Nearly two-thirds of UK commercial leases still include upwards-only rent review clauses, meaning rent can rise but never fall regardless of market conditions. That single clause can quietly drain thousands from a business over a five-year term, and it’s exactly the kind of structural disadvantage most tenants don’t spot until it’s too late. I’ve watched this pattern repeat across dozens of lease negotiations — tenants focus on the headline rent and miss the mechanisms that determine what they’ll actually pay three years in.
The commercial property landscape in the UK is shifting faster than it has in a decade. Between 2025 and 2027, we’re looking at changes to rent review rules, energy standards, business rates, inheritance tax relief, and the very structure of lease security. If you’re expanding your business into new premises — or renegotiating an existing lease — the decisions you make this year will lock in consequences that play out over the next ten. Here’s what you actually need to know.
I’ve been covering UK commercial property for long enough to see how easily a well-intentioned expansion turns into a cost trap. The problem isn’t usually the rent itself. It’s the clauses, the compliance obligations, and the tax implications that arrive quietly after the ink dries. That’s why I want to walk through the key negotiation points that matter most right now, starting with the changes that will reshape how leases work.
What a commercial expansion lease actually involves
Most people assume a commercial lease is just a rent agreement with some extra pages. In reality, it’s a bundle of obligations that determine your flexibility, your costs, and your exit options. A commercial expansion lease — one taken on to grow your business into new premises — carries additional weight because the stakes are higher. You’re committing to a space that needs to generate enough return to cover not just the rent but the service charges, business rates, fit-out costs, and compliance upgrades.
The single most important shift on the horizon is the proposed ban on upwards-only rent reviews. The English Devolution and Community Empowerment Bill, which has completed its first reading in Parliament, would make such clauses unenforceable in new commercial leases. That means a tenant could negotiate a rent reduction at review if market conditions have softened. For a business expanding into a new location, that’s a structural advantage that currently doesn’t exist. My first move if I were negotiating a lease today would be to include a clause that mirrors the proposed reform — a mutual rent review that can go down as well as up — even if the law hasn’t changed yet. Some landlords will accept it to secure a tenant.
Why the 2026 changes matter for your bottom line
The April 2026 business rates revaluation in England will update rateable values based on rental values as at 1 April 2024. That alone will shift costs for thousands of businesses. But the bigger story is the new five-tier multiplier structure. Properties with a rateable value below £500,000 — which covers most retail, hospitality, and leisure premises — will benefit from lower multipliers. Properties at or above that threshold will face a higher “high-value” multiplier. If your expansion involves a large unit, the rates bill could jump significantly.
Consider a scenario where your new premises has a rateable value of £520,000. Under the current system, you’d pay the standard multiplier. From April 2026, you’d fall into the higher bracket. That’s not a marginal difference — it’s a structural cost increase that needs to be factored into your expansion budget from day one. Transitional relief will phase in larger increases, but the direction of travel is clear.
On the inheritance tax side, the changes to Business Property Relief from 6 April 2026 are equally significant. The combined BPR and APR allowance of £1 million at 100% relief means that qualifying business property up to that value passes free of inheritance tax. Above that, only 50% relief applies, creating an effective 20% tax charge on the excess. If your expansion involves acquiring property through a company structure, this directly affects succession planning. I’ve seen business owners overlook this entirely until a valuation triggers an unexpected tax bill. A business lawyer can help structure the acquisition to preserve relief where possible.
Where tenants and landlords get tripped up
The most common mistake I see is treating the lease as a static document. It isn’t. Between the EPC reforms, the service charge code update, and the potential ban on upwards-only reviews, the regulatory ground is moving. Here are the specific traps to watch for.
→ Scroll right to see all columns
| Change | Timeline | Impact on tenant |
|---|---|---|
| EPC multi-metric reporting | H2 2026 | Landlords must maintain compliance throughout tenancy; shorter certificate lifespans mean more frequent re-certification |
| Business rates revaluation | 1 April 2026 | Rateable values updated to 2024 rental levels; new five-tier multiplier with £500k threshold |
| BPR/APR combined allowance | 6 April 2026 | £1 million at 100% relief; 50% relief above that — effective 20% IHT on excess |
| Upwards-only rent review ban | Late 2026/2027 (proposed) | New leases only; rents could fall at review; may affect asset valuations |
Ignoring the EPC compliance timeline
The current EPC system gives you a single score and a ten-year certificate. The 2026 reforms will replace that with multiple metrics — fabric efficiency, heating efficiency, smart-readiness, energy use, and carbon emissions — and shorter validity periods. Landlords will need to maintain a valid EPC throughout the tenancy, not just at grant or renewal. If you’re taking a lease on an older building, the cost of bringing it up to standard could fall on you through service charges or rent review assumptions. I’d ask for the current EPC data and a written commitment on who pays for any upgrades required during the term.
Overlooking the RICS service charge code
The updated RICS Professional Standard for service charges in commercial property took effect on 31 December 2025. It’s compulsory for all RICS-accredited professionals and sets industry benchmarks for transparency and dispute resolution. It doesn’t override your lease terms, but it’s a vital reference point if you’re challenging an opaque service charge. If your landlord’s agent isn’t following the code, you have leverage. A tenant landlord lawyer can review your service charge provisions against the code and identify where the landlord may be overreaching.
Assuming security of tenure is guaranteed
The Law Commission’s phase 1 consultation on Part 2 of the Landlord and Tenant Act 1954 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 means short-term leases under two years could lose statutory protection, leaving you without the right to renew. If your expansion plan relies on a short initial term with an option to stay, you need to understand whether the lease is contracted out and what that means for your renewal rights. The phase 2 consultation will also look at reforming the contracting-out procedure to reduce the administrative burden, but until then, the current process applies.
Missing the Assets of Community Value angle
The same Bill that targets upwards-only rent reviews also proposes widening the definition of community value to include properties that contribute to economic wellbeing. That could capture commercial premises like pubs, local stores, and even some office spaces. If your property is listed as an Asset of Community Value, community groups get a “preferred buyer” status — they can match a market value offer and delay a sale for up to 18 months. That’s a risk if you’re planning to buy the freehold or assign the lease. Check the local authority register before committing.
Writing about topics like this takes real time and research. If you buy something through an Amazon link on this page, I may earn a small commission — at no extra cost to you. It’s one of the things that makes it possible to keep BritWealth free to read. I only link to products that are genuinely relevant to the article.
How to prepare your commercial expansion lease for 2026 and beyond
The changes coming over the next 18 months aren’t just regulatory noise — they directly affect the cost and flexibility of your lease. Here’s how to act on them.
Audit your lease for upwards-only rent review clauses
If your existing lease has an upwards-only clause, the proposed ban won’t apply — it covers new leases and renewals only. But if you’re negotiating a new lease, push for a mutual review clause that allows rent to go down. Some landlords will resist, arguing it affects their asset valuation. That’s true, but it’s also a negotiating point. You can offer a slightly higher headline rent in exchange for the flexibility. The key is to get the clause in writing before the law changes, because once the ban takes effect, the market will adjust and landlords will factor the risk into their initial asking rent.
Factor EPC upgrade costs into your budget
The shift to multi-metric EPCs means a building that scraped a pass on the old system may fail under the new one. If you’re taking a lease on a property built before 2000, ask for a preliminary energy assessment. The cost of upgrading fabric efficiency, heating systems, or smart-readiness can run into tens of thousands. Some landlords will contribute, especially if the upgrade improves the asset’s long-term value. Get the contribution written into the lease as a landlord obligation, not a tenant improvement.
Review your business rates position before April 2026
The revaluation uses rental values as at 1 April 2024. If your new premises was valued during a market peak, you may be able to challenge the assessment through the Check, Challenge, Appeal process. The deadline for challenges is usually within months of the new rating list being published. I’d set a calendar reminder for 1 April 2026 and prepare your evidence — comparable rental data, floor area measurements, and any vacancy or condition issues — in advance. A property lawyer can handle the appeal if the valuation is complex.
Plan for the BPR and APR changes if you’re buying through a company
If your expansion involves acquiring the freehold or a long leasehold interest through a company, the combined £1 million allowance at 100% relief means you need to structure the ownership carefully. Above that threshold, only 50% relief applies, creating an effective 20% inheritance tax charge on the excess. That’s a significant cost if the property value grows over time. Consider holding the property in a structure that qualifies for the relief — typically a trading company rather than a pure investment vehicle — and review your will and succession plan alongside the acquisition.
Understand the security of tenure implications for short-term leases
If the minimum term for protected tenancies rises to two years, a 12-month lease with an option to renew may no longer carry statutory protection. That means the landlord could refuse renewal at the end of the term without needing a statutory ground. If your expansion is experimental — testing a new location or format — consider a longer initial term with a break clause rather than a short term with no security. A break clause gives you the exit you need while preserving your renewal rights.
Prepare for the Assets of Community Value reforms
If your property could be considered a community asset — a pub, a local shop, a sports ground — check whether it’s already listed. The proposed reforms would make ACV designations indefinite for sporting assets and give community groups a preferred buyer status that can delay a sale for up to 18 months. If you’re buying the freehold, factor that delay into your timeline. If you’re taking a lease, confirm that the landlord’s title is clear of any ACV restrictions that could affect assignment or subletting.
Will the upwards-only rent review ban apply to my existing lease? ▾
What happens if my landlord refuses to maintain a valid EPC during my tenancy? ▾
Can I challenge my business rates valuation before April 2026? ▾
Does the BPR change affect all commercial property owned through a company? ▾
What’s the difference between contracting out and security of tenure? ▾
The next 18 months will reshape how commercial leases work in the UK. The key is to act before the changes take effect — not after. Review your lease terms now, budget for the compliance costs, and get professional advice on the tax and legal implications. If this was useful, you might also want to read our guide to satellite office leases in the UK.
Sources and Further Reading
Sustainable commercial rental: a UK business advantage — How green lease clauses and energy efficiency upgrades can reduce your operating costs and improve your negotiating position.
Commercial rent traps: how small UK businesses get stung — Practical examples of hidden costs in commercial leases and how to negotiate around them.
Commercial property law changes coming in 2026. SoLegal, 2025.
UK real estate sector 2026 and beyond. Charles Russell Speechlys, 2025.
A practical guide to upcoming commercial property law changes in 2026. Longmores Solicitors, 2025.
