The commercial property sector is entering another period of fairly significant change. Alongside ongoing market pressures, a number of legislative and regulatory developments are beginning to reshape how land is assembled, buildings are designed and operated, and commercial property interests are managed.
For landlords, investors, developers, agents and surveyors, understanding the direction of travel is becoming increasingly important. Those who prepare early are likely to be better placed to manage risk, protect asset values and identify opportunities as the regulatory landscape evolves.
Major reform of commercial landlord and tenant law
Commercial landlords and tenants should also pay close attention to the Law Commission's ongoing review of key landlord and tenant legislation.
Recent consultation papers consider reforms to some of the most important statutory provisions affecting commercial leases, including the security of tenure regime under the Landlord and Tenant Act 1954. While the Law Commission has indicated that security of tenure itself should remain, many aspects of the current framework are under review.
Potential areas of change include the treatment of periodic tenancies, the role of turnover rents in renewal leases, the way environmental considerations are reflected in lease renewals and possible simplification of the contracting-out procedure.
Separate proposals also seek to address issues arising under the Landlord and Tenant Act 1987 and the Landlord and Tenant (Covenants) Act 1995, particularly where existing legislation creates unintended obstacles to commercial transactions and business reorganisations.
If implemented, these reforms could have a lasting impact on lease negotiations, asset management strategies and transactional due diligence across the commercial property market.
Heat network zones could transform urban property
One of the most significant developments currently receiving relatively little attention is the government's planned introduction of heat network zones across England. The initiative forms part of the UK's wider net zero strategy and is intended to increase the use of district heating systems in towns and cities.
Heat networks distribute heat from central energy sources to multiple buildings through insulated pipe systems. While the technology is already established in some locations, the government intends to expand its use significantly over the coming decades.
The first proposed zones have been identified in Bristol, Leeds, London, Plymouth, Sheffield and Stockport. Within designated areas, certain new developments may be required to connect to a heat network. Existing non-domestic buildings with substantial heat demand could also be brought within the regime in due course.
For owners and developers of commercial property, particularly in urban locations, this has the potential to influence building design, plant replacement strategies, refurbishment projects and long-term investment decisions. Assets located within future heat network zones may face requirements that differ significantly from current energy infrastructure arrangements.
Greater transparency over land control arrangements
Developers and landowners will also need to prepare for increased transparency regarding land promotion and development agreements.
The Provision of Information (Contractual Control) (Registered Land) Regulations 2026 create a new regime requiring key details of certain land control arrangements to be registered with HM Land Registry. Agreements affected include option agreements, conditional contracts, rights of pre-emption and promotion agreements.
The new register is scheduled to open on 6 April 2027, but parties should not assume that action can be delayed until then. Rights created between 8 June 2026 and the launch of the register will still need to be recorded retrospectively.
For those involved in strategic land assembly, the reforms represent a significant shift. Confidentiality has long been an important element of many development strategies, and participants will need to adapt systems and record-keeping procedures to ensure compliance with the new requirements.
Other developments to monitor
The government's programme of wider property reform continues to gather pace.
The next phase of the Renters' Rights Act reforms is expected to introduce a private rented sector database and a landlord ombudsman. Although aimed primarily at residential property, owners of mixed-use portfolios will need to consider the effect of these changes on residential elements within their holdings.
Further progress is also anticipated on proposals relating to commonhold and leasehold reform. Whilst these measures are principally residential in nature, they may have implications for mixed-use developments, estate management structures and certain investment assets.
Looking further ahead
Several other reforms remain on the horizon and could materially influence investment and asset management decisions.
The legislation introducing a ban on upwards-only rent reviews in new commercial leases has now received Royal Assent, although implementation is not currently expected until 2027 or 2028. Further consultation is anticipated on how the regime will operate in practice, including the treatment of mechanisms such as caps and collars.
The same legislation will also replace the existing Community Right to Bid framework with a new Community Right to Buy regime. Whilst implementation details remain limited, owners of certain commercial and community-facing assets may wish to monitor developments closely.
Energy efficiency remains another key area of focus. Changes to the EPC regime are expected during 2027 and the government has confirmed that larger commercial buildings will ultimately be required to achieve a minimum EPC rating of B by 2031. For many property owners, this may necessitate substantial investment in building fabric, plant and operational efficiency improvements over the coming years.
What property owners should be doing now
Although many of these reforms are still being developed, the overall direction of travel is clear. Greater transparency, tighter environmental requirements and continuing reform of landlord and tenant law are likely to shape the commercial property market throughout the remainder of this decade.
If you have any questions relating to this article, please contact Nick Ripper at [javascript protected email address], or a member of the commercial property team.
Property owners, investors and developers should now be reviewing future development pipelines, monitoring energy efficiency requirements, assessing the potential impact of leasing reforms and ensuring that systems are in place to comply with emerging land registration obligations. Those who engage with these changes early are likely to be in the strongest position as the next phase of property sector reform unfolds
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