Taking a Commercial Lease in 2026: Seven Essentials Before You Sign

If you are taking a commercial lease in London, England or Wales in 2026, understanding the legal, financial and practical implications before you sign is essential. Whether you are moving into a retail unit, office, industrial premises or other business premises, the 2026 landscape brings important changes affecting anyone entering into a commercial lease.

1) Business rates: the 2026–2029 rating list is now in force 

New rateable values came into effect in England and Wales on 1 April 2026, based on open market rental values at 1 April 2024. These values should be modelled alongside rent, service charge, insurance rent and any applicable reliefs. You can check your property's rateable value using the government's Find a business rates valuation service and then model the cash effect alongside rent and service charge. 

2) EPC and MEES: the minimum standard now, and the EPC B proposal for 2031 

At present, commercial landlords generally cannot grant or continue a letting of non-domestic premises below EPC E unless an exemption applies. The Government's June 2026 interim response confirms a proposed targeted approach: from 2031, private rented non-domestic buildings over 1,000 square metres in England and Wales are expected to need to reach EPC B, where cost-effective, while buildings below 1,000 square metres are intended to remain subject to the current EPC E minimum standard. The previously proposed EPC C milestone for 2027 is not being taken forward. The EPC B uplift for larger buildings will still require secondary legislation, so lease drafting should retain flexibility. 

3) Service charges: the RICS 2nd edition standard applies from 31 December 2025 

The RICS Service charges in commercial property, 2nd edition, is effective from 31 December 2025. It strengthens expectations on transparency and timing, including budgets being issued at least one month before the service charge year and year-end accounts within four months, plus apportionment matrices and disclosure of commissions and rebates. It does not override the lease, but it is a relevant professional benchmark in lease negotiation, drafting, interpretation and operation. 

4) Security of tenure: the Landlord and Tenant Act 1954 is under review, not replaced 

If you are taking a business lease in London, England or Wales, it is important to establish at an early stage whether the lease will benefit from statutory renewal rights under the Landlord and Tenant Act 1954. The Law Commission is reviewing Part 2 of the Landlord and Tenant Act 1954. Its second consultation paper, published on 16 June 2026, considers how the existing security of tenure regime should operate in practice, including qualifying criteria, contracting out, renewal terms, rent, grounds of opposition and dispute resolution. The consultation remains open until 16 September 2026. For now, the current 1954 Act regime remains in force, so parties should still decide early whether the lease is to be inside or outside the Act and ensure any contracting-out formalities are handled correctly. 

5) Biodiversity Net Gain: planning interfaces and the 2026 exemptions 

BNG is mandatory in England under Schedule 7A of the Town and Country Planning Act 1990, as inserted by the Environment Act 2021. Most in-scope developments must deliver a 10% net gain secured for 30 years, whether on-site, through off-site units or through statutory credits. If your project involves redevelopment or planning permission, raise BNG early to avoid delays. Developers should also be aware that BNG guidance and exemptions continue to evolve. Changes announced in July 2026 include a new 0.2 hectare exemption and a temporary development exemption coming into effect on 6 August 2026, subject to the detailed transitional provisions. 

6) Register of Overseas Entities: checks where an overseas entity is involved 

Where an overseas entity owns UK land or is involved in a transaction, check ROE registration, annual updating and verification requirements early. Non-compliance can affect the ability to sell, lease or charge land and may expose the entity to Companies House enforcement action. Companies House updated its enforcement approach on 2 January 2026. 

7) Upwards-only rent reviews: what the English Devolution Act 2026 changes 

The English Devolution and Community Empowerment Act 2026 includes provisions affecting upwards-only rent reviews in business tenancies. The enabling legislation has received Royal Assent, but the relevant provisions are not yet in force and secondary legislation is expected to deal with the detail. Landlords and tenants negotiating Heads of Terms should already consider alternative rent review structures, including fixed or stepped rents, genuine upwards/downwards reviews or other mechanisms appropriate to the asset and sector. 

None of these points is unusual on its own. What has changed is how many of them now move at once — rating lists, energy standards, service charge practice and rent review structures are all in flux in the same year. The practical consequence is that Heads of Terms carry more weight than they used to, because that is where most of this is either dealt with or quietly left open. It is worth knowing which, before the lease is drafted around it. 

Next reads in the series 

How to Compare Commercial Units and Heads of Terms: A Due Diligence Checklist for Tenants

Getting to Completion: Negotiating a Commercial Lease in 2026

Taking a Commercial Lease: frequently asked questions 

What is the difference between a lease and a licence to occupy? 

A commercial lease grants a tenant a legal interest in land for a defined term and usually provides exclusive possession of the premises. A licence to occupy generally provides permission to use premises without granting exclusive possession and usually offers fewer statutory protections. Licences are often used for flexible occupation arrangements, serviced offices and short-term occupation. 

Is a commercial lease in London, England or Wales protected under the Landlord and Tenant Act 1954? 

Some are and some are not. A commercial lease will usually benefit from security of tenure under the Landlord and Tenant Act 1954 unless the parties have followed the statutory procedure to contract out of those protections before the lease is granted. 

How long does a commercial lease in London typically run? 

There is no standard term, but many commercial leases in London are commonly granted for between three and ten years. The appropriate term will depend on the nature of the business, the property, market conditions and the parties' commercial objectives. 

What is a break clause? 

A break clause gives one or both parties the right to terminate the lease before the contractual expiry date. For tenants, a break clause can provide valuable flexibility if business needs change. 

Do I need a solicitor to take a commercial lease? 

Whilst there is generally no legal requirement to instruct a solicitor, a commercial lease can create significant financial and legal obligations. A solicitor can help identify risks relating to repair liabilities, service charges, EPC obligations, alienation provisions, rent review mechanisms and security of tenure rights. 

Is EPC B already mandatory for commercial lettings? 

No. The minimum standard currently bites at EPC E, subject to exemptions. The Government's June 2026 interim response proposes a targeted EPC B requirement from 2031 for private rented non-domestic buildings over 1,000 square metres, where cost-effective, but secondary legislation is still required.

Commercial Property law advice 

Our team of commercial lease solicitors in London advises landlords and occupiers on commercial leases, lease renewals, licence arrangements, business tenancies and property portfolio management across London, and throughout the whole of England and Wales. Whether you are taking your first business lease or expanding an existing portfolio, we can guide you through the process from Heads of Terms through to completion. 

Call 020 8858 6971 or email commercial@grantsaw.co.uk to discuss your circumstances. 

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Disclaimer 

This article is for general information only and is not legal advice. Laws and guidance change and outcomes depend on facts. If you need advice on your situation, please contact us. Grant Saw Solicitors LLP is authorised and regulated by the Solicitors Regulation Authority. 

Last updated: 29 July 2026