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The commercial property sector in England and Wales is set for significant legal and regulatory changes in 2026. From tax relief adjustments to sustainability obligations, these shifts will impact lease negotiations, development projects, and investment strategies. Understanding what’s ahead is critical for landlords, tenants, and developers alike.
In this article, I cover:
- Tightening of Business Property Relief
- The potential end of upward-only rent reviews
- Green energy provisions in leases
- Biodiversity Net Gain (BNG) for new developments
- Business rates reform
- Emerging trends and other considerations
Tightening of Business Property Relief
Business Property Relief (BPR) has long been a key tool for reducing Inheritance Tax (IHT) on qualifying commercial property, helping business owners pass on assets to the next generation with reduced tax liability. However, the government may tighten eligibility requirements, lowering relief percentages, and imposing stricter conditions on assets that are not actively used in business operations. These changes are expected to take effect from April 2026 and could significantly impact property-owning businesses.
For businesses that own commercial property, these reforms may affect succession planning, estate structuring, and long-term investment strategies. Properties previously assumed to qualify for BPR could be partially or fully disqualified if they are considered underutilised or not integral to the business. Those relying on BPR for estate planning should proactively review their property portfolios, assess which assets meet the updated criteria, and consider alternative arrangements, such as trusts, business reorganisations, or phased transfers, to mitigate potential tax exposure.
Early planning is key to ensuring that commercial property holdings remain an effective tool for wealth preservation while remaining compliant with the evolving regulatory landscape.
Discover more about Inheritance Tax planning.
The potential end of upward-only rent reviews
As explored in our earlier article, Rethinking Commercial Leases: How the End of Upward-Only Rent Reviews Could Transform the High Street, upward-only rent reviews are currently under consideration by policymakers. While no formal ban has yet been enacted, proposals suggest rent adjustments might no longer be automatically one-way. This could give tenants fairer terms and help prevent excessive rent increases during market downturns. Landlords may need to reassess lease structures to maintain revenue predictability while reflecting true market conditions.
Some landlords may wish to consider alternatives to traditional rent reviews, such as stepped rent increases, which provide a predictable, incremental rise in rent over the lease term. This approach could offer a compromise between tenant affordability and landlord income stability while regulatory changes remain uncertain.
Green energy provisions in leases
Sustainability obligations are increasingly shaping lease negotiations. In 2026, commercial leases could increasingly feature more stringent green energy provisions, reflecting both regulatory requirements and growing tenant expectations. These may include:
- Mandatory energy efficiency upgrades: Landlords and tenants may need to improve insulation, heating, and lighting systems to meet higher efficiency standards, reducing energy consumption and environmental impact.
- On-site renewable energy requirements: Properties could be expected to incorporate renewable technologies, such as solar panels, heat pumps, or other low-carbon solutions, to support decarbonisation targets.
- Compliance with enhanced EPC standards: Leases may require adherence to stricter Energy Performance Certificate (EPC) ratings, ensuring properties meet minimum environmental benchmarks.
Landlords and tenants will need to carefully consider how these obligations affect operational costs, long-term property value, and lease negotiations. Forward-thinking investment in green infrastructure—such as solar panels, smart energy management systems, or low-carbon heating—will likely become standard practice, helping properties remain competitive and compliant in a rapidly evolving regulatory landscape.
Biodiversity Net Gain (BNG) for new developments
The government’s Biodiversity Net Gain (BNG) requirements may become more rigorous in 2026, depending on final regulations. As highlighted in our previous article, Biodiversity Net Gain: A New Obligation for Developers, new developments must deliver measurable improvements to ecological value, going beyond merely mitigating environmental harm.
This obligation is likely to extend beyond traditional new builds to include commercial refurbishments, mixed-use projects, and potentially even extensions or major renovations. Developers will need to plan for ecological enhancements early in the design process, integrating features such as green roofs, wildlife corridors, native planting, and sustainable drainage systems.
Careful consideration of BNG obligations can also provide strategic benefits. Beyond compliance, enhancing biodiversity can improve a development’s attractiveness to tenants, investors, and the wider community, while potentially reducing long-term environmental management costs. By embedding these measures into project planning, developers can ensure their schemes meet regulatory requirements and support broader sustainability and climate-resilience goals.
Business rates reform
Business rates remain a key consideration for commercial property stakeholders and the government’s document, Business Rates: forward look, sets out the planned reform programme, including changes tied to the 2026 revaluation, support for high streets, and adjustments to the rates system. Potential reforms in 2026 might include:
- More frequent property revaluations: Regular updates to property values aim to better reflect current market conditions, but could also increase volatility in business rate bills for tenants and affect landlords’ forecasting.
- Revised multipliers: Changes to the multipliers used to calculate business rates may shift the overall tax burden, potentially benefiting some sectors while increasing costs for others.
- Targeted reliefs for sectors under economic stress: Certain industries, such as retail and hospitality, may qualify for reliefs or exemptions, reflecting ongoing economic pressures and structural changes in the high street.
These reforms could significantly impact tenants’ operating costs and landlords’ rental income, making it essential to review leases and property portfolios in advance. Proactive planning will help businesses manage liabilities, take advantage of reliefs, and ensure financial stability under the evolving business rates system.
Emerging trends and other considerations
In addition to the headline changes, 2026 could bring developments in several important areas:
- Flexible and digital lease provisions: Hybrid working is making adaptable space and technology infrastructure more critical. Leases may need to allow flexible term lengths, subletting, or co-working arrangements.
- Tenant insolvency protections: New rules may affect lease termination, rent obligations, and recovery processes. Both landlords and tenants will need to understand their rights and responsibilities to manage financial risk.
- Service charge and repair clarity: Reforms may standardise service charge calculations and repair obligations, reducing disputes in multi-tenant properties. Clear agreements will become increasingly important.
Landlords, tenants, and developers should watch these trends to manage risk and keep their property strategies effective and compliant.
Commercial property law changes in 2026: Conclusion
2026 marks a transformative year for commercial property law in England and Wales. Tightened tax relief, potential restrictions on upward-only rent reviews, enhanced green energy and biodiversity obligations, and business rates reforms will reshape the market.
Forward-looking landlords, tenants, and developers who adapt to these changes proactively will be best positioned to navigate the evolving landscape and unlock new opportunities.
At BLB Solicitors, we actively monitor changes in commercial property law and work closely with our clients to navigate them, ensuring that their property strategies are legally compliant, financially robust, and sustainable for the future.