UK Real Estate Round Up May 2026

Training

Our PROPcast series continued in May with Episode 4 and our subject was “Cyber security in real estate – managing digital risk in smart buildings”. As buildings become smarter and more digitally connected, cyber security is fast becoming a critical real estate risk. In this PROPcast Kelly Holmes, Partner and Head of Strategic Contracts, explored where responsibility for cyber security in real estate really sits, and what buyers, tenants and lenders should be asking to understand a building’s cyber resilience. If you missed it, you can watch or listen back here.

PROPcast Episode 5 is at 10 a.m. on 9 June when our subject will be “Upwards only rent reviews - latest FAQs on the proposed ban”. With potential reform on the horizon, what does the proposed ban on upwards-only rent reviews mean in practice? In this PROPcast, we will explore the legal and practical considerations arising from the proposals, offering practical insight into the issues landlords, investors and occupiers should be considering now. You can sign up for the PROPcast here. 

Legal Updates

Building Safety Act 2022

“Higher risk building” in England: 18m or seven+ storeys high and two or more residential units
“Relevant building” in England: 11m or five+ storeys high and two or more dwellings 

Remediation Bill 

The King’s Speech on 13 May 2026 set out the UK Government’s legislative plans for the year ahead and included a Bill which aims to speed up remediation for people living in homes with unsafe cladding. The Remediation Bill is said to deliver on the manifesto commitments to "fix the cladding crisis and make those responsible pay towards fixing the problem they caused". No firm timings have been given but the Bill forms part of a wider Remediation Acceleration Plan in which the government has committed to see:

• every 18m+ residential building in England remediated by the end of 2029 
• every 11m+ residential building in England remediated by 2031 

The Remediation Bill will affect property owners, developers, construction product manufacturers and residents. The majority of the Bill will apply to England only, although it will extend to England and Wales.

RICS publishes updated valuation standard for residential buildings with cladding

The Royal Institution of Chartered Surveyors has published the second edition of its valuation standard for secured lending on multi-storey, multi-occupancy residential buildings with cladding which will be effective from 1 November 2026. The updated standard revises guidance for valuers assessing residential properties affected by fire safety concerns and reflects developments in legislation, regulation and industry practice since publication of the first edition in 2022. The standard’s aim is to help RICS members understand when to request an EWS1 form when undertaking valuations for secured leding purposes on domestic residential, including mixed use, blocks of flats, although expressly points out that specific lender requirements will take precedence. RICS states that the revised standard incorporates changes arising from the Building Safety Act 2022, developments relating to the External Wall System process and updated approaches to fire risk appraisal and remediation. The standard also provides further guidance on the information valuers should obtain when assessing properties with cladding and sets out expectations for reporting and valuation assumptions in cases involving unresolved fire safety risks. Link to the new standard.

Contract

Commercial Payments Bill

The Commercial Payments Bill has been published and the draft legislation imposes a ban on retentions in construction contracts.  

• Implementation of the ban will be staged with a two year transition period so that the ban won't affect pre-existing contracts entered into before the ban comes into force
• Any retention clause that was agreed to before the transition period or during the transition period will be ineffective on the "last retention day", which is three years from the day on which the section comes into force. Upon this day the due date for the retained sum will be 30 days from the last retention day, with the final date for payment being 30 days from the due date for public authorities or 60 days from the due date for other payers. (The parties are able to agree an earlier due date and/or final date for payment in writing)
• If a "retention debt" arises (i.e. money that is wrongfully withheld, or not paid back on the last retention day), then it will be an implied term of a construction contract that the party to whom the debt is due is entitled to a fixed sum, which shall be the amount higher of £40 or the sum that is 50% of the retention debt. This is an additional sum payable on top of the retention debt itself (not a replacement for it). There is also an entitlement to statutory interest

ESG

Register of MEES exemptions and penalties

There is now an online service which allows you to search for any non-domestic properties which have a MEES exemption or penalty. It is possible to search by postcode, street name and town, the landlord's name or exemption/penalty type. The register shows when the property was registered as exempt and the reason.

View private rented sector energy standards exemptions - GOV.UK

Land Law

The Terrorism (Protection of Premises) Act 2025 (Martyn’s Law) – government guidance

The UK government has published new guidance to help the industry prepare for the implementation of the Terrorism (Protection of Premises) Act 2025 (the Act), also known as Martyn’s Law, in 2027. The Act is based on the assumption that a terrorist attack might occur anywhere. Therefore, the requirements in the Act are not related to considering the likelihood of an attack at specific premises or events. Instead, it mandates that the responsible person for standard tier premises, enhanced tier premises and qualifying events considers what public protection procedures are appropriate and reasonably practicable to achieve the objective of reducing the risk of physical harm caused to individuals if an act of terrorism were to occur. The Act is not just focused on large event spaces like arenas. Shops, restaurants and leisure facilities (amongst other premises) can all be captured.

The guidance includes flowcharts and checklists for establishing whether premises qualify under the Act, and whether certain events fall within the standard or enhanced regulatory requirements. Terrorism (Protection of Premises) Act 2025: Statutory guidance (accessible) - GOV.UK. 

One of our PROPcasts in 2025 was on the topic of Martyn’s Law and you can listen back here.

Assets of Community Value - England

The English Devolution and Community Empowerment Act 2026 will amend the assets of community value (ACV) regime in England. The changes will be brought into force by regulations (not yet made). The changes will include:

• the "right to bid" becomes a "right to buy". Previously, a community group benefitted from a six month moratorium from sale, giving it time to prepare a proposal to buy the property on the open market, but the seller was not obliged to sell to the group. Under the Act, the community group will have a right of first refusal at a price to be agreed between it and the seller at the time of sale (with a third party valuer to determine the price if the parties do not reach agreement)
• the moratorium on sale to a third party will be extended to 12 months (although the seller can require the local authority to review progress at six months and the right to buy will terminate if the community group has not met the progress requirements (to be specified in regulations))
• ACVs will be listed for 10 years, rather than the current five years, sporting ACVs will be listed indefinitely
• the criteria for an ACV will be widened to include assets that further the economic wellbeing or economic interests of the community

Landlord and Tenant

The proposed ban on upwards only rent review

Royal Assent was granted for the English Devolution and Community Empowerment Act 2026 at the end of April 2026. The schedule containing the provisions setting out the ban on upwards only rent review is not yet in force. You can read more in our update here.

Although the provisions are not yet in force, because of an element of retrospectivity in the Act, it is possible that some deals being done now may nevertheless be affected. Agreements for lease/renewal lease/reversionary lease or options to renew with a tenant of an existing lease in respect of the whole or part of the same premises will be considered "tenancy renewal arrangements" if entered into after the key date of 17 March 2026 and if the lease in question is entered into after Schedule 7A is in force the landlord will not be able to enforce any upwards only rent review provisions contained in the lease.

The variation of any such existing agreements for lease/renewal lease/reversionary lease or options to renew may also be captured, depending on the nature of the variation.

The legislation is complex and some nuanced analysis is required to establish the status of a particular deal. Please speak to your usual Eversheds Sutherland contact for more information.  

The government has indicated, albeit not in formal guidance, that the legislation is not intended to interfere with rent review of the type that mix two variables e.g. the higher of open market rent and indexed rent, as long as both of those variables is capable of moving upwards and downwards. Further detail, and a consultation on various aspects of the operation of the ban, is awaited.

Real Estate: UK - research on Tribunal readiness for Renters' Rights 

• Historic protections for renters in action across England - announces that the Act’s reforms are now in force across England, describing them as "historic protections" for renters. The update highlights the government’s intention to rebalance the landlord-tenant relationship, improve security of tenure and raise standards across the private rented sector
• When will the Renters' Right Act come into force? - this press release confirms the timeline for implementation, with the core provisions of the Act commencing on 1 May 2026. It also clarifies that certain elements will be introduced in stages, providing time for landlords, agents and the court system to adapt
• Renters' Rights Act: an overview for landlords - provides landlords with a comprehensive overview of the new legal landscape such as changes to tenancy structures and possession grounds
• Tenancy agreements: written information for your tenant - sets out the requirement for landlords to provide tenants with prescribed written information about their tenancy
• Fees you can charge as part of a tenancy - clarifies which fees landlords and agents can lawfully charge, reflecting continued restrictions on tenant costs
• Giving notice of possession to tenants before 1 May 2026 - transitional guidance explains how possession notices served before 1 May 2026 should be handled, particularly relevant for ongoing cases
• Repossessing your privately rented property after 1 May 2026 - outlines the updated process for repossessing property following the abolition of section 21
• Enforcement measures for landlords: Renters' Rights Act 2025 - sets out strengthened enforcement measures, including increased powers for local authorities and tougher penalties for non-compliance

Rights to install telecommunications apparatus capable of business occupation under LTA 1954 

In EE Ltd v Clocktower Investments Ltd [2026] UKUT 163 (LC), the Upper Tribunal (Lands Chamber) confirmed that rights to install telecommunications apparatus can constitute incorporeal hereditaments capable of “occupation” for the purposes of Part II of the Landlord and Tenant Act 1954. As a result, where such rights are held under a 1954 Act protected tenancy, the tribunal has no jurisdiction to impose a Code agreement under the Electronic Communications Code.

The operator argued that incorporeal rights could not amount to “premises” capable of “occupation” within section 23(1) of the 1954 Act, and in any event did not satisfy the requirements for easements. The FTT rejected those arguments, holding that the rights to install apparatus on the tower were incorporeal hereditaments occupied for business purposes.

Dismissing the appeal, the UT upheld the FTT’s analysis. The rights were capable of occupation of being valid easements: they conferred sufficient practical benefit on the demised premises (used as a base station) and did not infringe the “ouster” principle, as the landowner retained sufficient control. The UT did, however, flag a potential anomaly. Given the apparent lack of occupation of the corporeal premises, a court may be unable to grant a renewal lease of the land itself, raising the prospect of statutory continuation under the 1954 Act without a corresponding right to a renewal tenancy of the incorporeal rights.

Bennets Courtyard Ltd v Bennets Courtyard Airspace Ltd [2026] EWHC 1119 (Ch) – enfranchisement notice must be served on registered proprietor during the registration gap

In this case, the court had to determine whether an Initial Notice served by tenants to collectively enfranchise and acquire the freehold of their building, which was served on an unregistered transferee during the registration gap, satisfies the requirement to give notice to "the person who owns the freehold" under paragraph 1 of Schedule 1 to the 1993 Act. It held that it did not - the reversioner must be the registered proprietor at the date of service, not merely an equitable owner. Section 74 of the LRA 2002 (which provides that "An entry made in the register in pursuance of— (a) an application for registration of an unregistered legal estate, or (b) an application for registration in relation to a disposition required to be completed by registration, has effect from the time of the making of the application") did not help the tenants’ argument because it is "concerned with the effective date of registration for priority purposes under the LRA. It is not concerned to treat the person whose title relates back to the time of the application for registration as the legal owner of the freehold for all purposes, irrespective of the context".  

The King’s Speech

We understand that the Commonhold and Leasehold Reform Bill will be introduced into Parliament once the draft bill has undergone pre-legislative scrutiny. As presently drafted the bill will:

• Create a new legal framework for commonhold, to provide freehold ownership for flats and communal living without the involvement of third-party landlords. The new framework will be workable for more types of buildings than the current regime
• Introduce a ban on the use of leasehold for most new flats, to make commonhold the default tenure for developments containing flats.
• Cap ground rents for most existing long residential leases at £250 a year, falling to a peppercorn after 40 years
• Abolish forfeiture for long residential leases and replace it with a fairer system that strengthens protections for leaseholders and removes the automatic risk of home loss
• Repeal sections 121 and 122 of the Law of Property Act 1925 in relation to estate rentcharges and introduce a new type of enforcement action
• Amend the enfranchisement provisions in the Leasehold and Freehold Reform Act 2024 (LFRA 2024)
• Create a new right for leaseholders in flats to request improvements, such as a gigabit-capable broadband connection

Residential leasehold reform

The government has issued a "toolkit" to outline recent and planned residential leasehold reform. Leasehold toolkit - England - GOV.UK

Colin the Caterpillar and contractual options to renew – decision upheld by the Court of Appeal

You might recall from last month’s round-up the case of Park Cakes Limited v Caterpillar Property Limited where the court considered contractual options to renew and statutory renewal under the Landlord and Tenant Act 1954. The court found that on their true construction, options (which may of course never be exercised) do not constitute agreements within the meaning of s.28 Landlord and Tenant Act 1954. The landlords made an expedited leapfrog appeal to the Court of Appeal, which was heard on 8 May 2026. The appeal was unanimously dismissed. The Court of Appeal held that on a proper construction of the 1954 Act, whilst an option to renew is an agreement, it is not an agreement for the grant of a future tenancy to the tenant. At the point of grant the tenant has not entered into a binding commitment to take a new lease. Such agreement is reached only where the option is fully exercised and a mutually enforceable agreement to grant a new tenancy arises.

Scotland

No change to Scottish EPC rules

The Scottish Government has announced, in its updated response to the 2023 Energy Performance Certificate reform consultation and 2025 technical consultation, that it is delaying the implementation of EPC reforms in Scotland for both domestic and non-domestic EPCs until the second half of 2027. The reforms were originally due to take effect in October 2026 but have been pushed back to align with the UK government. The current EPC regime therefore remains in force in Scotland until further notice.

Tax

Land Transaction Tax

The Welsh Revenue Authority has updated guidance on whether a property is suitable for use as a dwelling. This change to guidance has been updated to reflect recent Tribunal and Court of Appeal decisions. The guidance is in relation to section 72 of the Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017. The guidance incorporates relevant case law and provides further clarification on the factors to be considered when assessing whether a property satisfies the statutory test. Importantly, this update does not represent a change in WRA policy. The revisions are only meant to improve clarity and transparency. "LTTA/1052 Derelict properties and removal of fixtures and fittings".

Articles & Publications

• Park Cakes Limited v Caterpillar Property Limited decision where the court considered contractual options to renew and statutory renewal under the 1954 Act. The court found that on their true construction, options (which may of course never be exercised) do not constitute agreements within the meaning of s.28 1954 Act. Agreement is reached only upon their effective exercise. Note that this might not be the final word on the matter as the case is being appealed. An appeal by the landlord was unanimously dismissed on 8 May 2026. Read more here: ES Lawbite / LinkedIn
  
  
• Star Pubs Trading Limited v Gunmakers Arms (Essex) LLP (County Court at Central London) decision where the court considered whether a landlord can rely on the own occupation ground under section 30(1)(g) of the Landlord and Tenant Act 1954 where it proposes to run a business from the premises using a highly structured management model, rather than through direct occupation by its own employees. The Court held that the landlord had established a genuine intention to occupy the premises for the purposes of a business carried on by it, notwithstanding that day-to-day operations would be undertaken by an operator company under the landlord’s management services agreement. As a result, the tenant was not entitled to a new tenancy under Part II of the 1954 Act. Read more here: ES Lawbite / LinkedIn.
  
  
• Pridewell Properties (London) Ltd v Spirit Pub Co (Managed) London Ltd [2026] EWHC 953 (Ch) – where the court considered the appeal in a case under Ground (f) of the 1954 Act. Although not crucial to the outcome of the appeal, the most interesting element of the judgment is the guidance offered on what is a "reasonable time" by which the landlord must have commenced works on termination of the tenancy under Ground (f). The question is not whether a post-termination delay is reasonable or explicable, but whether the landlord can truly be said to intend to set about the works at that time. A substantial post termination delay, even if explicable, is therefore likely to be insufficient. Read more here: ES Lawbite / LinkedIn
  
  
• The English Devolution and Community Bill received Royal Assent on 29 April and is now the English Devolution and Community Empowerment Act 2026. The Act includes provisions which introduce a ban on upwards only rent reviews in certain commercial leases – that ban is not yet in force. Read more here: LinkedIn
  
  
• Read the Flash Update on the Remediation Bill which was announced in the King’s Speech. The Bill aims to speed up remediation for people living in homes with unsafe cladding and is said to deliver on the government’s manifesto commitments to "fix the cladding crisis and make those responsible pay towards fixing the problem they caused
  
  
• The Court of Appeal is due to hear the appeal of the London Trocadero (2015) LLP v Picturehouse Cinemas Ltd & Ors [2025] EWHC 1247 (Ch) (23 May 2025) decision on 3 June 2026. The case involved a tenant’s claim against its landlord in relation to insurance premium charges. Read more here: LinkedIn / ES.com.