As we approach the end of the second month of 2026, we look at some of the changes that retail tenants can expect during the remainder of this year and beyond.
From major changes to rent review mechanisms to business rates reforms and stricter energy performance standards, these updates will all impact retailers.
It is important to be aware of any new changes and seek legal advice to ensure your position is protected under your lease, now and in the future.
Our Retail Lawyers provide an overview of the key changes anticipated and what they mean for retail tenants in practice.
Ban on upwards only rent reviews
Last year, the government announced one of the most significant commercial property law updates in decades – the proposed ban on upwards-only rent reviews in new commercial leases.
This ban is due to come into effect in 2027/2028.
The aim of these provisions is to protect tenants against inflated rents when the market is low. If the bill is passed, the changes will not affect existing leases but will be relevant to any future new leases and renewal leases, as well as on the subletting of an existing lease.
These changes are largely positive for retailers, as they mean that occupiers will benefit from rents that reflect the market. However, landlords may look for ways to protect the level of rents they can charge, which could mean more short-term contracted-out leases, with higher initial rents and fixed or stepped rent increases.
Consultation on renewal rights
Retailers will be aware of last year's consultation on the future of security of tenure for business tenants under the Landlord and Tenant Act 1954.
The Law Commission has provisionally concluded that there should be no change to the current model of security of tenure and that the existing contracting-out model should remain. A second technical consultation paper is due to be published in Spring 2026, which will consult on whether to increase the threshold for excluding tenancies from the scope of the 1954 Act based on the tenancy’s duration from 6 months to 2 years.
Change to business rates
Further reforms to business rates are coming in April this year.
New rateable values will apply from 1 April this year, with a new system of multipliers coming into effect.
The government is introducing two lower business rates multipliers for retail, hospitality and leisure (RHL) properties with rateable values below £500,000.
This is a permanent tax cut, which the government says is worth nearly £1 billion per year and will benefit over 750,000 RHL properties.
The lower multipliers will result in lower rateable values for RHL properties and, consequently, lower business rates. It is anticipated that the tax rate for small RHL properties will fall by nearly 12p next year, and the tax rate for all other RHL properties below £500k will fall by 12.5p next year.
However, retailers will still be under pressure as the temporary relief that many RHL businesses benefit from, which has been winding down since the pandemic, will end next month.
Energy Performance Certificates (EPCs)
There are proposals to update the Energy Performance Certificate (EPC) regime, raising the minimum EPC rating required for commercial properties.
Under the Minimum Energy Efficiency Standards (MEES), landlords must ensure that a commercial property has an EPC rating of E or above to let or continue letting it.
Under planned changes, which look increasingly likely to become law this year, landlords will have to ensure that rental properties meet a minimum EPC rating of C by 1 October 2030.
If the minimum rating is increased, many commercial properties will not meet the minimum requirement.
Depending on how the lease is drafted, the landlord might have the right to do works to improve the energy efficiency of the property so that the property is compliant with MEES obligations.
This work could cause disruption to retail tenants and even result in the temporary closure of stores. Tenants may also have to bear the costs of these upgrades, either through the service charge or higher rental figures. However, once the works are completed, the properties will be more energy efficient and should therefore benefit from lower energy bills, which would be good news for retailers.
Changes to the RICS Service Charge Standard
At the end of last year, a new edition of the RICS Service Charge Standard document took effect, which sets out the required standards and best practice on service charges in commercial properties.
The standard is not legally binding, but it sets out the professional standards that both landlords and tenants should adhere to.
This new edition updates the 2018 edition and adopts stricter standards to reflect changes in the commercial property market.
The second edition contains updates on various parts of guidance, including the following:
- Financial accountability – The new standard imposes timescales on landlords to issue service charge budgets to tenants at least one month before the start of the service charge year. Year-end accounts must be delivered within four months of its close. Landlords are also subject to more stringent controls and the new standard sets out which costs must not be recovered via the service charge e.g. future redevelopment costs or costs relating to empty units.
- Transparency in apportionment – All costs should be transparent so that all parties, are aware of how the costs are made up. The basis and method of apportionment should be fair and reasonable to ensure that each tenant bears an appropriate proportion of the total service charge expenditure that reflects the availability, benefit and use of services to that tenant.
- Environmental considerations – The new standard requires landlords to take environmental considerations into account in its decision-making and to factor in sustainability. There is also guidance on how to improve the environmental, social and governance (ESG) position of the property.
- Dispute resolution – Clearer guidance on how parties can resolve disputes and which steps to take. The updated standard encourages all new leases to include an Alternative Dispute Resolution (ADR) clause. Even where a lease doesn’t include such a provision, parties are strongly urged to agree to ADR as an alternative to court proceedings.
Conclusion
2026 is set to be a pivotal year for commercial lease arrangements.
The likely ban on upwards-only rent reviews and other key reforms means that retail tenants should stay informed and review the current leases in their property portfolio ahead of the changes.
Seeking legal advice early can identify any changes or updated compliance measures that may be required, reducing the risk of unwelcome surprises when the reforms come into force.
Contact Our Retail and Commercial Property Team
Our experienced Commercial Property lawyers can assist with new and renewal commercial leases, and lease re-gears.
We understand that every retail business is unique, and we take a proactive approach to ensure your specific needs and objectives are met.
0161 941 4000
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Ellie Sharp
Solicitor
Ellie obtained a 1st class Law degree from the University of Law in 2020, and then completed her Legal Practice Course with additional Master of Laws in 2021 at the same university, obtaining a distinction in both. Ellie has experience in a variety of commercial property matters, such as new leases and renewal leases, sales, purchases and refinance matters for a variety of individual, company and charity clients.
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