Understanding Public Market Lease Agreements In The UK

Over the past few years, I’ve watched the commercial property landscape shift in ways that catch even experienced business owners off guard. The rules around public market lease agreements in the UK are changing faster than many people realise, and the implications for your bottom line can be significant. According to recent analysis, major commercial property law changes are set to take effect from 2026, including a proposed ban on upwards-only rent reviews and a complete overhaul of business rates. That means the lease you sign today could look very different from the one you negotiate in two years’ time.

If you’re running a business that rents commercial space — or you’re thinking about it — these changes matter right now. The way rent is reviewed, how service charges are calculated, and even what happens to your property when you pass it on are all being reshaped. Here’s what you actually need to know.

What a public market lease agreement actually means for your business

The most important thing to understand about a public market lease agreement is that it’s not a fixed document — it’s a negotiation framework that’s being rewritten as we speak. A public market lease typically refers to a commercial lease on a property that’s available to any business, often in a retail, hospitality or office setting, where the terms are shaped by market conditions rather than a private arrangement. But the real issue is what happens when those market conditions shift.

If I were looking at a lease right now, the first thing I’d check is the rent review clause. The proposed ban on upwards-only reviews in new commercial leases, which is part of the English Devolution and Community Empowerment Bill, would fundamentally change the balance of power between landlords and tenants. For years, tenants have been stuck paying above-market rent because the lease wouldn’t let it drop. That could soon end — but only for new leases, not existing ones.

Why the 2026 reforms could save you thousands

Let me give you a concrete example. Imagine you run a small retail shop with a rateable value of £200,000. Under the current system, your business rates are calculated using a single multiplier. From April 2026, that same property would qualify for a lower multiplier because it falls under the £500,000 threshold. That’s not a small saving — it’s a structural change in how much you pay the government each year. The revised multiplier structure was confirmed in the November 2025 Budget, with lower rates for qualifying retail, hospitality and leisure properties funded by higher multipliers on larger premises.

But it’s not just rates. The proposed ban on upwards-only rent reviews means that if you sign a new lease after the law takes effect, your rent could actually go down if the market drops. That’s a huge shift. For small and medium-sized businesses, which the Law Commission specifically cited in its provisional conclusions, this creates a more balanced negotiating environment. What I’d do in your shoes is start thinking about timing — if you’re due to renew or sign a new lease in late 2026 or 2027, you may have more leverage than you think.

Where most tenants get caught out

The biggest mistakes I see come from people assuming the old rules still apply. Here are the traps that are easy to fall into.

Ignoring the EPC overhaul

Energy Performance Certificates are about to become a lot more demanding. The government’s consultation on reforming the Energy Performance of Buildings framework points to enhanced EPC data showing multiple performance metrics — fabric efficiency, heating efficiency, smart-technology readiness, energy use and carbon emissions — rather than a single score. Validity periods will shorten from the current ten years, and landlords will need to maintain a valid EPC throughout the tenancy, not just at the start. If you’re a tenant, that means you could be stuck in a property that becomes non-compliant mid-lease, with the landlord under pressure to upgrade — and those costs often find their way into service charges.

Assuming service charges are set in stone

The updated RICS Professional Standard on service charges in commercial property took effect from 31 December 2025. It’s compulsory for all RICS-accredited professionals. While it doesn’t override your lease terms, it sets industry benchmarks and is a vital reference point for negotiations and dispute resolution. If your landlord’s service charge seems high, you now have a stronger framework to challenge it. The updated RICS code is your friend here — use it.

Overlooking the security of tenure changes

The Law Commission has provisionally concluded that the minimum six-month term for business tenancies protected by the Landlord and Tenant Act 1954 should increase. The second consultation paper is likely to propose a minimum of two years. That means short-term leases under two years could lose their automatic protection, leaving you with less security than you expect. If you’re planning a short-term arrangement, you need to understand whether you’re contracting out of the Act and what that means for your right to stay.

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Forgetting about Business Property Relief

From 6 April 2026, Business Property Relief and Agricultural Property Relief will be combined into a single £1 million allowance at 100%. Any qualifying value above that threshold receives only 50% relief, creating an effective 20% inheritance tax charge on the excess. Shares in unlisted companies, including AIM-listed shares, will also receive only 50% relief. If your commercial property forms part of your estate planning, this changes the numbers significantly. What I’d do is review your succession plan now, before the April deadline.

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How to prepare for the new lease landscape

The reforms coming in 2026 and 2027 aren’t just background noise — they’ll change the economics of your lease. Here’s what you can do about it now.

Review your rent review clause before signing anything

If you’re entering a new lease, check whether it contains an upwards-only rent review clause. Under the proposed ban, such clauses would become unenforceable in new commercial leases. But the ban applies only to new leases and renewals — not existing ones. If you’re renewing, you may be able to negotiate a clause that allows rent to go down as well as up. The Law Commission’s provisional conclusions on modernising the Landlord and Tenant Act 1954 make it clear that this reform is gaining traction. Don’t wait until it’s law to start negotiating.

Check your EPC status and plan for upgrades

With shorter validity periods and enhanced metrics on the way, an EPC that’s fine today may not be fine next year. Ask your landlord for the current certificate and check when it expires. If it’s due for renewal in 2026, the new, stricter standards will apply. If you’re a tenant, you may want to negotiate a cap on your contribution to any energy efficiency upgrades the landlord is forced to make. A smart leak detector is a small investment that can help you monitor water usage and spot inefficiencies early — it won’t fix your EPC score, but it shows you’re taking energy management seriously.

Understand the new business rates structure

From April 2026, the multiplier that applies to your property depends on its rateable value. If you’re below £500,000, you benefit from a lower rate. If you’re above it, you pay more. Check your current rateable value on the government’s valuation office website. If it’s close to the threshold, a successful challenge through the Check, Challenge, Appeal process could save you thousands. Transitional relief will phase in larger increases following the revaluation, so don’t assume your bill will jump overnight — but do plan for the new normal.

Plan for the Assets of Community Value changes

The English Devolution and Community Empowerment Bill also proposes wide-ranging changes to the Assets of Community Value framework. The definition of community value would widen to include properties that contribute to a local community’s economic wellbeing, and a new category of “sporting asset of community value” would capture outdoor sporting grounds. If your property could be listed, you need to understand the implications — including a potential 18-month delay on sale if a community group offers market value. This is an emerging area that could affect disposal timelines.

• 1
  Check your current lease terms

  Look at the rent review clause, EPC expiry date, and service charge provisions. These are the areas most affected by the 2026 reforms.

• 2
  Get professional advice on timing

  If you’re renewing or signing a new lease in late 2026 or 2027, the legal landscape may be different. A tenant landlord lawyer can help you understand whether the proposed ban on upwards-only reviews applies to your situation.

• 3
  Review your business rates valuation

  Check your rateable value against the £500,000 threshold. If you’re close, consider a valuation challenge before the April 2026 revaluation takes effect.

• 4
  Plan your estate strategy

  If your commercial property is part of your inheritance planning, the changes to Business Property Relief from April 2026 could affect your tax position significantly.

Frequently asked questions

Sources and Further Reading

Decoding commercial leases: a simple guide for UK businesses — A practical walkthrough of the key clauses every tenant should understand before signing.

The commercial tenant’s bill of rights: knowing your protections in the UK — What protections you have under the Landlord and Tenant Act 1954 and how to use them.

Commercial property law changes coming in 2026. SoLegal, 2025.

Key legislative and legal updates for 2026: what landlords, investors and occupiers need to know. James & Sons, 2025.

UK real estate sector: 2026 and beyond. Charles Russell Speechlys, 2025.