The UK commercial property market saw investment activity hit £20 billion in the final quarter of 2025 — the highest Q4 figure since 2021 and 18% above the ten-year average for that period. That tells you something important: despite economic uncertainty, serious money is still moving into commercial real estate. I’ve been covering this sector for years, and what I keep seeing is that the businesses getting the best deals aren’t the ones with the biggest budgets — they’re the ones who understand the legal and financial mechanics before they start looking. Here’s what you actually need to know.
If you’re looking to rent commercial space in the UK right now, you’re entering a market where prime rental growth has been stronger than average, but that growth is being driven by a lack of new development rather than a surge in tenant demand. That’s a subtle but crucial distinction — it means landlords have more pricing power in some sectors, but tenants who know what to look for can still negotiate effectively. Before you sign anything, you need to understand the major changes happening to lease law, service charge rules, and security of tenure. Understanding market rent trends is a good place to start your research.
What the key lease terms actually mean for you
The most important thing to understand is that a commercial lease is not like a residential tenancy. You have far fewer statutory protections unless you specifically negotiate for them. The shared retail lease agreements that work for one business might be completely unsuitable for another. The core concept you need to grasp is security of tenure under Part 2 of the Landlord and Tenant Act 1954. This gives you the right to stay in your premises after the lease ends and to request a new lease on similar terms. But many landlords will ask you to ‘contract out’ of this protection — and if you agree, you lose those rights entirely.
What I’d do in your position: never agree to contract out without understanding exactly what you’re giving up. If you’re investing in fit-out costs, branding, or equipment that can’t easily be moved, security of tenure is worth fighting for. The Law Commission is currently consulting on increasing the minimum term for protected tenancies from six months to two years — which tells you the government thinks the current system needs strengthening, not weakening.
Why the upcoming legal changes matter right now
The English Devolution and Community Empowerment Bill, published on 10 July 2025, is progressing through Parliament and could become law in late 2026 or 2027. It contains two changes that will directly affect anyone renting commercial property. First, the ban on upward-only rent reviews — if you sign a lease today with an upward-only clause, that clause could become unenforceable if the Bill passes. Second, the expansion of Assets of Community Value rules means that if your property is listed, a community group could block a sale for up to 18 months by offering market value. That’s a risk if you’re planning to buy the freehold later.
Consider this scenario: you’re a small retailer renting a unit on a high street. Your lease has an upward-only rent review clause. Under current law, the landlord can increase rent but never decrease it, even if market rents fall. The Bill would make that clause unenforceable in new and renewal leases. That’s a significant shift in bargaining power. I’ve noticed that many tenants don’t realise they can negotiate the rent review mechanism itself — you don’t have to accept an upward-only clause even before the ban comes in. Ask for an open-market rent review that allows decreases too.
If you’re in a sector where rental growth is slowing, now is the time to lock in favourable terms. Understanding catchment areas can help you identify which locations still have strong tenant demand and which are at risk of oversupply.
Where people go wrong when renting commercial property
I’ve seen the same mistakes repeat across dozens of lease negotiations. Here are the ones that cost tenants the most money.
Ignoring the service charge provisions
The updated RICS Professional Standard for service charges took effect on 31 December 2025. It’s compulsory for all RICS-accredited professionals, but it doesn’t override your lease terms — it only sets industry benchmarks. That means if your lease has vague or one-sided service charge clauses, the new code won’t automatically fix them. The most common mistake is assuming the service charge is a fixed cost. It’s not — it can increase significantly if the landlord’s costs rise, and you have limited ability to challenge them unless your lease specifies what’s included. Always ask for a service charge budget and a breakdown of previous years’ actual costs before you sign.
| Lease Clause | What It Means | What to Watch For |
|---|---|---|
| Upward-only rent review | Rent can only increase, never decrease | May become unenforceable under new Bill |
| Service charge | Your share of building running costs | Check if capped or uncapped |
| Security of tenure | Right to stay after lease ends | Contracting out loses this right |
| Break clause | Option to end lease early | Often has strict conditions and deadlines |
Contracting out of security of tenure without understanding the cost
Landlords will often ask you to contract out of the 1954 Act. If you agree, you lose the right to stay in the property after the lease ends and the right to request a new lease. The Law Commission’s phase 1 consultation, which closed on 19 February 2025, provisionally concluded that the current model for contracting out is the right one — but it also proposed increasing the minimum term for protected tenancies from six months to two years. That suggests the government thinks tenants need more protection, not less. If you’re investing significant money into fit-out or branding, contracting out is a major risk. You could be forced to leave with no right to compensation for the improvements you’ve made.
Not checking whether the property is an Asset of Community Value
The Bill also proposes widening the definition of community value to include properties that contribute to economic wellbeing. That means more commercial properties could be listed. If your property is listed, a community group can trigger a moratorium that prevents sale for up to 18 months if they offer market value. This matters if you’re planning to buy the freehold later or if you need certainty about your long-term occupancy. Check the local authority’s ACV register before you sign a lease.
Overlooking the new register of contractual controls
The Levelling-up and Regeneration Act 2023 contains provisions for a new public register of contractual controls. This is still being implemented, but it will eventually make it easier to see what restrictions apply to a property — things like restrictive covenants or rights of way that could affect your use of the space. If you’re renting a property that has hidden contractual controls, you could find yourself unable to operate the way you planned. A real estate lawyer can help you identify these before you commit.
How to negotiate a commercial lease that works for you
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Here’s the practical process I’d follow if I were negotiating a commercial lease today.
Get the rent review mechanism right
With the proposed ban on upward-only rent reviews, you have leverage to negotiate a fairer mechanism. Ask for an open-market rent review that allows the rent to go down as well as up. If the landlord insists on an upward-only clause, negotiate a cap on the increase — say, a maximum of 5% per review. The key driver of recent rental growth has been a lack of development, not tenant demand, so there’s a real risk that rents could fall in some sectors. Don’t lock yourself into a mechanism that only goes one way. Understanding surveyor fees can help you budget for professional advice during these negotiations.
Scrutinise the service charge provisions
The new RICS code is a useful benchmark, but it doesn’t override your lease. Make sure your lease specifies exactly what’s included in the service charge, how it’s calculated, and whether it’s capped. Ask for the right to audit the service charge accounts — many leases don’t give tenants this right, and without it, you’re relying on the landlord’s word. If the service charge is uncapped, budget for significant increases. A property lawyer can review the service charge clauses and flag any that are one-sided.
Understand your security of tenure position
If the landlord asks you to contract out, ask why. If you’re investing in the property — fitting out the space, installing equipment, building a customer base — you need the certainty that security of tenure provides. The Law Commission’s provisional conclusion that the minimum term should increase to two years suggests the current system is seen as too weak. If you do agree to contract out, negotiate a longer notice period and a right to compensation for improvements. A tenant landlord lawyer can advise on what protections you can still negotiate even after contracting out.
Plan for the upcoming legal changes
The Bill is at committee stage in the House of Lords and could become law in late 2026 or 2027. If you’re signing a lease now, consider including a clause that allows you to renegotiate if the law changes. For example, if the ban on upward-only rent reviews comes into effect, you want the ability to remove that clause from your lease without penalty. Similarly, if your property could be listed as an Asset of Community Value, factor that into your long-term plans. Understanding heritage leases can also help if you’re looking at properties with special designations.
Frequently asked questions
Can I still negotiate an upward-only rent review before the ban comes in? ▾
What happens if my landlord doesn’t follow the new RICS service charge code? ▾
How do I check if a commercial property is listed as an Asset of Community Value? ▾
What’s the minimum term I should accept for a protected business tenancy? ▾
Can I break a commercial lease early if my business struggles? ▾
The commercial property market is shifting beneath our feet. Prime yields are under downward pressure in nine out of 14 sub-sectors, investment activity is strong, and the government is rewriting the rules on rent reviews, service charges, and community assets. The businesses that come out ahead will be the ones who understand these changes before they sign. If this was useful, you might also want to read best practices for leasing event venues in the UK.
Sources and Further Reading
Understanding maintenance charges when renting commercial space — A deeper look at what you’re actually paying for in service charges and how to challenge unfair costs.
UK Commercial Property Market Outlook. Savills, 2026.
UK Real Estate Sector 2026 and Beyond. Charles Russell Speechlys, 2026.
