mandatory for landlords to sign up to the "PRS Landlord Ombudsman" scheme, intended to provide a quicker, cost-effective means of resolving landlord and tenant disputes. The final phase of the implementation of the Act will focus on raising housing standards through the extension of Awaab's Law to the private rented sector and a modernised Decent Homes Standard. The timescales for this are subject to consultation.
Please see our Renters' Rights Hub for further information regarding the provisions of the Act.
The implementation of leaseholder protections contained within the Leasehold and Freehold Reform Act 2024
The government's consultation to implement strengthened leaseholder protections over charges and services within the Leasehold and Freehold Reform Act 2024 concluded on 26 September 2025. The reforms proposed signal a decisive shift towards transparency, accountability and cost control of service charges and services across England and Wales. The direction of travel for the new measures being introduced is clear: improving the amount and type of information leaseholders receive, earlier planning, and tighter scrutiny of costs with a view to empower leaseholders and raise standards across the sector. The major changes expected to be implemented over the next 12–24 months are detailed below.
The proposed reforms
There are six key changes expected to be implemented are:
Transparency of fees and charges
The current requirements for information regarding service charge have been largely unchanged for the last 20 years. The reforms seek to improve both the amount and type of information that will be provided to leaseholders by requiring:
- A standardised service charge demands form.
- A new annual report will give leaseholders clear, comparable information at the start of each year. The annual report must be provided within one month of the accounting period start and may be combined with the initial demand.
- A standardised interim service charge demand for the remaining estimated costs for that year, to be provided 6 months into the year.
- A full and accredited financial statement of accounts to include a demand or credit note for any underspend or overspend in the previous 12-month period. This is for all leaseholder blocks where there are four or more properties.
- An enhanced right for leaseholders to request information regarding service charges, on demand. The additional costs of provision of this information should be reasonable, however, as this is likely to be borne by the leaseholders and so landlords won't be unduly burdened.
Insurance transparency
Once the measures are implemented, freeholders must proactively share building insurance policy information with leaseholders. These obligations align with FCA rules introduced on 1 January 2024 for regulated insurance brokers and insurers. The consultation also proposes that landlords and managing agents provide additional information, including claims procedures and any conflicts of interest between freeholders, managing agents, insurers, and brokers.
Litigation cost rebalancing
In order to remove the barriers to access for leaseholders seeking to seek legal intervention and to move away from the presumption that leaseholders should pay their landlords’ legal costs, landlords must now seek court or tribunal approval to reclaim their litigation costs from leaseholders, either through service charges or administration charges. Some exemptions apply, including costs incurred in proceedings for enfranchisement, lease extensions, and applications for Right to Manage. The consultation also proposes a "suspension" mechanism for resident-led buildings, allowing temporary cost recovery subject to later tribunal validation.
Qualification of managing agents
The consultation proposes the introduction of mandatory professional qualifications for managing agents requiring them to be qualified to a higher level (level 4). It also seeks views on whether managing agents should also be subject to continuing professional development criteria to ensure continue to learn and retain skills.
Reserve funds and planning for major works
The government proposes mandating reserve funds for new leases and enabling mechanisms for existing leases in relation to planned major works. This would permit contributions to be collected via service charges, held in trust, and tied to Asset Management Plans forecasting 5–10 years of major works. The aim is to provide additional transparency, manage indicative costs and obtain competent professional sign-off to regularise leaseholder costs over time and reduce unexpected large bills.
Increase in the thresholds for section 20 consultation
Section 20 consultation thresholds would be increased from £250 to £600 per leaseholder for qualifying works and from £100 to £300 for qualifying long-term agreements. The consultation also clarifies that associated professional, and ancillary costs count towards these thresholds. The consultation process would be modernised through standardised notice forms, potentially shortened consultation windows from 30 to 21 days, and a 12-month deadline to commence works after consultation, failing which there would be an obligation to re-consult. Optional electronic service to be made available subject to leaseholder consent.
Timings
Now that the consultation has concluded, the next step is the development of secondary legislation for the measures to be implemented by both the UK and Welsh Governments. Whilst the government has stated that it wants to act as quickly as possible, it has been clear that it must balance speed with care to ensure that the measures are technically correct. There is no commitment as to when these measures will be brought into force and the government is currently analysing the feedback from the consultation. Once implemented, the proposals would require landlords, resident management companies and right to manage companies to invest significant time and resources to ensure ensuring compliance.
Construction
A new era of developer accountability
The construction sector is entering a transformative period where traditional corporate structures will no longer shield developers from building safety liabilities. The emerging trend of Building Liability Orders (BLOs) signals a fundamental shift in how the industry will manage risk, structure developments, and allocate capital in the years ahead. We are seeing increasingly more applications for BLOs against developers and its associated companies.
What's coming: The end of corporate insulation
The construction industry will witness an accelerating wave of BLO applications as courts increasingly pierce the corporate veil to hold parent companies accountable for their subsidiaries' building defects. The recent 381 Southwark Park Road decision is not an isolated ruling—it's an indication of what developers and their corporate groups should expect as the new normal. The retrospective nature of the Building Safety Act 2022 means that developers will face exposure for historical projects, fundamentally altering the risk profile of existing property portfolios. The practice of using thinly capitalised special purpose vehicles (SPVs) to ring-fence liability whilst protecting parent company assets is rapidly becoming obsolete.
The broader transformation
This judicial approach represents more than legal technicality—it signals a sector-wide accountability revolution. The construction industry will see quality and safety considerations elevated from compliance exercises to core business imperatives. Companies that adapt early, investing in rigorous safety standards and transparent corporate governance, will emerge as market leaders. The message is clear: the era of liability avoidance through corporate engineering is ending. The construction sector's future will be defined by those who embrace accountability and build it into their business models from the ground up.
Telecoms
The telecommunications sector has seen a lot of judicial activity in recent months, with developments that will shape the landscape for Code rights disputes in 2026 and beyond.
Court of Appeal clarifies key Code principles
The summer of 2024 brought two important victories for telecoms operator On Tower in the Court of Appeal, clarifying fundamental aspects of the Electronic Communications Code regime. The first ruling addressed the complex interplay between contractual termination rights and those available under the Code itself-a distinction that has proved contentious in practice. The second case centred on the perennial question of whether telecommunications arrangements constitute leases or licences, a characterisation issue with significant implications for both parties' rights and remedies.
These decisions provide welcome clarity for operators and landlords alike, though the full implications of the Court of Appeal's reasoning will likely emerge as lower tribunals apply the principles to future disputes.
A rare win for landlords: The first successful redevelopment defence
In what represents a notable shift in the balance of Code rights disputes, the First Tier Tribunal's recent decision in CTIL v Firoka marks the first successful deployment of the redevelopment defence against an operator's application for a new agreement.
The tribunal accepted that the landlord had demonstrated a settled intention to develop the land in question-a threshold that can be challenging for landlords to meet. The decision offers valuable guidance on the evidence required to evidence a credible redevelopment scheme.
The OFCOM template question heads to the Upper Tribunal
The validity of Code notices that deviate from OFCOM's prescribed template remains an open question following the First Tier Tribunal's decision to grant permission to appeal in (1) EE and (2) Hutchison 3G UK v London Borough of Wandsworth (also known as Castlemaine). The FTT had held that notices departing from the OFCOM template were invalid—a conclusion with potentially far-reaching consequences for operators who have served non-compliant notices. The Upper Tribunal will now have the opportunity to provide authoritative guidance on the degree of flexibility permitted when serving Code notices, and whether strict adherence to the template is mandatory or merely advisory.