Real estate

When is occupation not occupation? Rates mitigation under the spotlight

Thu, 6 Aug 2026 00:00:00 +0100

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When is occupation not occupation?

Rates mitigation under the spotlight

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A “box shifting” rates mitigation scheme did not amount to occupation for non-domestic rating purposes where the sole purpose of placing items in the premises was to secure a rates saving.

Published: 6 August 2026
Authors: Sophie Tracey

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The Court of Appeal has allowed the appeal in The Mayor and Commonalty and Citizens of the City of London (CoL) v 48th Street Holdings Limited and Principled Offsite Logistics Limited (POLL), holding that a “box shifting” rates mitigation scheme did not amount to occupation for non-domestic rating purposes where the sole purpose of placing items in the premises was to secure a rates saving. The decision reverses the High Court ruling discussed in our earlier article, Strategic occupation or rates loophole?, which had found the scheme effective.

Legal position

Liability for non-domestic rates arises through occupation under section 43 of the Local Government Finance Act 1988, or ownership of unoccupied property under section 45. Empty property relief is available to the owner for the first three months after premises become unoccupied. At the time the facts in this case arose, a period of occupation of at least six weeks (the “reset period”, now 13 weeks) was required before that relief could be claimed again.

The leading test for rateable occupation, from John Laing & Son Ltd v Assessment Committee for Kingswood Assessment Area, requires: actual occupation; exclusive occupation for the occupier’s purpose; occupation of some value or benefit to the occupier; and occupation that is not too transient. The appeal focused on whether POLL’s occupation provided any real value or benefit.

What happened?

The case concerned empty office units at 2 America Square, EC3. After the initial empty rates relief period expired, POLL took a short lease at a peppercorn rent and simultaneously served a break notice ending the lease after six weeks. During that period it placed boxes in the premises, accepted liability for rates and claimed to be the occupier. Once the lease ended, the boxes were removed and the owner claimed a fresh period of empty property relief. POLL received a share of the resulting rates saving.

It was common ground that the boxes served no business or commercial purpose and were present solely to create occupation for rating purposes. The lease was not a sham; the dispute was whether the arrangement amounted to occupation to constitute a reset period.

What did the court decide?

At first instance, the High Court followed R (Principled Offsite Logistics Ltd) v Trafford Council and held that POLL’s scheme was effective. It accepted that the benefit of the occupation was the rates mitigation achieved by the arrangement.

The Court of Appeal disagreed and held that the Trafford Council case was wrongly decided. Relying on the Supreme Court’s reasoning in Rossendale BC v Hurstwood Properties, it emphasised that the empty rates regime is intended to discourage properties being left vacant and encourage productive use.

Applying a purposive interpretation, the Court held that Parliament cannot have intended temporary placement of items in an otherwise empty property to constitute occupation where there is no commercial or business purpose beyond rates mitigation. The Court described the arrangement as “pure rate mitigation occupation”.

The Court rejected the argument that the rates saving itself supplied the necessary benefit. That reasoning was circular. While storage can amount to occupation where the stored items have utility to the occupier, occupation must have some independent use, value or benefit. Activity undertaken solely to obtain a rates saving cannot satisfy that requirement.

The Court stressed this was not a motive test. Occupation may still qualify even where reducing rates is one objective, provided the occupation has genuine utility beyond the tax advantage. The difficulty for POLL was that the alleged benefit was the rates saving itself.

What next?

The judgment is a significant setback for intermittent occupation schemes that rely on minimal activity with no independent purpose. Owners, occupiers and advisers should review existing arrangements and consider whether the occupation has genuine commercial or practical utility. Rates mitigation remains possible, but only where occupation has a real use, value or benefit beyond securing a rate saving.

Sophie Tracey, Real Estate Litigation Principal Associate and a rating expert at Shoosmiths, comments: “This decision is likely to signal the end of many rates mitigation schemes based on token occupation. While the Court confirmed that occupation need not be wholly commercial in nature, it must provide a genuine use, value or benefit beyond the rates saving itself. Property owners and occupiers should therefore review existing arrangements carefully, as the courts are increasingly willing to assess such schemes against the underlying purpose of the rating regime.”

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Law Commission consultation: Reforming interim rent on lease renewals

Tue, 4 Aug 2026 00:00:00 +0100

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Law Commission consultation: Reforming interim rent on lease renewals

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Our next article considering the Law Commission's consultation on the future of the Landlord and Tenant Act 1954 (the Act) tackles one of the more complex and frequently misunderstood aspects of the lease renewal process: interim rent.

Published: 4 August 2026
Authors: Elinor Sandbach

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The Act currently contains detailed provisions dealing with interim rent. However, the Law Commission has concluded that the existing regime is difficult to understand, can produce uncertainty and tactical behaviour, and may lead to unfair outcomes both for landlords and tenants.

The consultation therefore considers whether the current approach should be replaced with a simpler system or retained in a more streamlined form.

Interim rent

When the contractual term of a lease protected by the Act expires, the tenant will often remain in occupation under a statutory continuation tenancy while the parties negotiate the terms of a renewal lease.

As a starting point, the terms of the existing lease continue during that continuation period. This means the tenant generally continues to pay rent at the level specified in the existing lease, even if market rental values have changed significantly since the lease was originally granted or the level of rent last reviewed.

Either party may, however, apply to the court for an interim rent determination.

The interim rent period starts from the earliest date that could have been specified in the relevant section 25 or section 26 notice, and continues until either:

1. the renewal tenancy is completed

2. the continuation tenancy comes to an end (for example, because the landlord successfully opposes renewal or the tenant decides not to proceed).

The current statutory regime is complicated because different valuation assumptions can apply depending on the circumstances. Where a renewal lease is ultimately granted, interim rent is often agreed to be the same as the rent payable under that new lease. However, the legislation contains a number of exceptions, particularly where:

1. rental values have changed substantially during the continuation period

2. the terms of the renewal lease differ from the existing tenancy

3. no renewal tenancy is ultimately granted.

Further complexity arises because the rent under the renewal tenancy is currently linked to the court's determination process. Legally, the valuation date is the commencement date of the renewal tenancy i.e. three months and three weeks after the court decides the provisions of the tenancy. Since future market conditions cannot be known, in practice the valuation date is generally treated as the date of the final hearing, even though that date may be itself uncertain (with final hearings sometimes listed for in excess of 12 months from the date of a Court application). This can create difficulties for valuers and encourage tactical delays in both rising and falling markets.

The Law Commission also highlights a practical cashflow issue. Until interim rent and renewal rent are agreed or determined, tenants continue to pay rent at the existing level. Once the final figures are established, a substantial balancing payment may become due from either landlord or tenant, potentially many months after the relevant period has ended.

Proposals for reform

Rather than abolishing interim rent altogether, the Law Commission has developed two alternative reform models.

Option A: fixed valuation and commencement dates

Under Option A, both the valuation date and commencement date for the renewal tenancy would be fixed by reference to the section 25 or section 26 notice.

The intention is to create a clearer and more predictable system in which the parties know from the outset the dates that will be used for valuation purposes.

If adopted, this approach would largely remove the need for separate interim rent provisions because the rent under the renewal tenancy would effectively apply from a date linked to the notice itself.

The principal advantages are greater certainty, simpler valuation evidence and reduced scope for tactical delay.

However, the proposal could create difficulties where the renewal tenancy differs materially from the existing tenancy. For example, if the renewal lease relates to only part of the premises, it may be unfair for the tenant to continue occupying the whole property during the continuation period while paying rent calculated by reference to the smaller demise.

The Law Commission therefore proposes that, in certain cases, adjustments could be made to reflect significant differences between the continuation tenancy and the renewal tenancy.

The consultation also seeks views on whether the notice-linked date should be:

the earliest date that could have been specified in the notice (which, following the amendments introduced by the Regulatory Reform (Business Tenancies) (England and Wales) Order 2003, is the date from which interim rent is currently payable); or
the actual termination date specified in the notice.

This distinction could have significant strategic implications. The 2003 Order deliberately severed the link between interim rent and the date actually specified in the notice, instead tying interim rent to the earliest date that could have been specified. The intention was to prevent parties from obtaining a tactical advantage by choosing a longer notice period. Reverting to the actual termination date would risk reintroducing those tactical considerations, as parties may seek to influence both the valuation date and the commencement of any revised rent by controlling the timing of their notices.

Option B: retain interim rent but simplify it

Option B would preserve the current structure of the Act, keeping the commencement date and valuation date broadly unchanged, and with interim rent continuing to exist as a separate concept.

However, the basis on which interim rent is assessed would be substantially simplified.

Rather than the current array of different valuation exercises and exceptions, interim rent would be assessed by reference to the open market rent of a hypothetical tenancy on the same terms as the continuation tenancy.

This approach is simpler than the current statutory scheme, and avoids both bringing forward the lease renewal cycle and the need to account for differences between the continuation tenancy and the renewal tenancy.

However, it would not eliminate uncertainty around valuation dates and would continue to allow scope for tactical delay because the renewal rent would still be linked to the timing of the court process.

Application of interim rent in more complex scenarios

The consultation also examines how either option should work where circumstances do not fit the traditional lease renewal model.

For example, issues can arise where the rental model changes on renewal, such as a transition from a conventional rack rent to a turnover rent arrangement. The ability of the court to order a turnover rent is discussed in Chapter 7 of the Consultation and in our article here: Commercial leases: On what terms and rent can a lease be renewed?

The Law Commission recognises the practical difficulties of retrospectively calculating turnover-based rents for periods when tenants may have had no obligation to keep or provide the relevant trading data. Under Option A, the court could be given power to make an appropriate adjustment. Under Option B, interim rent would instead remain based on the rental model used in the original tenancy.

The consultation proposes a similar approach where no renewal tenancy is granted, suggesting that the rent should continue to be assessed using the same rental structure as the original lease.

The Law Commission also seeks views on whether parties should be able to apply for interim adjustments to rent during the continuation period and how balancing payments should be enforced once the final rents have been determined.

Comment

From a corporate occupier perspective, Elinor Sandbach, partner in the real estate litigation team, comments:

“From an occupier perspective, the strongest argument for reform is greater certainty. The current regime can leave occupiers carrying a significant contingent liability for many months while lease renewal proceedings progress, only for a substantial balancing payment to arise long after the relevant period has passed. That uncertainty can make budgeting and financial planning particularly challenging for businesses with large property portfolios.

Option A has obvious attractions because it creates a clear valuation framework from the outset and reduces the scope for tactical delay. However, fixing the valuation date at the notice stage also means that the parties are effectively pricing a lease before the terms have been finalised and, in some cases, before market conditions have fully evolved. In volatile occupational markets, a significant period may elapse between the service of a notice and completion of the renewal lease, creating a risk that the rent ultimately paid is detached from conditions prevailing at the point the new tenancy is actually granted.

Many occupiers may therefore see merit in the simplicity offered by Option B, which preserves the existing renewal timetable whilst streamlining the valuation exercise.”

Laurence Matthews, a Senior Associate in the real estate litigation team who acts for investors and developers, agrees:

“Option A gives both parties greater certainty from the outset, but the trade-off is that it could accelerate the lease renewal cycle. Fixing the valuation and commencement date at an earlier stage means that a lease that takes a year to negotiate may have already lost a substantial part of its term by completion, bringing the next renewal process into view much sooner. While parties may respond by agreeing longer lease terms, that will of itself affect value and, potentially, the new level of rent under the renewal lease."

This article forms part of our series examining the Law Commission's consultation on reform of the Landlord and Tenant Act 1954. Our separate article on Chapter 7 Part 1 considers the Law Commission's proposals regarding the assessment of rent under renewal tenancies.

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Commercial leases: A cautious approach to 1954 Act reform

Thu, 23 Jul 2026 00:00:00 +0100

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Commercial leases: A cautious approach to 1954 Act reform

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Although the Law Commission has proposed changes in some areas of commercial leasehold law, in other areas it is more cautious about making changes.

Published: 23 July 2026
Authors: Michael Callaghan

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Introduction

The Law Commission’s consultation on the Landlord and Tenant Act 1954 (1954 Act), which underpins the law for business tenancies, proposes several significant changes to the 1954 Act. We have focused on a number of these in other articles in this series. However, where changes would overlap with other areas of law, the Law Commission has taken a more conservative and cautious approach to law reform.

Registration gap

The registration gap arises where a property is transferred, but the buyer is not yet registered at HM Land Registry. Legal title remains with the seller, while the buyer holds the beneficial interest. During this period, notices must be served by or on the legal owner, not by or on the new owner. The issue affects both landlords who sell their title and tenants who assign their leases.

The Law Commission’s preferred option is to maintain the current law to ensure that the treatment of the registration gap under the 1954 Act is broadly consistent with other statutory and common law notice requirements. It believes that the difficulties that the registration gap creates, and the way in which those issues are managed by the parties or their representatives, are generally well understood.

Notably, the Law Commission says that there are questions about establishing the grounds for possession where the legal landlord serves a notice opposing the renewal of a tenancy on redevelopment or occupation grounds but the new owner is the person who will redevelop or occupy. However, it does not explore these further or suggest solutions to these questions. This is a missed opportunity to clarify the law.

Occupation by linked parties

For a tenant to benefit from the protection of the 1954 Act, it must be in occupation of premises for the purposes of a business. In modern structures the “tenant entity” may differ from the “occupying entity”. Although there are existing statutory relaxations applying to group companies and trusts, they do not benefit public sector bodies or other arrangements. The Law Commission does not propose immediate reform. Instead, it specifically asks whether occupation by “government bodies” should be treated like group companies and trusts. In effect this would mean that occupation by one government body should constitute occupation of the tenant in circumstances where the tenant is a different government body.

Occupation requirement

Some business tenants may not be able to benefit from the protection of the 1954 Act where their businesses consist of granting rights of occupation of the premises to others as they are not then in occupation of the premises themselves. Typical examples include business tenants that run mobile home sites, and operators of serviced apartments and serviced offices. Similar difficulties might also arise for companies that operate a franchise business model, where the franchisor owns a business tenancy of premises that are occupied by the franchisee.

The Law Commission is cautious about reforming the “occupation” rule and widening it to “using the premises” for the purposes of a business. Such an approach would, it believes, risk unravelling a key principle underpinning the 1954 Act. It is therefore asking for further evidence about the extent to which the “occupation” rule causes difficulties in practice that should be addressed through reform.

Contractual break clauses

If a landlord has a contractual break clause in a protected tenancy, it must not only comply with the contractual obligations in the lease but also comply with the statutory requirements of the 1954 Act to oppose the grant of a new tenancy. It has been suggested that where the parties have agreed to the inclusion of a contractual break clause within a protected tenancy, the landlord should be able to exercise the break without having to oppose the grant of a renewal tenancy under the 1954 Act.

The Law Commission considers that the current law is right. Allowing landlords to terminate a protected tenancy simply by exercising a contractual break clause would risk substantially undermining the protection offered to tenants under the 1954 Act.

Large-scale and complex redevelopments

Where a landlord plans a large-scale or complex redevelopment, a landlord may not be able to satisfy the redevelopment ground to regain occupation. Where extensive works are planned to a wider property, the impact of that work specifically on the tenant’s premises may be relatively minor, or non-existent. However, there could be potentially significant risks or logistical difficulties in undertaking wider redevelopment works with the tenant in situ that might make redevelopment of the wider property prohibitively costly, difficult or dangerous.

The Law Commission has considered whether the redevelopment ground should be amended, or a new ground of opposition created, to enable a court to consider a landlord’s wider works. However, it has concluded that this expansion would represent a significant change to the 1954 Act and should not be implemented. It believes that although there are challenges that are caused by the 1954 Act, there is no evidence those challenges hold back large-scale and complex developments. Nevertheless, it invites consultees’ views regarding any specific challenges that are encountered in large-scale or complex developments, and about any amendments to the 1954 Act that are required to resolve them.

The interaction between MEES and the 1954 Act

The Law Commission discusses the obligations in the MEES Regime (in particular, the duty not to let, or continue to let, “sub-standard” property) and the security of tenure regime under the 1954 Act (which obliges landlords to re-let a property to existing business tenants). Which regime takes priority?

The Law Commission notes that there is a temporary exemption to “postpone” compliance with MEES by six months on the grant of a renewal tenancy pursuant to the 1954 Act and that the consent exemption may also apply. It therefore considers that, in principle, these exemptions mean that the 1954 Act does not itself present compliance issues with the MEES regime.

However, the Law Commission acknowledges that there is a lack of clarity about how the exemptions operate in practice. For example, it is unclear whether a negotiated renewal of a protected tenancy, concluded without the service of a section 25 or section 26 notice (or issuing court proceedings), constitutes a “renewal pursuant to the 1954 Act” for the purposes of the temporary exemption under the MEES regime. However, to the extent that this is an issue with the MEES regime, it is outside the scope of the Law Commission’s consideration of the 1954 Act.

The Law Commission asks for evidence of any practical difficulties in relation to the “conflict” between MEES and the 1954 Act.

What next?

As ever, it is important to remember that this is, for now, only a consultation. Any views provided in response will form the basis of recommendations by the Law Commission. It will then be for government to choose how to implement (or not) those recommendations in order to reform the landscape for commercial landlord and tenant relationships.

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Commercial leases: On what terms and rent can a lease be renewed?

Tue, 14 Jul 2026 00:00:00 +0100

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Commercial leases: On what terms and rent can a lease be renewed?

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The Law Commission’s consultation on modernising security of tenure reviews the current approach to determining the rent and “other terms” of a renewal tenancy and proposes changes for today’s commercial property market.

Published: 14 July 2026
Authors: Rachel Beard

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New rent – setting the open market rent

If the landlord and tenant cannot agree the new rent, the court can determine the rent for which the premises “might reasonably be expected to be let in the open market by a willing lessor”. The Law Commission does not propose any reform to the general approach in assessing the level of rent.

However, the consultation invites views on whether any reduction in rent in comparable lettings to reflect a rent-free fit out period should be considered when the court determines the new rent. Suggestions include including an additional assumption that the premises are fitted out to the tenant’s requirements (to reflect reality) or to expressly disregard any fit-out rent-free period that might be granted to the hypothetical tenant.

New rent – changing rental model

The Law Commission also invites views on whether the court should have the power to switch rental models in the renewal lease from a fixed rent to a turnover rent, or vice versa. It considers that the rack rent assumption is no longer fit for modern markets, especially for retail and leisure.

The Law Commission recommends that the court’s powers should be clarified and expanded to allow the court to set rent and lease structure based on what would be agreed in the open market letting of the premises but adapted for an ongoing business, existing occupation and fairness between the parties. The rental model should not change simply because a different model is commonplace in the market. There should be a balancing exercise to determine whether a change is appropriate.

The Law Commission recommends that if the rental model changes, the court should be able to impose necessary supporting provisions by reference to tenancy provisions that are typically agreed in the open market and then tailor them to the premises and parties, including turnover reporting obligations, audit rights, user restrictions and alienation controls.

This would be a significant change in the basis on which a lease can be renewed.

“Other terms” – options for reform

Where a landlord and tenant cannot agree the terms of a renewal lease, the court may determine the disputed provisions having regard to the terms of the existing tenancy and “all relevant circumstances”.

In O'May v City of London Real Property Co Ltd [1983] 2 AC 726, the House of Lords directed that a court should start with the existing lease, with the burden on the party seeking a change to demonstrate that it is justified by “essential fairness”. The court also considers the protective purpose of the 1954 Act and the tenant’s bargaining position.

The Law Commission recognises that commercial lease drafting continues to evolve. The emergence of pandemic-related drafting and the growing use of green lease clauses illustrate how new issues can arise that were not contemplated when many existing leases were granted. The consultation considers four possibilities for reform:

retain the existing law

The Law Commission acknowledges that the current approach is embedded in the existing commercial leasehold market. Its view is that the current position is resilient and widely understood. However, the Commission acknowledges the criticism of the current law, that it lacks certainty of outcome when a case proceeds to court.

codifying existing principles

The terms of the renewal lease would be determined by a court under a new statutory test, based on the existing law. Codifying the case law could improve clarity but the Law Commission considers that any statutory wording would need to remain high level and may simply generate new disputes about interpretation.

a market-based approach

Under this model, renewal lease terms would be based on terms typically agreed in the market at the time of renewal. While this mirrors the approach used for determining the new rent to be paid by the tenant, the Law Commission highlights practical difficulties in identifying market-standard provisions and concerns about increased cost and litigation.

a “guided” or “presumptive” approach

This option would retain the current framework but would require a court to have regard to one or more factors or to presume a particular type of term should be included. For example, the Law Commission explored whether the 1954 Act should require courts to consider specified factors, such as the MEES regime, or presume the inclusion of certain modern lease provisions, such as pandemic clauses, when determining renewal lease terms.

“Other terms” – recommended approach

The Law Commission’s conclusion is that the current law has not proved problematic enough to justify reform, particularly in the light of its consideration of other options. It is possible under O’May principles to introduce new terms to leases where it is fair to do so. Therefore, it proposes that the current law as to determination of “other terms” is retained.

However, the Law Commission recognises that the existing law may not go far enough in enabling leases to evolve to accommodate modern environmental concerns. It proposes a “guided approach to environmental terms” where a provision would be included in the 1954 Act to require the court to consider environmental matters when exercising its discretion to settle disputes over the other terms of a renewal tenancy.

Comment

From a corporate occupier perspective, Elinor Sandbach, partner in the real estate litigation team, comments:

“From an occupier perspective, the Law Commission’s consultation highlights the tension between ensuring lease renewals reflect modern market realities and preserving the certainty that businesses need to invest and operate with confidence. While greater flexibility around rent assumptions, fit-out incentives and alternative rental models may better reflect how space is let in today’s market, occupiers will be concerned about increased complexity, cost and uncertainty if renewal terms become more heavily influenced by current market practice.

The decision to retain the established approach to “other terms” is therefore welcome, helping to protect tenants from wholesale changes to their existing bargain, while the proposed focus on environmental considerations recognises the growing importance of sustainability obligations in commercial leasing. Overall, the challenge will be striking the right balance between modernisation and maintaining the security and predictability that underpin business tenancy renewals.”

James Speed, partner in the real estate team notes from an investment perspective:

Institutional and international investors are attracted to the commercial property investment market within England and Wales by its relative certainty and maturity. In a world of rising inflation, bond yields and interest rates, investors will welcome the Law Commission’s conclusion that “if it ain’t broke, don’t fix it”

What next?

As ever, it is important to remember that these are for now, only consultations. Any views provided in response will form the basis of recommendations by the Law Commission. It will then be for Government to choose how to implement (or not) those recommendations in order to reform the landscape for commercial landlord and tenant relationships.

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Shoosmiths advises on Centre Court refinancing

Mon, 6 Jul 2026 00:00:00 +0100

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Shoosmiths advises on Centre Court refinancing

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Shoosmiths has advised long-standing clients Olympian Homes and Housing Growth Partnership (HGP) on the refinancing of the senior debt secured against Centre Court, a 790-bed purpose-built student accommodation (PBSA) scheme in Nottingham.

Published: 6 July 2026

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The successful refinancing marks an important milestone in the evolution of the development, providing a strong platform for the asset to continue to mature and generate long-term value.

Centre Court is a landmark purpose-built student accommodation asset, and the refinancing reflects the continued confidence in both the scheme and its long-term potential. The transaction supports the next phase of the project as the development continues to establish itself within the Nottingham student accommodation market.

Shoosmiths has worked closely with Olympian Homes and HGP over a number of years and previously advised on the original development financing of the scheme in 2023. Building on that relationship, the real estate finance team was delighted to support both clients once again on this latest transaction.

Sheelagh Cooley, Partner and Co-Head of Real Estate Finance, commented: "After acting on the initial development loan, we are delighted to have been able to support Olympian and HGP with this next phase of the project. We value our longstanding relationships with both clients and look forward to seeing the continued success of Centre Court."

This latest instruction further demonstrates Shoosmiths' strong track record in advising developers, investors, lenders and funding partners across the living sector, supporting clients through the full lifecycle of a project from development financing through to refinancing and stabilisation.

Congratulations to Olympian Homes, HGP, Affinius Capital and all those involved in the successful completion of the transaction.

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Commercial leases: Consultation on protection of business leases

Fri, 3 Jul 2026 00:00:00 +0100

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Commercial leases: Consultation on protection of business leases

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The Law Commission has recommended significant changes that will affect whether business leases have security of tenure and to the procedures to remove it.

Published: 3 July 2026
Authors: Michael Callaghan

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Current law

Business tenants will usually have the protection of the Landlord and Tenant Act 1954 (the Act), including the right to renew their lease, unless the lease is contracted out of the security of tenure provisions in the Act. Currently, only fixed-term leases can be contracted out. All express or implied periodic tenancies (those that continue on a rolling basis until terminated by notice) are automatically within the protection of the Act.

Proposed changes to leases that have the protection of the Act

The Law Commission has recommended that all periodic tenancies granted to new tenants should fall outside the protection of the Act, or if this is not accepted, that these tenancies too should be capable of being contracted out. A tenant who currently has a periodic tenancy with the protection of the Act who renews it would continue to have protection but could agree to contract out the renewed periodic tenancy.

Short-term leases

Currently a lease granted for a term of under six months does not have the protection of the Act unless the tenant (or a predecessor in title carrying out the same business) has been in occupation for at least 12 months. If the tenant is granted two or more successive short-term leases of less than six months, it is unclear whether the aggregate terms determine whether the 12-month rule is satisfied.

The Law Commission has proposed two options for reforming the short-term lease rule.

Under the first option, a lease for a term of less than 24 months would not have the protection of the Act. If the landlord and the tenant agree to grant a new lease, the 24-month rule would apply again but any previous period of occupation by the tenant counts. If the total period of occupation at the end of the term of the new lease exceeds 24 months, the new lease will have the protection of the Act, unless it is contracted out.

Under the second option, a lease for a term of less than 12 months would not have the protection of the Act. If the landlord and tenant agree to grant a new lease, the 12-month rule would apply again but without taking into account occupation under any previous leases.

The Law Commission has sought views on which option consultees prefer.

Excluded tenancies

Currently, certain types of tenancies, that might otherwise have the protection of the Act are excluded from protection based on the use of the premises. This includes agricultural leases, mining leases, older leases of licenced premises and leases whose primary purposes is to grant “code rights” to electronic communications operators. The Law Commission has concluded that there should be no additions or alterations to the list of “excluded use” leases.

Contracting out

Since 2003, the procedure to contract out a lease has consisted of a prescribed form of notice served by the landlord on the tenant and a declaration by the tenant in return to confirm that it has received the notice and understands the lease will not have the protection of the Act. This process must be completed before the tenant is contractually bound to accept the grant of the lease.

The Law Commission has acknowledged that this procedure is slow, bureaucratic, open to mistakes being made and largely a tick-box exercise. It also creates issues for some leasehold transactions such as options to renew, enforcement of guarantor obligations and changes to the identity of landlord or tenant before the lease is granted.

The Law Commission recommends abolishing the current process and replacing it with a new procedure whereby contracting out takes place within the lease with prescribed wording appearing prominently. Agreements for lease would also contain prescribed wording explaining that the future lease will be contracted out. This would bind successors in title.

Unauthorised underleases

The tenant of a contracted-out lease can grant an underlease that has the protection of the Act. When the lease comes to an end, the undertenant has the right to ask the landlord to renew its lease. Whilst acknowledging that this might be unfair to landlords, the Law Commission has not recommended changing the position. It is usual for leases to provide that underleases must be contracted out.

Surrenders and agreements to surrender

A lease can be surrendered in whole or part without any statutory process of contracting out. However, an agreement to surrender a protected lease must be contracted out otherwise the agreement is void. The contracting out must take place between the current landlord and tenant of the lease. It follows the same procedures as for contracting out a lease.

The Law Commission asks for consultees’ views on the issue and whether, if the procedures are retained, they should apply equally to surrenders of a lease as well so to agreements to surrender.

If the procedures are retained, it recommends that they should follow the same form as those proposed for contracting out leases. In addition, it recommends that the law be clarified to confirm that agreements to surrender part can be contracted out.

How will this affect investors and occupiers?

Nathan Rees, partner and co-head of Shoosmiths’ Investment group notes:

“From an investor perspective, the proposed move to simplify the contracting-out process is a positive and long overdue step. Embedding the process within the lease documentation should materially reduce execution risk and delay, particularly on time-sensitive transactions, while still preserving tenant awareness. The current regime is widely seen as overly procedural for what is, in most cases, a commercially agreed outcome.

Investors will also welcome the proposal to exclude periodic tenancies from security of tenure (or allow them to be contracted out), and the proposed increase from 6 months to 24 months before a tenancy is capable of acquiring security of tenure will, again, be seen as a positive proposal given that it is very rarely intended that such tenancies should benefit from security of tenure.”

From a Corporate Occupier perspective, Beth McArdle, partner and head of Shoosmiths’ national Corporate Occupier real estate team, comments:

“From a corporate occupier perspective, the Law Commission’s proposals represent a clear shift towards simplification in a regime that has long been seen as overly rigid and procedurally burdensome. The move to exclude (or more readily contract out of) protection for periodic tenancies and to broaden the scope of short-term lettings outside the Act reflects the modern corporate occupier’s need for agility.

However, this flexibility comes with a trade-off: a potential erosion of the certainty and renewal rights that many occupiers still rely on. The proposed overhaul of the contracting-out process is likely to be widely welcomed, removing a layer of administrative friction which is often viewed as a “tick-box” exercise and a source of technical risk in transactions. That said, greater reliance on wording within the lease itself will place increased emphasis on careful drafting and early-stage negotiation, particularly in agreements for lease. Overall, the reforms signal an evolution rather than a wholesale reset, but for corporate occupiers they underline the importance of being increasingly proactive in lease structuring, with a sharper focus on balancing flexibility against long-term security of tenure in their portfolio strategy

What next?

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Buying leasehold land: How to avoid an unreasonable landlord killing your deal

Thu, 25 Jun 2026 00:00:00 +0100

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Buying leasehold land

How to avoid an unreasonable landlord killing your deal

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In a case of interest to purchasers acquiring leasehold titles, the court considered the position where the seller’s landlord unreasonably withholds or delays consent to the assignment.

Published: 25 June 2026
Authors: Tom Freeman

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The case of Mulberry Homes (Hazel Grove) Limited v Scoto Limited (1) and Stockport Metropolitan Borough Council (2) [2026] EWHC 1339 (Ch) confirms that a buyer has standing to challenge such conduct, enabling developers to take control of both the timetable and the parties’ rights to either enforce or end the sale contract.

Background

The case concerned a right of pre-emption over a mixed freehold and leasehold site in Stockport, with Stockport Metropolitan Borough Council as landlord of the leased part. The lease included a standard restriction against assignment without landlord’s consent, such consent not to be unreasonably withheld.

The buyer exercised its right of pre-emption to acquire the land, and the parties duly entered into a sale and purchase agreement, incorporating the Standard Commercial Property Conditions (SCPC).

As required by the lease and SCPC 11, the seller applied for consent to assign – which was refused (twice) by the Council.

SCPC 11.6 makes provision for what happens if consent to assign cannot be obtained. First, the deadline for completion is pushed back and then, if after six months consent has not been granted and there has been no court declaration that the landlord’s refusal was unreasonable, either party has the power to rescind the contract.

With consent refused and no application made for a declaration, the seller in this case purported to exercise its right to rescind and pulled out of the deal.

Legal argument

The buyer argued that the Council’s refusal of consent was clearly unreasonable, and so (under s.1(3) of the Landlord and Tenant Act 1988) the seller became entitled to assign without consent so that SCPC 11 no longer applied – and crucially, the seller lost its right to walk away.

The buyer therefore applied for specific performance requiring the seller to complete the sale agreement, plus a declaration that the Council’s refusal of consent to the proposed assignment was unreasonably withheld and/or delayed.

The questions for the court were therefore:

If consent to assign has been wrongfully refused or delayed, such that it is “no longer required”, does SCPC 11.3 fall away?
Can the buyer apply for a declaration that the consent to assign has been wrongfully refused or delayed by the landlord for the seller?

Decision

The court considered the first question at a single moment in time – the original completion date, at which point landlord’s consent to assign was required under the lease. Where the SCPC specifically made provision for next steps, and notwithstanding the statutory framework, the obligation on the seller under the SCPC couldn’t simply fall away.

The court was however willing to find that a contracting purchaser has sufficient interest and standing to apply for declaratory relief against the landlord, even in advance of completion of the sale of the leasehold interest – although it would also need to join the seller as a party to the litigation.

Crucially however, that step had to be taken in accordance with the deadline in the SCPC.

This had not happened in this case, and so the seller was entitled to rescind the contract.

So what?

It is not uncommon for a landlord’s delay in providing consent, or refusing consent, to scupper a transaction. The seller will argue that it is doing all that it can to secure consent, and that a “reasonable endeavours” obligation does not require it to issue proceedings against a landlord which is holding out.

This decision is of real benefit to buyers, as it confirms for the first time that buyers can unilaterally make an application for a declaration that consent has been unreasonably withheld or delayed. This gives the buyer much more control over the transaction and means that they are no longer beholden to a seller. If that declaration is made, the sale agreement will stand – without the obligation for the seller to obtain consent. Any such application must, however, be made within the timescales laid down in the sale contract.

Remember too that the sale and purchase agreement can amend the SCPC. In certain circumstances, it might be worth considering whether deadlines (such as the six-month longstop date) should be extended to allow both parties more time to consider their options (and to litigate, if required), particularly where strategic acquisitions are key to wider deals.

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2031: A new target date for MEES in commercial real estate

Wed, 24 Jun 2026 00:00:00 +0100

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2031: A new target date for MEES in commercial real estate

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The Government has signalled a new strategy to tighten MEES for commercial lettings. From 2031, the minimum EPC rating will rise from E to B, but only for larger buildings.

Published: 24 June 2026
Authors: Nathan Rees

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What is the new strategy?

The Government has issued an update on increasing minimum energy efficiency standards for let commercial buildings. It intends to adopt a proportionate approach, focused on larger buildings.

The headlines are:

from 2031, it is proposed that all private rented buildings over 1,000 square metres in England and Wales will need to reach a higher standard of energy efficiency of EPC B, where cost effective.
buildings below 1,000 square metres will continue to be subject to the current minimum standard of EPC E. This is aimed at giving greater flexibility to SMEs and high street landlords of smaller properties.
the previous strategy included an interim step of a minimum standard EPC C in 2027. This has been dropped to give landlords and tenants more time to improve their buildings.
existing exemptions, including the 7-year payback test, will remain in place.

When will further details follow?

This is an interim response to consultations issued in 2019 and 2021 on the future for MEES for commercial lettings. A full response to these consultations will follow, providing the finer details of the new strategy.

Additional legislation will be required to implement the proposals, but the Government is aiming to introduce that legislation, and additional guidance, as soon as possible.

How does this differ from the Government’s strategy for residential premises?

The target date for increasing the minimum energy efficiency standard for let residential premises is 1 October 2030, with a lower target of EPC C rating.

The metrics for calculating EPC ratings is also set to change for residential premises. However, the Government has previously announced that the metrics for EPC ratings for commercial premises will remain the same.

Comment: what does this mean for landlords and tenants?

Landlords and tenants will welcome confirmation of the 2031 target date and scope of affected buildings, after waiting since the 2021 consultation for clarity on the Government’s policy for commercial buildings.

Nathan Rees, partner and co-head of Shoosmiths’ Investment group notes that “the removal of the 2027 interim target provides welcome breathing space but should not be seen as a reason to defer action. With a clear end-date now in sight, investors who plan capital expenditure and building upgrades early will be better placed to manage pricing risk, avoid bottlenecks in delivery, and preserve liquidity.

The Government’s more targeted approach brings long-awaited clarity, particularly for institutional owners with larger assets. While further detail is still required, the direction of travel is clear—energy performance is increasingly a core investment metric rather than a compliance issue.”

From a Corporate Occupier perspective, Beth McArdle, partner and head of Shoosmiths’ national Corporate Occupier real estate team, comments “the revised MEES trajectory provides helpful clarity but does not remove the underlying commercial and operational challenges. A confirmed 2031 target for EPC B gives occupiers greater visibility when planning estate strategies, refurbishments, and relocations, and should support more informed lease negotiations and alignment with corporate ESG commitments. There is also a clear upside in terms of reduced energy costs and increased resilience to price volatility as more efficient buildings come forward.

However, the shift to a single end-date without an interim EPC C milestone risk compressing delivery into a shorter window, potentially leading to disruption around key lease events as landlords accelerate works closer to the deadline. For occupiers, this heightens the need to manage business continuity, particularly where improvement works require access, equipment replacement or reconfiguration of occupied space.

Cost allocation will also remain a key concern. While the obligation to improve sits primarily with landlords, the extent to which upgrade costs can be recovered through service charges or reflected in rents will depend on lease drafting and may ultimately be expected to be borne (in whole or in part) by corporate occupiers.

Finally, the targeted focus on larger buildings creates a two-tier market. Occupiers of substantial assets will see increasing pressure both from a regulatory perspective and from investors to occupy higher-performing space, whereas those in smaller units may face less immediate change but greater long-term uncertainty as policy continues to evolve.

Overall, occupiers will welcome the direction of travel but will need to engage proactively with landlords, scrutinise green lease provisions and factor MEES compliance into longer-term occupational and ESG strategies.”

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Commercial leases: Law Commission proposes sensible, measured changes

Tue, 23 Jun 2026 00:00:00 +0100

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Commercial leases: Law Commission proposes sensible, measured changes

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Alongside its consultation on the Landlord and Tenant Act 1954, the Law Commission has launched a second one aimed at removing specific legal impediments to commercial lettings.

Published: 23 June 2026
Authors: Michael Callaghan

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What is being considered?

The consultation (available here) poses 13 questions, with a particular focus on:

the application of residential tenants’ rights of first refusal to commercial lettings in mixed-use buildings
the extent to which the Landlord and Tenant (Covenants) Act 1995 (1995 Act) restricts otherwise legitimate commercial arrangements

The proposals are deliberately targeted rather than radical, focusing on discrete areas where the current law creates delay, cost and uncertainty in day-to-day transactions.

The consultation closes on 16 September 2026.

Commercial lettings in mixed-use buildings

Residential tenants in a mixed-use building may benefit from a right of first refusal under the Landlord and Tenant Act 1987 where the landlord proposes to dispose of the whole or part of the building.

Broadly, the right arises where more than 50% of the building is residential and at least 50% of the flats are held by qualifying residential tenants.

There is, however, longstanding uncertainty as to whether the grant of a lease of commercial space in such a building constitutes a “disposal” triggering these rights.

In practice, this creates a significant problem for landlords if the rights apply:

the right of first refusal procedures must be followed before the commercial lease can be granted
this can delay the transaction by at least two months
failure to comply is a criminal offence

This is so even though, commercially, residential tenants are highly unlikely to seek to take on a commercial lease given the financial and practical commitments this would involve.

The Law Commission’s view is that, under the current law, disposals of premises that are used, or intended to be used, for commercial purposes are likely to be caught by rights of first refusal. However, it considers that Parliament did not intend the right of first refusal to apply to such transactions. It therefore proposes:

a specific statutory exemption for lettings of premises used, or intended to be used, solely for commercial purposes
the exemption would not extend to shared areas

If implemented, this would remove a well-known source of delay and risk in mixed-use developments.

Reform of the 1995 Act

Under the 1995 Act, on assignment of a “new tenancy” (broadly one granted on or after 1 January 1996):

the outgoing tenant and its guarantor are released from future liability under the lease
the landlord’s main protection is an authorised guarantee agreement (AGA) given by the outgoing tenant
wide-ranging anti-avoidance provisions invalidate arrangements designed to preserve liability outside this framework

Judicial interpretation of the anti-avoidance provisions has been notably strict. As a result:

a guarantor of the outgoing tenant cannot act as guarantor for the next tenant
an assignment of the lease to a guarantor is prohibited
various commercially sensible restructuring arrangements are rendered void

The Law Commission does not propose to revisit the core policy of the 1995 Act. Instead, it suggests targeted reforms to address outcomes widely regarded as uncommercial, particularly in:

group company transactions
partnership arrangements involving joint tenants

It also seeks views on whether similar flexibility is needed in other commercial contexts (for example, franchising structures).

Corporate transactions

The Law Commission provisionally recommends that certain intra-group transactions involving the assignment of a lease should no longer be rendered void by the 1995 Act.

In particular arrangements to transfer lease liability that have been held unlawful by the courts would be permitted where they occur between group companies, The definition of “group company” would follow section 42 of the Landlord and Tenant Act 1954.

To guard against abuse, it proposes that the group relationship must exist both at the date of the agreement for assignment and at completion.

This would introduce a degree of flexibility currently absent from the statutory regime.

Partnership transactions

The Law Commission identifies similar issues in the context of partnerships.

For example, where A and B are joint tenants, G is their guarantor and the lease is assigned to A and C, the continuation of the G’s liability as guarantor of A and C will be void under the current law.

The Law Commission suggests that more flexible arrangements should be permitted where the outgoing and incoming tenants are, in substance, the same business. This would be satisfied where:

the outgoing and incoming tenant groups are engaged in substantially the same business
at least one partner is common to both

Other potential reforms

The Law Commission does not propose changes in areas where reform would affect both commercial and residential tenancies as this falls outside the scope of its current project that is limited to purely commercial transactions.

What does this mean in practice?

The proposals are best characterised as incremental but practical. If implemented, they would:

remove a significant procedural burden and risk affecting commercial lettings in mixed-use buildings
introduce a limited but useful degree of flexibility into the 1995 Act regime
reduce the risk of transactions being inadvertently rendered void or delayed

Next steps

These proposals are at the consultation stage only. Responses will inform the Law Commission’s final recommendations, after which it will be for Government to decide whether (and how) to legislate.

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Small changes, big questions? The Law Commission takes a cautious approach to 1954 Act reform

Thu, 18 Jun 2026 00:00:00 +0100

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Small changes, big questions?

The Law Commission takes a cautious approach to 1954 Act reform

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Following the announcement that the Law Commission proposed retaining the security of tenure regime under the Landlord and Tenant Act 1954 in substantially the same form, a second consultation paper has now been released inviting views on how the Act might be modernised.

Published: 18 June 2026
Authors: Kate McCall

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In this series of articles, we review the key areas of change under consideration in the Consultation.

Proposals for reform

The consultation (which closes on 16 September 2026) poses 67 questions considering:

the tenancies to which the Act applies; excluding more short-term tenancies by increasing the duration threshold from six months to as much as two years and excluding the majority of periodic tenancies
simplification of the contracting out procedure; by including the declaration in the lease rather than via service of warning and declaration notices
the terms of a renewal tenancy; in particular, whether changes should be made to address environmental matters
how rent should be calculated; allowing the court to grant leases including a turnover rent and improving the calculation and enforcement of interim rent payments
modernising the grounds of opposition; redefining the categories ofworks that can be relied on under Ground F (redevelopment), including a consideration of how to permit access for works relating to the landlords’ obligations under the MEES regime
dispute resolution process – exploring whether lease renewal disputes should remain in the county courts or whether some or all cases should be decided in the tribunal and/or High Court, and considering whether Alternative Dispute Resolution could have a greater role in resolving disputes.

Continuity over change

When it comes to consideration of the grounds of opposition under s.30(1) of the Act, the headline is one of continuity rather than wholesale change. No new grounds are proposed, and most of the existing framework is left intact.

From a commercial perspective, that balance remains important. Retaining meaningful (albeit limited) rights to recover possession may reduce the incentive for landlords to contract out of the Act entirely.

That said, the consultation does reveal where pressure points lie in modern practice. Ground F (redevelopment) and Ground G (own occupation) are highlighted as areas where targeted clarification or reform may be warranted.

Ground F in the spotlight: Refinement, not reinvention

Ground F continues to attract the greatest scrutiny, which is unsurprising given it is the ground most commonly encountered in practice. The consultation acknowledges “significant dissatisfaction” with its operation, but stops short of proposing fundamental change.

Two key aspects are expressly preserved:

the intention test, including consideration of the landlord’s motive following S Franses v Cavendish, is retained.
the “crunch” point for assessing intention remains the date of the hearing.

Instead, the focus is on the scope of qualifying works. Three options are proposed:

expanded categories for works that can satisfy Ground F, with a purpose/motive filter
expanded categories without a filter
a single “substantial works” test

These options respond to recognised issues in practice:

uncertainty around what constitutes “refurbishment”
difficulty in accommodating modern works such as retrofitting
the risk that rigid categories become outdated

Option 3, focusing on “substantial works”, represents the most radical reframing, allowing the court to assess the scheme holistically while retaining safeguards such as the requirement that possession is reasonably necessary.

The MEES driver

A key policy driver is the interaction with the Minimum Energy Efficiency Standards (MEES) regime. In some cases, landlords cannot lawfully let sub‑standard properties, yet the works required to remedy those properties may not currently satisfy Ground F.

The consultation stops short of proposing a new MEES-specific ground, instead exploring whether reform of Ground F itself is sufficient – including the possibility of specifically referencing the MEES regime in Ground F.

Takeaways

For landlords and tenants alike, the consultation signals no imminent shift in the fundamental architecture of security of tenure.

The direction of travel is towards the simplification of short-term leasing processes and increasing flexibility in accommodating modernisation and sustainability works, but with continued scrutiny of intention. Depending on what reform is proposed, we can anticipate more litigation, not less, particularly on the boundaries of what works qualify for Ground F.

Alongside this, another consultation will consider the Landlord and Tenant (Covenants) Act 1995, and the sections of the Landlord and Tenant Act 1987 relating to rights of first refusal over commercial/mixed-use premises.

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Retail leases on trial: Value beyond the store

Tue, 9 Jun 2026 00:00:00 +0100

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Retail leases on trial: Value beyond the store

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Two investor landlords have commenced High Court proceedings against John Lewis Properties plc seeking declaratory relief on the scope of turnover rent.

Published: 09 June 2026
Authors: Gemma Siviter

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Retail has moved on, but leases have not. The dispute between Hammerson and John Lewis puts a spotlight on a growing tension: how do you value a store when sales are no longer made solely within its walls? The outcome will shape how landlords and retailers share risk, define value and futureproof leases in an omnichannel world where boundaries between online and physical retail no longer hold.

What the dispute is really about

Two investor landlords have commenced High Court proceedings against John Lewis Properties plc seeking declaratory relief on the scope of turnover rent.

The claim concerns the proper interpretation of “Gross Receipts” payable under a long lease at Brent Cross Shopping Centre, for the purposes of calculating additional rent under a 1979 underlease.

In this case, the turnover provisions refer to receipts relating to business “conducted at or from” the premises, expressly including orders “originated and/or accepted at or from the demised premises” and mail, telephone or similar orders “received or filled at or from” the premises.

Where landlords see untapped turnover

The landlord claims that Gross Receipts (and therefore turnover rent) should include:

“click and collect” sales, attributable to online retail but collected in store
online orders dispatched from stock held at the store
as in‑store purchases delivered from elsewhere
sales made by licensees or concessionaires operating within the store

Alongside declaratory relief, the claim seeks provision of detailed auditors’ certificates going back to the 2013 accounting year – which, depending on the findings of the court as to what constitutes Gross Profits, may result in John Lewis owing backdated and underpaid rent.

As always, the matter is fact-specific. However, the proceedings will be closely watched by landlords and retailers alike, given their potential implications for turnover rent clauses drafted long before omnichannel retailing became the norm.

When one sale becomes two

In particular, with a clause as widely drafted as this one, the result could be that in scenarios where orders are placed in one store and fulfilled from stock held in a different store, or ordered from one store for collection in another, there would be the potential for that item to be counted as “turnover” in both stores– which would result in the profits being double counted.

In a world where the high street is already struggling, these additional costs may make bricks and mortar presence even less attractive to retailers.

With already tight margins across the retail sector, the prospect of additional rental exposure linked to online activity, risks making a physical presence harder to justify for many retailers. Where stores are no longer purely sales-generating locations but also act as fulfilment hubs, showrooms or customer service centres, attributing online revenue to the premises can disproportionately increase occupancy costs relative to in-store profitability.

From an occupier’s perspective, only sales that are both generated at and paid for at the premises should be included in the turnover attributable to that store.

From a landlord perspective however, the case goes to the commercial rationale underpinning turnover rent – namely that rent should reflect the economic value generated by a store’s operation, which, from this perspective, a landlord could argue to include its role as a hub for online sales.

Why legacy leases are under strain

More generally and whilst the case is unlikely to establish a new point of law with general application, the proceedings underline the limits of trying to map 20th‑century drafting onto 21st‑century retail practices. Legacy turnover definitions were never designed to accommodate the complexities of omnichannel trading, where the distinction between in-store and online sales is increasingly blurred. Whatever the outcome, the dispute is likely to have a material influence on how turnover rent provisions are negotiated going forward. In particular, we are likely to see a greater focus on clearly delineating how different categories of online and delivery sales are treated, with more sophisticated and expressly drafted mechanisms to reflect the realities of modern retail trading models.

In short, even if the law does not move, the market almost certainly will.

Gemma Siviter, Principal Associate in Shoosmiths’ Real Estate team notes: “At its core, this is as much an operational issue as a legal one. Retailers need a clear understanding of what their systems can actually capture as turnover and ensure that property and finance teams are aligned before agreeing lease terms. Open dialogue with landlords is key because if the parties are not working from the same assumptions, disputes are almost inevitable. The benefit of shorter lease cycles is that they allow for more precise, up-to-date drafting without needing to speculate as heavily on future retail models, which can go some way to reducing this risk of dispute in the future.”

Tom Freeman, Legal Director in the Real Estate Litigation team comments: “While this dispute turns on the specific wording of one lease, it is fundamentally about the issues in applying legacy analogue drafting to modern digital retail. We will be keeping a close eye on this case but in the meantime, landlords may consider reviewingthe drafting of turnover rent clauses within their precedent leases and challenge whether their drafting truly captures the economic value generated by the premises”.

Find out more in our Shared & Halved podcast series considering this issue, as well as other trends and updates within the occupier sphere. Please use the link below to sign up.

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Valuing reality: What Dyer means for business rates & fit-out

Tue, 19 May 2026 00:00:00 +0100

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Valuing reality: What Dyer means for business rates & fit-out

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In a recent Upper Tribunal decision, commercial occupiers have been reminded that business rates do not exist in a vacuum.

Published: 19 May 2026
Author: Sophie Tracey

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Where offices have moved beyond a basic Cat A fit‑out to a more bespoke Cat B configuration, rateable value should reflect the physical reality of that enhanced hereditament.

Fit‑out decisions, dilapidation strategies and occupation profiles can therefore all have unintended rating consequences – meaning that occupiers need to take early advice on the knock-on effects of customisation of their premises.

How is rateable value calculated?

Rateable value (RV) is an estimate of the annual rent a ‘hereditament’ (essentially, a unit of property) could achieve on the open market.

It is a hypothetical rental value, assessed by reference to the antecedent valuation date (AVD), but reflecting the physical state of the property and any relevant circumstances on the ‘material day’. For properties entered onto the ratings list after the AVD, the material day is typically the date they were entered – meaning that strong comparative evidence is crucial to the exercise.

In the Upper Tribunal’s recent decision on appeals by two valuation officers (considered together and known as Re Dyer and Re Johnson), the relevant premises were occupied on the material day and were therefore valued including the sitting tenant’s fit out, known as ‘Cat B’ condition.

How does tenant’s fit out affect the RV of its premises?

As highlighted in Re Dyer, most lettings in the office market are actually of properties in Cat A condition (i.e. a standard developer or landlord’s shell or standard fit-out). These lettings are therefore of limited use to valuers, but direct Cat B comparables are themselves limited.

The starting point is therefore often Cat A rental evidence, ‘toned’ by adding an uplift to reflect the value of the element of the Cat B fit out that would have general market appeal. In Bunyan v Acenden [2023], for example, this was assessed at 4.4% of the capital amount of expenditure. However, where the tenant’s fit out is overly bespoke, this can instead depress values.

In Re Johnson, the primary evidence came from sub-lettings between law firms, where the expected fit out was relatively consistent across occupiers.

Key considerations for occupiers

1. Plan early

The 1 April 2026 revaluation has reset RVs across England and Wales, based on a new AVD of 1 April 2021. The result is sector- and location-specific shifts, with some occupiers seeing significant movement. The introduction of more permanent reliefs/multipliers (particularly in retail, hospitality and leisure) has also altered the landscape, making forward planning essential.

2. Do your due diligence

There is evidence both in the property and national press that the new list has not been implemented consistently, with errors in RVs, multipliers and reliefs. It is well worth your time checking rateable value, factual accuracy for the property e.g. floor area, use and layout, and whether correct multiplier and reliefs have been applied.

3. Check, challenge, appeal

The system for challenging rates valuations first requires you to raise a ‘check case’ and then ‘challenge’ via the Valuation Office’s electronic portal. This can then be appealed if you still disagree with the challenge decision (within four months of the date of the decision), or if you have not had a reply within 18 months.

In another Upper Tribunal appeal, Caffe Concerto v Johnson [2026], the VTE confirmed its discretion to extend appeal deadlines, applying the Denton principles – but this should not be relied on, and deadlines remain critical.

4. Factor rating into fit-out and works

Physical changes to property such as tenant fit-out can increase RV where it adds value, but landlord works or contributions may also have unintended rating consequences. Occupiers should therefore price rating risk into fit-out decisions and negotiations.

In the Hitchings appeals [2025], the Tribunal was reluctant to determine whether a landlord’s contribution to a Cat B fit out should be preferred over the actual cost of the fit out.

Instead, whilst there is no automatic ‘strip back to Cat A’ rule, the Tribunal must look at the actual physical state of the property and its utility in the market.

5. Evidence is king

As highlighted in Re Dyer, the Tribunal is often dealing with “less than helpful” evidence, particularly given the scarcity of Cat B comparables (described in one case as “virtually impossible to come by”).

The Tribunal will engage closely with hard factual evidence of the condition of the hereditament, not general market narratives. Floorplans, photos, specifications and evidence of actual works carried out can all be decisive.

Where necessary, an application to the Tribunal for an order for disclosure or a witness summons could encourage production of better evidence.

6. Remember it’s not all about works

Changes in mode or category of use of the property can also trigger revaluation.

Remember too that certain tenancy arrangements will be subject to more scrutiny than others – there are known issues with valuing flex or serviced office space either per individual tenant or as a single office space, for example – so be alive to potential issues. Once a valuation ‘tone’ is established, the Tribunal may seek to prioritise consistency across the list rather than seeking to arrive at the ‘perfect’ number.

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Good news on upwards only rent reviews

Fri, 24 Apr 2026 00:00:00 +0100

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Article | 5 min read

Good news on upwards only rent reviews

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The government has indicated that there will be some flexibility on the terms of rent review clauses despite the ban on upwards only rent review clauses contained in the English Devolution and Community Empowerment Bill.

The Bill has passed through all its major stages and now is subject to a game of parliamentary ping-pong as the House of Commons and House of Lords resolve their differences in relation amendments made to the Bill in the House of Lords. However, none of the points still at issue relate to rent reviews, so we know the final form of the legislation implementing the ban, subject to a promised consultation on a collar and cap on the amount by which rents could fall or rise on review.

Published: 24 April 2026
Authors: Michael Callaghan

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Implementation date

We do not know when the provisions in the new legislation will come into force. It is not likely to be before 2027 and there have been rumours that it could be as late as 2028, albeit note should be taken of the proposed retrospective aspects of the legislation, which we comment on below.

How will the ban work?

The ban operates where the rent under the lease is expressed to be payable at the higher of the existing rent and a “reference amount”. A reference amount is an amount that is arrived at by a means of calculation and so it could be one or more of an open market rent, an indexed rent or a turnover rent. Under the ban, if the reference amount is lower than the existing rent, the rent is reviewed to the reference amount. However, how does the Bill operate where there are two or more reference amounts? There has been uncertainty over this point. The Ministry of Housing, Communities and Local Government (MHCLG) has provided some much-needed clarity and will be issuing formal guidance when the Bill becomes law.

For example, if an existing rent of £100,000 is to be reviewed to the higher of the open market rent and the existing rent as increased by RPI, what happens if, on review, the open market rent is £98,000 pa and the existing rent increased by RPI is £105,000? Both figures are reference amounts. Which figure becomes the new rent payable by the tenant? MHCLG says that the higher of the two figures can be used as the new rent, since the RPI-based increase is a legitimate rental increase based on the lease terms. This is welcome news.

Landlords with turnover rent leases will benefit most from this guidance. In many cases, the tenant pays a base rent each year that increases by reference to the higher of an index-linked increase and a percentage of the previous year’s turnover. A disastrous trading year by the tenant will not see the base rent for the next year nosedive if the index-linked calculation produces a higher figure.

Consultation on a collar

The government has said that before the ban is implemented it will consult on introducing a collar on the amount by which the rent could fall because of the ban. For example, if the current rent is £100,000 it may be possible for the parties to agree that the rent could not fall by more than, say, 5%. With such a collar, if the open market rent was £91,000 on review, the collar of 5% would mean that the reviewed rent would be £95,000. The government has indicated that if a collar is agreed, it may require a corresponding cap on any increase so that, in the above example, the reviewed rent could never be more than £105,000. Tenants will no doubt welcome this latter proposal.

Retrospective effect

One amendment made in the House of Lords makes the ban operate retrospectively, but only where the landlord and tenant have, on or after 17 March 2026, entered into arrangements for the renewal of an existing lease and the renewal lease is granted on or after the ban comes into force. “Arrangements for the renewal of an existing lease” include agreements for lease, options to renew (whether contained in a lease or in another document) and landlord’s put options. Where these provisions apply, the starting rent on the grant of the renewal lease cannot be calculated on an upwards only basis and any rent review in the renewal lease cannot operate on an upwards only basis.

Comment

Development

Partner and co-Head of Development James Needham comments “when negotiating pre-lets, developers have to anticipate what an investor will be looking for when the asset comes to market for sale/funding. Until the investment market has reached a consensus on this, developers will need to judge what is likely to be acceptable, but the MHCLG guidance is helpful in confirming that a legitimate increase in one reference amount is not undermined by a fall in others. For now, we are likely to see the continuation of an existing trend – the decline of open market reviews in favour of the greater simplicity and certainty offered by indexation and fixed percentage increases.”

Investment

Partner and co-head of Investment, Kate McCall says “The MHCLG guidance is likely to be cautiously welcomed by investors as a pragmatic softening of the intended ban on upwards only rent reviews. It signals that policymakers recognise the importance of allowing leases to continue delivering rental growth through legitimate index linked or turnover based mechanisms, even where open market rents fall. While material uncertainty remains around collars, caps and the timing of implementation, the guidance suggests a clear awareness of one of the investment market’s principal concerns: preserving income certainty. In practice, this is likely to further accelerate the shift away from open market reviews towards indexation and fixed uplifts, which sit more comfortably with current pricing, funding and valuation discipline”

Corporate occupier

Partner in Real Estate Litigation , Elinor Sandbach comments “The proposed ban on upwards only rent reviews is a positive step for occupiers, offering the prospect of rents that better reflect market conditions rather than being locked into perpetual upward movement. That said, tenants should be cautious about assuming a dramatic shift in balance. Index linked and turnover based mechanisms may still protect landlords from downside risk, and potential rent review collars could further blunt the practical impact of the ban. Ultimately, while the direction of travel favours tenants, the real benefit will depend on careful lease structuring and early strategic advice to ensure the legislation delivers meaningful flexibility in practice.”

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Creating a contractual control register

Wed, 11 Mar 2026 00:00:00 GMT

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Article | 5 min read

Creating a contractual control register

A new era of transparency for land deals

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A new statutory register for contractual control agreements is set to be introduced. With the regulations due to take effect in April 2027 – and capturing agreements exchanged well before then – developers, promoters and investors need to prepare now. The shift promises greater transparency, but also potential for sharper competition and higher stakes for those securing sites.

Published: 11 March 2026
Authors: Michael Callaghan

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What is happening?

The Levelling-up and Regeneration Act 2023 contains provisions to permit the creation of a register of contractual control agreements – agreements that give third parties control over the use and development of land. The register will be used by local authorities, communities and smaller developers to see who is controlling potential development land in their local areas.

The regulations to implement the register have been laid before parliament. They will come into force on 6 April 2027 (one year later than originally intended).

What do I need to do?

The property industry needs to start preparing now for the introduction of the new register. Although the regulations do not come into force until 6 April 2027, any agreements exchanged between the date that the regulations are made and the date that they come into force will become registrable. We do not know the date when the regulations will be made but the government has indicated that it will be in the first half of 2026.

What will require registration?

Agreements that will require registration are those relating to registered land that will last for more than 18 months, taking into account any right to extend the period that the rights under the agreement could be exercised.

Registration is required only if the rights under the agreement are held by a person that is an undertaking, charity or similar organisation or is exercising a public function.

Option agreements, conditional contracts, pre-emption rights, promotion agreements or any other contracts that allow a third party to direct a landowner to dispose of land to another person will be registrable.

Registration is mandatory if the agreement is entered into with the owner of the land. Registration is also required if an agreement is entered into with a person who is not the landowner if you want to enter a notice or restriction in relation to the agreement on the landowner’s registered title.

Are any agreements exempt from registration?

Agreements relating to leases for a term of less than 15 years are outside the scope of the regulations.

Agreements made for the purpose of national security or defence are specifically excluded from registration as are rights in an agreement necessary or incidental to security for a loan or financial instrument or security for deferred consideration or overage.

Agreements exclusively held for purposes that do not relate to future development resulting in the provision of one or more dwelling-houses or a building where the floorspace created by the development is 100 square metres or more are excluded from registration.

Finally, rights in a section 106 Agreement that relate exclusively to the provision of infrastructure, amenities or services in connection with a grant of planning permission are excluded from registration.

Who will apply for registration?

A conveyancer acting for the party acquiring rights under an agreement will be required to register the agreement via an on-line portal maintained by the Land Registry. Registration by other persons is not permitted.

Registration must be made within 60 days of the exchange of the agreement. For those agreements exchanged during the period from the date that the regulations are made to the date that the regulations come into force, registration must be made by 6 October 2027.

It will be important for parties to maintain details of any new agreements exchanged once the regulations are made so that their registration is not overlooked when the regulations come into force.

What details will be required for registration?

The registration process requires details of the type of agreement entered into, the names, registration numbers and type of organisation of the parties to the agreement (including the date and place of birth of any individuals), the date the agreement was entered into, the start date of the agreement, the end date, rights to extend or terminate the agreement, the address and extent of the property subject to the agreement and title numbers of the land.

How will the requirement to register be enforced?

An agreement will need to be added to the new register before it can be protected at HM Land Registry by an agreed or unilateral notice or before any restrictions on the landowner making dispositions of the property are added to the registered title.

Under the Levelling-up and Regeneration Act 2023, it is a criminal offence not to comply with the regulations that require the registration of contractual control agreements. It is also an offence to provide misleading or false information in relation to the agreement if this is done knowingly or recklessly.

Are there any other registration requirements?

In addition to registering the creation of agreements, it will also be necessary to register any assignment of the rights under an agreement or any variation of the terms of an agreement if the variation affects any of the terms included on the register. These registration requirements will include the assignment or variation of an agreement that did not have to be registered under the regulations when it was exchanged.

Where an agreement has been included on the register, notice must be given of the determination, expiry or exercise of the rights under the agreement.

What information will be disclosed?

From 6 April 2028, the Land Registry will provide monthly datasets showing the information held on the register (excluding the date and place of birth of individuals).

What will the impact be?

Developers will need to be prepared for greater transparency in relation to their development proposals.

Greater transparency will undoubtedly result in earlier engagement between developers and communities about proposed developments. However, with greater transparency, there is a risk that those opposed to development will have more time to prepare objections during the planning process or take other actions to frustrate the development, potentially slowing development or making it more costly.

There is also a risk that transparency will drive up land prices. An adjoining landowner who knows that part of their land may be required for a proposed development may be forearmed and potentially inflate the price that they ask for their land, or the rights required over it, to enable the development proposals to proceed. Site assembly might become more costly as a result.

Finally, smaller developers may be wary of the requirement to register contractual control agreements. If they have secured a development site and details appear on the register, that information will be available to larger, better resourced developers, with the risk that they may then seek to promote alternative schemes taking advantage of the opportunity that the smaller developer has identified. Developers may be more reluctant to waste time and money on development schemes if other developers are then able to take unfair advantage of the development opportunities that have identified.

Update

The regulations discussed in this article were made on 8 June 2026. Any contractual control agreements exchanged on or after this date will need to be notified once the regulations come into force on 6 April 2027.

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Scottish Building Safety Levy and what it means for residential development

Wed, 18 Feb 2026 00:00:00 GMT

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ARTICLE | 5 min read

Scottish Building Safety Levy

What it means for residential development

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From 1 April 2028 the Scottish Building Safety Levy (the Levy) will be charged on completion of new residential units in Scotland. This forms part of the Scottish Government’s Cladding Remediation Programme and Levy proceeds must be used to remediate unsafe external wall cladding systems.

Published: 18 February 2026
Last updated: 7 August 2026
Author: Lewis Ritchie & Mandy Soppitt

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The underlying legislation (the Building Safety Levy (Scotland) Act 2026) was passed by the Scottish Parliament in March 2026 and the Scottish Government has recently published:

indicative levy rates and
a technical consultation on outstanding aspects of operating the Levy.

Both are significant for PBSA, BTR and traditional models of residential development and are summarised here.

At a glance, the key points to note about the Levy at this stage are:

this is the Scottish equivalent of the levy which will apply to developments in England from 1 October 2026
there are no transitional arrangements meaning that residential units in progress - but not complete - before 1 April 2028 will be subject to the Levy
the Indicative rates show a bespoke rate of tax for each local authority area to reflect average house prices, home sizes and the estimated number of units in that area. For greenfield sites the rates range from £23.17 per square metre in Dumfries and Galloway to £48.46 in Edinburgh
brownfield sites will benefit from a minimum 50% relief. The consultation explores how “brownfield” should be defined and asks whether this rate should be higher
full or partial relief is being considered for units sold to first-time buyers
developers have an annual Levy-free allowance of 29 units
there are some Levy exemptions: for affordable and social housing and new residential units constructed on Scottish islands. In addition, the consultation asks whether relief or exemption should be applied to conversions of existing buildings and if so, whether this should cover non-residential buildings, residential buildings or both
build-to-rent (BTR) and purpose-built-student accommodation (PBSA) properties are specifically included. However, in response to industry concerns about the Levy’s impact on cash-flow for such developments (where all/a number of units are completed and will trigger a charge at the same time), the consultation asks if BTR and PBSA sites with building warrants granted before 5 June 2025 (when the legislation was introduced to the Scottish Parliament) should be given the option to pay over an extended period of up to three years
on a practical level, the Levy will be collected by Revenue Scotland (compared with local authority collection for developments in England)
secondary legislation will be required when the rates are approved by the Scottish Parliament and the consultation responses have been reviewed
further detail is set out below.

Liability

The person liable to pay the Levy is the building owner at the time of either:

submission of a completion certificate to the verifier, or
application for the grant of temporary occupation.

This shifts the financial burden from homeowners to residential developers, making it an additional cost to factor into new residential projects. While this aligns with broader policy objectives, it does introduce a new viability consideration for developers.

When will the Levy be due and how will it be calculated?

The Levy becomes due when a completion certificate is accepted or temporary occupation permission is granted. The legislation provides for payments to be calculated in the accounting periods for a financial year - ending on 31 March unless otherwise set by Scottish Ministers - and to take into account the developer’s annual Levy-free allowance of 29 units and applicable reliefs.

The Levy will be calculated by applying the relevant rate to the floorspace area (in square metres) of the new residential unit. More detail of the calculation is provided in the consultation which proposes that:

floorspace should be measured using Gross Internal Area as set out in the RICS Code of Measuring Practice 6th Edition (this is consistent with the equivalent levy for England).
communal areas of a building e.g. shared entrances, stairs and facilities such as gyms and residents’ lounges in BTR developments would not be chargeable.

The Scottish Government hopes that this approach, which contrasts with that for the English levy, will incentivise high-density development and BTR and PBSA projects which typically have more areas of communal space. For PBSA it is worth noting that the communal entrance/stairs and facilities (e.g. study hubs, laundry) for use by all the building’s residents would not be chargeable but the shared kitchen and bathroom facilities within the residential unit of each cluster flat would form part of the taxable space.

Properties included

The Levy applies to new units that are used or are "intended to be used as a dwelling or other accommodation". The legislation specifically includes residential accommodation for occupation by students and tenants. Hotels are not included.

Exemptions

To ensure that that Levy does not exacerbate the challenges to disadvantaged housing sectors, not all residential development will be subject to the Levy including:

affordable housing: Consistent with its commitment to building 110,000 affordable homes by 2032, housing delivered through the Scottish Government’s affordable housing supply programme will be exempt from the Levy
social housing: Housing to be let under a secure tenancy by any party such as a local authority, registered social landlord or private developer will also be exempt
units constructed on Scottish islands will be exempt
in addition, the consultation asks whether relief or exemption should be applied to conversions of existing buildings and if so, whether this should cover non-residential buildings, residential buildings or both.

Reliefs

Brownfield sites will benefit from a minimum 50% relief. The consultation explores how “brownfield” should be defined and whether this rate should be higher.

Full or partial relief is being considered for units sold to first-time buyers.

Penalties

Penalties will apply: for failure to make a return, pay the Levy and failure to register for the Levy. Enforcement is not expected to go so far as to withhold or reject a completion certificate because of non-compliance.

For how long will the Levy apply?

The Levy will apply to new units completed from and including 1 April 2028. Despite concerns raised during the legislative process there is no fixed end date for the Levy – instead the Scottish Ministers are obliged to report every three years on how the proceeds of the Levy have been used and the work funded by it.

Looking ahead

The rates are not yet final (they will require approval from the Scottish Parliament and implementing regulations) but it is hoped that they will assist cost planning for developments due to complete after 1 April 2028. The technical consultation closes on 9 October 2026 and secondary legislation will follow. Please do get in touch if you would like more information in the meantime.

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Shoosmiths appoints new co-heads of real estate development and living

Thu, 18 Dec 2025 00:00:00 GMT

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Press release | 2 MIN READ

Shoosmiths appoints new co-heads of real estate development & living

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Shoosmiths has appointed two new co-heads to its real estate development and living practices – strengthening its leadership across key markets.

Published: 18 December 2025

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Choisanne Man has been appointed as co-head of development, working alongside James Needham.

Choisanne brings extensive experience advising on residential, commercial, and mixed-use schemes and will continue driving growth in the firm’s development practice, which supports clients including HBD, O&H, CBRE, Far East Consortium, Invesco and City & Provincial Properties.

William Seymour takes on the role of co-head of living, partnering with Judy Fawcett. Together, they’ll lead Shoosmiths’ national strategy across the living sector.

William’s focus will include housebuilding and strategic land, working closely with sub-sector leads Peter Marsden and Thomas Hall, while Judy continues to lead on build to rent, purpose-built student accommodation, later living and healthcare alongside Barry McKeown, Sheelagh Cooley, Andrew Pattinson, Edell Asquez, and Melissa Barker - areas where Shoosmiths has developed a truly market-leading reputation for supporting institutional developers, operators, investors, and funders.

Jason Jackson, Partner and Head of Real Estate Clients and Markets said: “Both Choisanne and William bring proven expertise and trusted relationships to these roles. Their leadership strengthens our ability to deliver for clients and grow across key markets.”

James Needham, Partner and Co-head of Development added: "Choisanne has been a pivotal part of our development team for some time, shaping our strategy and driving some of the new business opportunities we’ve secured over the past year. Her commerciality and holistic understanding of residential, commercial, and mixed-use development markets will help us build on the transformative work already underway and take it to the next level."

Judy Fawcett, Partner and Co-head of Living added: "2025 has been a landmark year for the living team - one where we were named Residential Legal Team of the Year at the Property Week RESI Awards. It’s also been a year of facing challenges head-on, including market viability issues, to help clients deliver standout mandates, from £1bn regeneration schemes to major portfolio deals, including the recent sale of a 610-home single-family housing portfolio. We’re taking this momentum forward, with William set to work with our team on cementing Shoosmiths’ position as the market leader in the residential sector."

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Retail real estate in 2026: It is back - but not as we knew it

Mon, 15 Dec 2025 00:00:00 GMT

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Article | 12 min read

Retail real estate in 2026: It is back - but not as we knew it

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“Retail is back.” That was the opening line from more than one panel at MAPIC in Cannes last month, followed by “retail is no longer a bad word” among real estate professionals.

Published 15 December 2025

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A year or two ago, these statements would have sounded brave. After a decade of structural change, pandemic disruption and a crippling cost-of-living crisis, retail real estate has had its fair share of challenges as it finds its footing again as part of the commercial property sector.

What came through at MAPIC 2025, however, is that the narrative is shifting. This is not a simple recovery story, but rather a process of evolution and transformation.

Retail real estate is being re-imagined as a platform: a network of physical spaces that connect brands, data and people in new ways.

For retail corporate occupiers, particularly in the UK, the task in 2026 is not to go back to how things were, but to understand this new model and use it to their advantage.

Credible, investable, strategic

The first change impacting retail real estate is confidence. Across Europe, retail real estate investment rose 26% year-on-year in Q1 2025, outpacing the 6% growth in all-property volumes. In the UK, Colliers’ analysis shows this trend continuing into Q2, with investment volumes in the retail sector rising to £2.2bn - 8% above the five-year quarterly average.

That confidence is being expressed selectively. Prime high streets, destination shopping centres and well-located retail parks are seeing renewed demand and improving performance, while weaker locations remain under pressure. Knight Frank data highlights vacancy in UK retail parks at a lean 6.8%, with shopping centres and the high street still in the mid-teens and a widening gap between the best assets and the rest.

This bifurcation mirrors what was said in Cannes. The mood music of retailers has changed; profitability is improving, and repriced rents have reset affordability. But occupiers are disciplined in their approach. Presence in the right place carries more value than ever.

Platform operator

The language at MAPIC showed just how far the sector has moved.

There were observations such as a shopping centre manager being “more like a creative director”, or owners talking about their schemes as “platforms of content”, more Netflix than bricks and mortar. These are just a few examples of how the retail experience now hinges on orchestrating a mix of brands, experiences and events that make people want to be there.

For corporate occupiers, that shift matters. A store in a successful shopping centre, high street or retail park is no longer just a space with a lease attached; it is a slot in a curated platform. The value of that slot is a combination of catchment, co-tenants, digital infrastructure, media exposure and the ability to plug into centre-wide data and marketing.

Where occupiers once primarily focused on rent and incentives, they are now increasingly interested in what the platform around them can deliver: footfall analytics, loyalty schemes, event calendars, social media reach, digital screens and brand activations.

Experiential

If the ‘platform’ model is the new structure for retail real estate, experience is the emotional engine. Again and again during discussions at MAPIC, the same idea appeared: spaces must be “compelling” and “exciting”; shopping centres are “daily placeholders” for consumers’ lives; and the goal is to create “joy, curiosity, excitement and desire” – a human, emotional effect that scrolling on a phone or ordering online cannot replicate.

What is striking is how strongly this resonates with younger shoppers. ICSC’s research on Gen Z shows that 97% of this supposedly “all online” cohort still shop in physical stores, driven by the ability to see and try products, get them immediately and spend time with friends. They are omnichannel, not digital-only, and expect convenience and experience.

You can see the response in the way UK retail schemes are evolving. Food halls, wellness concepts, collectibles, immersive art, sports and athleisure, F&B-led evenings and social-media-driven pop-ups have moved from the periphery of the retail mix to the centre. The shopping centre manager as creative director is not a throwaway line; it is a job description.

For occupiers, this is a clear signal. Whether you are a fashion brand, a health and beauty concept or a big-box retailer, a physical footprint is now part theatre, part showroom, part fulfilment node. The question is less “how many stores do we have?” and more “what does it feel like to be in one of our stores – and what does that do for our brand and our numbers?”

Selectivity and the pull of global locations

The earlier question raises an important point with regards to selectivity. The days of blanket roll-outs are clearly over. Instead, occupiers are channelling capital into a smaller number of high-impact locations, with many making the case for global and gateway cities at MAPIC.

A flagship store is as much a media and brand asset as a place of transaction. It reaches tourists, workers and residents, while appearing in social content or anchoring the brand in a location’s mental map. For occupiers, this means that expansions need to be more surgical than ever, with concept, size and positioning tailored to each city, town or even street.

Retail parks as the new core

As charted in much analysis over recent years, retail parks continue to perform strongly and are carving out a new core in the retail real estate landscape.

Knight Frank reports that retail park vacancy in the UK has been cut to under 7%, with CBRE’s European review also singling out retail parks as a standout segment expected to continue outperforming on rental growth.

There are a range of reasons behind this trend. Retail parks tend to be accessible by car, offer large, flexible units that lend themselves to click-and-collect and fulfilment, often hosting resilient categories such as grocery, discount, home improvement and bulky goods.

For consumers managing tighter budgets and busier lives, they are convenient “one trip, many tasks” destinations. While not suitable for all types of retail occupiers, this out-of-town format represents a strategic pillar. A 2026 property portfolio could well blend high-impact urban flagships with a strategic network of retail park locations that help to boost sales volume, supporting convenience and omnichannel operations.

Data is the currency, AI is the bank

Underpinning the shift in how space is used is a quieter revolution in how it is understood.

AI has moved from buzzword to key infrastructure. SAP Emarsys’ 2025 survey suggests that 92% of retail marketers now use AI in some form, and nearly two-thirds are increasing their investments to boost engagement. A UK-specific cut of the research shows a similar picture, with 87% of UK marketers deploying AI and the majority planning to spend more on it.

These technological developments are reshaping the retail real estate experience, providing innovative approaches for sales forecasting, computer vision for footfall and demographic analysis, clustering customers into behavioural segments, and “agentic AI” that combines large language models with protected datasets to support decision-making.

For UK occupiers, this has three immediate implications.

First, site selection and portfolio strategy will increasingly be data-driven, combining internal sales and loyalty data with external information on catchments, footfall, competition and transport. Second, the in-store experience will be informed by AI-enabled insight into how people move, what they buy, where friction arises and how to ease it. And third, the conversation with landlords could widen to include data-sharing, performance-linked rents, advertising and media value, and the management of both tenant mix and consumer mix.

Joined-up journey

This deeper understanding extends into a richer view of the consumer journey, specifically: what happens before the visit, what happens during, and what happens after.

Before the visit, the new battleground is social and digital. Algorithms on Instagram, TikTok and other platforms now play a central role in deciding which centres, brands and experiences appear in front of potential visitors. During the visit, AI and data could be used to reduce friction – directing people to the right offers or events, smoothing wayfinding, and using real-time information to adjust staffing and promotions. After the visit, loyalty programmes and personalised rewards could convert occasional visitors into regulars.

For occupiers, this expanded view requires a mindset change. Stores are one chapter in a longer journey that starts on a screen and may end on one too. The strategic question becomes how well the physical presence is integrated into the omnichannel system that surrounds it, and whether that integration can justify the rent for a certain location.

Opportunity in a cautious macro climate

All of these changes are happening against an economic backdrop that is still, at best, cautiously optimistic. The UK has avoided a deep recession up to this point, and shop price inflation has cooled, with the BRC reporting that annual shop price inflation slowed to 0.6% in November 2025, helped by early and aggressive Black Friday discounting.

But the underlying demand picture remains fragile. BRC-KPMG data shows that total retail sales in October 2025 grew just 1.6% year-on-year, the weakest since May and below the twelve-month average, as consumers held back discretionary spending.

UK consumers are still cautious, still value-seeking and still sensitive to fiscal headlines. Energy costs, wage bills, business rates and new tax measures introduced in the latest Budget will weigh on retailers and households, with the BRC warning that rising regulatory and tax burdens could push prices higher again in 2026, just as confidence needs nurturing.

For retail corporate occupiers, this is the argument for discipline. It could mean leaning into structural strengths: resilient categories, quality spaces, formats that support omnichannel, and partnerships with landlords creating standout platform locations and experiences.

What this means for UK retail corporate occupiers in 2026

Taken together, the picture that emerges is not a simple “retail bounce-back”, but a sector evolving into a more complex, more data-intensive, more experience-driven ecosystem.

For occupiers entering 2026, this could mean making harder choices about which locations really matter; accepting that a single well-executed space, plugged into a strong online and social presence, may be worth more than a dozen marginal units; and recognising that retail parks and out-of-town schemes now play a critical role in an omnichannel network.

It will also mean investing in the less visible foundations that support this shift: data capability, AI-enabled analytics, loyalty infrastructure, and teams who can interpret what the numbers are saying. The mantra from Cannes – that “data is the currency of the future” – is a useful one. It places responsibility squarely on occupiers and their advisors to use the tools available to them, rather than treating technology as something done to them by others.

Finally, it will require closer, more collaborative relationships with landlords. If the shopping centre manager is now a creative director, then occupiers are the cast and co-producer. Those who bring compelling concepts, understand their consumers, use data intelligently and lean into the idea of retail as platform will find success.

Yes, retail is back. But it is back in a different guise: more selective, more experiential, more analytical and, in some ways, more demanding.

For UK corporate occupiers willing to match that evolution, 2026 offers genuine opportunity, even in a cautious economy. The challenge now is to take these new insights and the realities of the UK retail market, and turn them into strategies that work on the ground.

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Shoosmiths leads on real estate matters for PRS REIT’s £1.1bn sale

Fri, 12 Dec 2025 00:00:00 GMT

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Press release | 2 MIN READ

Shoosmiths leads on real estate matters for PRS REIT’s £1.1bn sale

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Shoosmiths’ living sector experts have advised The PRS REIT plc on the real estate aspects of its sale of The PRS REIT Holding Company Ltd (PRS HoldCo) to UK Housing Platform Bidco Ltd.

Published: 12 December 2025

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The £1.1bn transaction, which completed on 9 December 2025 following shareholder approvals, marks the conclusion of PRS REIT’s strategic review.

Shoosmiths led on the real estate aspects of the transaction, handling extensive due diligence, managing the property data room, and providing strategic guidance on property warranties within the SPA, as well as robust input into disclosures. Following completion, PRS REIT is now pursuing a members’ voluntary liquidation and a return of capital to shareholders.

PRS HoldCo holds the entirety of PRS REIT’s property assets – one of the UK’s largest single‑family build to rent (BTR) platforms, comprising c.5,478 purpose-built rental homes across 70+ sites. The sale represents a transaction of significant scale for the UK single‑family BTR market in 2025.

Shoosmiths’ deal team was led by real estate partner and investment expert Lyndsey O’Connor, supported by principal associate, Gillian Watson, senior associate Rachel Munro and trainee solicitor Lara Swanepoel.

Lyndsey O’Connor, real estate partner at Shoosmiths, said:

“Shoosmiths is proud to have helped complete what is a milestone transaction for the PRS REIT and the UK’s wider build to rent sector. It follows both a long-term firm and personal client relationship, after acting for the company since 2017 and advising on over 70 site acquisitions and other key deals as it scaled to become one of the UK’s leading single‑family BTR platforms.

“The sale underscores the maturity and institutional appeal of single‑family rental and the role long‑term partnerships play in delivering outcomes at this level. It also shows that Shoosmiths real estate is the trusted advisor in the build to rent sector, with our experts advising on major single-asset and portfolio transactions, as well as the delivery of investment and development platforms in 2025.”

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Shoosmiths strengthens real estate offering with Partner hire in London

Mon, 24 Nov 2025 00:00:00 GMT

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Press release | 2 MIN READ

Shoosmiths strengthens real estate offering with London Partner hire

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Shoosmiths is pleased to announce the appointment of Jasvinder Sahotay as Partner in London’s Commercial Real Estate team.

Published: 24 November 2025

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Jasvinder joins from Steptoe International (UK), bringing extensive experience in advising on major domestic and cross-border commercial real estate transactions. His broad and sophisticated practice spans significant acquisitions and disposals, complex development projects, and high-value joint venture arrangements.

A substantial part of Jasvinder’s work centres on operational real estate, where he has developed deep expertise in both the senior living and data centre sectors. He supports clients in navigating the complex regulatory, operational, and contractual challenges that characterise these asset classes. His work includes several high-profile and widely reported developments, advising on major senior living schemes and strategic data centre expansions that have attracted considerable institutional investment. Jasvinder’s recent experience includes advising a senior living operator on multiple major acquisitions and joint venture arrangements, as well as acting for a Fortune 500 multinational company on the real estate aspects of its data centre portfolio.

Shoosmiths Partner and Head of London Real Estate, Liam Phillips, said: “We’re delighted to be welcoming Jasvinder into the Real Estate team. He’s a perfect fit not only for bringing considerable experience within the real estate sector, but also for delivering the high-quality, client-centred service expected at Shoosmiths.

“Jasvinder’s hire is a significant step in our firm’s 2030 strategy, bringing an extraordinary technical ability and commercial approach to real estate transactions – particularly those involving data centre and senior living assets. Both are expected to see a significant expansion, and at Shoosmiths, we expect our practice to be at the heart of this progress.”

Commenting on his appointment, Jasvinder said: “Shoosmiths’ ambitions for growth in both sectors highlighted to me a firm that’s looking to exceed its excellent reputation in the UK commercial real estate market. The firm was already well known to me for its specialist expertise and collaborative ethos, and I look forward to contributing meaningfully to both the culture of the firm and to the growth of its commercial real estate practice.”

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Shoosmiths advises TPG Real Estate and Gatehouse Living Group on sale of single-family portfolio

Mon, 10 Nov 2025 00:00:00 GMT

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Press release | 2 MIN READ

Shoosmiths advises TPG Real Estate & Gatehouse Living Group

On the sale of a single-family portfolio

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Shoosmiths has advised TPG Real Estate and Gatehouse Living Group on the sale of Start Living, a 610-home single-family housing portfolio, to Lloyds Living.

Published: 10 November 2025

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The 275-bed development was acquired by US investor Harbert Management Corporation, with Abodus Student Living appointed as operational partner. Designed by Hoskins Architects, the building blends contemporary architecture, resident amenities, and strong sustainability credentials.

The deal marks the final phase of Chris Stewart Group’s £120m Love Loan regeneration project, which has transformed a key area off George Square. The wider scheme includes an AC Hotel by Marriott, Flight Club, residential, leisure and office spaces, and a newly created pedestrianised lane.

Chris Stewart, CEO at Chris Stewart Group, said:

“Martha Street Apartments demonstrates our commitment to creating vibrant, future-ready urban spaces. This development addresses the demand for high-quality student accommodation in Glasgow and raises the bar for sustainable design and placemaking. Shoosmiths’ support, paired with its deep knowledge of the PBSA sector, was key to the successful completion of this deal.”

Shoosmiths’ real estate partners Lauren Miller and Barry McKeown led on the transaction, advising on all aspects of the disposal – from negotiating the development agreement to comprehensive due diligence. The team also supported on the property management agreement with Abodus Student Living and a grant agreement with Glasgow City Council for public realm funding.

Lauren Miller, real estate partner at Shoosmiths, added:

“This deal is a significant milestone for Glasgow’s city centre and its student accommodation market. Martha Street Apartments is a landmark development and part of a wider regeneration story that we’re thrilled to have helped Chris Stewart Group realise.”

Barry McKeown, head of real estate Scotland at Shoosmiths, commented:

“We were delighted to bring Shoosmiths’ experience in the PBSA market and work collaboratively with all parties to successfully complete one of the largest real estate transactions in Glasgow during the quarter.”

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Plastic wet wipes: A clean break

Fri, 7 Nov 2025 00:00:00 GMT

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Article | 6 min read

Plastic wet wipes: A clean break

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England is set to ban the sale of single-use wet wipes containing plastic. While exemptions apply, the move signals a decisive shift in environmental regulation. Businesses must act now to protect supply chains, avoid penalties, and explore compliant alternatives.

Published 7 November 2025

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What is being prohibited and why?

The Regulations make it an offence, in the course of business, to supply or offer to supply wet wipes (i.e. a non-woven piece of fabric which has been pre-wetted and which is not designed or intended to be re-used) containing plastic to end users.

An end user is anyone other than someone who is then supplying the product to another person for business reasons, or to whom the products are supplied for the purposes of a manufacturing process.

The ban only applies to single-use products, and any reusable wet wipe products containing plastic will not be caught by the ban.

Importantly for manufacturers, and as per this Explanatory Memorandum, the manufacture of wet wipes containing plastic will not be banned. This allows manufacturers in England to continue to export wet wipes containing plastic to countries where their supply and sale is still permitted.

The ban is being proposed in order to reduce unnecessary plastic and microplastic pollution. It is said that the ban will lower the volume of plastic litter and reduce the amount of microplastics entering our waterways. 

Are there any exemptions to the ban?

Several sector-specific exemptions will apply.

Pharmacies: The supply of wet wipes containing plastic by pharmacies to their customers in England (whether supplied at a registered pharmacy or online) is not prohibited provided the pharmacy does not advertise the wet wipes to customers. If they are supplied at a registered pharmacy, the wet wipes must not be visible or accessible to customers, and they must not be offered or provided to a customer unless specifically requested. Displaying the wet wipes for sale on a website or app through which the pharmacy sells products online is not prohibited.

Medical purposes: The ban does not apply to a person supplying the products for use for medical purposes by or under the direction of a healthcare professional. Nor does it apply to a healthcare professional or NHS appliance contractor, provided they are supplying the products for medical purposes.

Businesses and local authorities: If wet wipes containing plastic were supplied to a person who carries on a business, or to a local authority, that supply will also be exempt provided the supply is for the purpose of that business, or local authority. 

What are the penalties for non-compliance with the ban?

The ban will be enforced by local authorities and local trading standards officers, in accordance with future guidance. Breaching the ban will constitute a criminal offence, and will carry a maximum penalty on conviction of an unlimited fine.

There is a due diligence defence available if a defendant can show that it relied on information provided by a third party (this may be the case if, for example, the defendant was supplied with, and then supplied to an end user, wet wipes containing plastic, despite their supplier claiming the wet wipes did not contain plastic).

A regulator may also impose civil sanctions. Not surprisingly, as per this Government response, it is expected that authorities will apply civil sanctions in the first instance. However, a failure to comply with a civil sanction, or repeated breaches, may result in prosecution.

Fixed monetary penalties or compliance notices: if a regulator is satisfied beyond reasonable doubt that a person has committed an offence, a fixed monetary penalty of £200 can be imposed, or a compliance notice issued. A compliance notice sets out steps a person must take (within a specified period) to ensure the offence does not continue or recur.

If a regulator proposes to issue either a fixed monetary penalty or compliance notice, it must issue a notice of intent setting out the grounds for the penalty and/or notice, and providing information on the right for a person to make representations or objections within 28 days. A recipient of a notice of intent can also discharge any liability for payment of a fixed monetary penalty by paying £100.

If a person is served with a notice of intent in relation to a proposed compliance notice, that person may, in response, undertake to act in a way which benefits any third party affected by the offence. A regulator may accept or reject this third party undertaking.

Stop notices: a regulator may decide to serve a stop notice if it reasonably believes a person is carrying on (or anticipates that a person is likely to carry on) an activity that is causing, or presents a significant risk of causing, serious harm to the environment (including animal health), and that activity involves, or is likely to involve, the commission of an offence. A stop notice prohibits a person from carrying on the activity specified in the notice until that person has taken certain steps.

Enforcement undertakings: if a regulator has reasonable grounds to suspect that a person has committed an offence, a regulator can accept a written undertaking given by that person.

Non-compliance penalties: If a person fails to comply with a compliance notice or undertaking, a regulator may serve a notice imposing a monetary penalty in respect of the same offence. That penalty will be a percentage of the costs of fulfilling any remaining requirements in the notice or undertaking.

Regulators also have powers to enter premises without a warrant and take possession of any samples for as long as is necessary. 

What should suppliers of these products do now?

It is unclear when the Regulations will be approved, but when that date comes, businesses selling wet wipes containing plastic to consumers should ensure that any stock can be sold within 18 months.

In anticipation of the ban, businesses should consider their ability to supply to other businesses (rather than consumers), or to export to  countries where the supply and sale of wet wipes containing plastic is still permitted, or to source and sell wet wipes which do not contain plastic.

Businesses should begin to check the termination provisions in any relevant long-term supply contracts. Businesses left with unsold stock after the ban comes into force should consider how to dispose of their remaining inventory, as the products are likely to be viewed as ‘waste” by environmental regulators.

The proposed ban on wet wipes containing plastic is the latest in a series of recent bans on single use products. For our other articles on this topic, see “The Great British Clean-up: a ban on single-use plastics” and “Single-use vapes to be banned across the UK from 1 June 2025: what do you need to know?”.

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Renters’ reform: A turning point for UK housing

Tue, 28 Oct 2025 00:00:00 GMT

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Renters’ reform: A turning point for UK housing

Student landlords face a cliff edge, while professional operators gain ground

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The Renters’ Rights Act marks a seismic shift in England’s private rental sector. By converting all assured shorthold tenancies into rolling periodic agreements, the legislation removes fixed end dates and reshapes landlord-tenant dynamics. But with no confirmed implementation date, uncertainty reigns – especially for student housing providers. While some landlords may exit the market, others will see opportunity in a more transparent, regulated landscape. The winners? Those ready to raise standards and absorb complexity.

Published 28 October 2025

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The Renters’ Rights Act seeks to rebalance landlord-tenant relations across England by converting all assured shorthold tenancies (ASTs) in the PRS – both existing and any granted after the Act comes into force – into assured periodic tenancies. This means that tenancies will no longer have a fixed end date and instead will roll over indefinitely until a valid notice is served by a landlord or tenant.

However, the key message tucked into the government’s press release is that we still do not have a full timetable for implementation of the Act’s provisions – although an “outline” is anticipated in the coming weeks. The current view across the sector is that a six-month implementation period is likely, potentially placing commencement around April 2026.

Uncertainty hits student housing hardest

The landlords most affected by this uncertainty over timing are those with student housing stock. ASTs already granted for the 2025/26 academic year will be caught under the Act, but it is hoped that the coming timetable will give providers a clearer picture before the 2026/27 cohort are signed up. The government rejected proposals to extend the ground for possession beyond houses in multiple occupation (three or more people forming one household), meaning that landlords will not be able to rely on that ground to obtain possession of smaller units of student housing – and may instead favour other PRS tenants.

For other sectors however, the legislation is aimed at discouraging and regulating unscrupulous landlords and giving more transparency and recourse to tenants – creating space for professional, responsible building owners with the ability and capacity to absorb the additional administrative burden, while raising standards across the sector by improving the quality and sustainability of housing stock.

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Shoosmiths advises Chris Stewart Group on nearly £60m sale of Glasgow PBSA scheme

Mon, 27 Oct 2025 00:00:00 GMT

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Press release | 3 MIN READ

Shoosmiths advises Chris Stewart Group on nearly £60m sale of Glasgow

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Shoosmiths has advised Chris Stewart Group on the sale of Martha Street Apartments, a 20-storey purpose-built student accommodation (PBSA) tower in Glasgow city centre, in a deal worth almost £60m.

Published: 27 October 2025

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Shoosmiths advises HGP on JV in latest £145m build to rent deal

Tue, 30 Sep 2025 00:00:00 +0100

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Shoosmiths advises HGP on JV in latest £145m build

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Shoosmiths has supported the Housing Growth Partnership (HGP) on a £145m joint venture with JRL Group to deliver Luton’s first institutional build to rent (BTR) scheme.

Published: 30 September 2025

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Experts from the law firm’s real estate, corporate and construction teams advised HGP on its plans with JRL Group to deliver the Castle Street development. The project will create 414 new homes across three buildings, alongside high-quality resident amenities including a rooftop lounge, co-working spaces, a gym, landscaped roof terraces and shared gardens.

HGP, the Lloyds-backed equity investor, is committing £28m of equity funding alongside JRL’s investment to help deliver the project. Construction is already underway, with completion targeted for December 2027. The scheme will bring professionally managed rental homes to Luton for the first time, supporting the town’s regeneration and boosting its rental market, which currently has no institutional purpose-built BTR in operation.

Colin Bennett, investment director at HGP, said:

“This joint venture with JRL marks an exciting milestone for HGP as we bring the first build to rent homes to Luton – a location with strong fundamentals and no existing institutional BTR stock. Shoosmiths’ support has been key in helping us deliver this new project, and we look forward to continuing our partnership as we unlock further opportunities.”

The deal is the latest joint venture Shoosmiths has supported HGP on, following its role advising on a £150m partnership with PLATFORM_ to deliver a 451-apartment build to rent scheme in Leeds, and a £120m joint venture with Watkin Jones to deliver a 397-bed purpose-built student accommodation scheme in Stratford, East London.

The law firm’s deal team was led by real estate partner Sheelagh Cooley, supported by experts across the firm including: Morgan Trigg and Leah Cairney (corporate), Dan Kennedy (tax), Christine Burrows (construction), Gillian Watson (real estate) and David Mathias (planning).

Sheelagh Cooley, partner and joint head of real estate finance at Shoosmiths, added:

“We’re thrilled to have supported HGP on this joint venture with JRL Group. It’s the latest in a series of transactions Shoosmiths’ real estate team has advised on. This landmark scheme will deliver Luton’s first institutional build to rent homes, meeting the demand for high-quality rental housing. It’s also a clear example of HGP’s commitment to backing ambitious living sector developments across the UK – a vision our team is proud to help realise.”

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Leasehold reform: Clarity or complexity?

Mon, 22 Sep 2025 00:00:00 +0100

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Article | 5 min read

Leasehold reform: Clarity or complexity?

What the 2025 consultation really means

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The Government launched a consultation earlier this summer, seeking views on how to implement the provisions of Part 4 of the Leasehold and Freehold Reform Act 2024 (LAFRA) via secondary legislation.

Published 22 September 2025

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The consultation also seeks views on new proposals for reform, including updates to the major works regime under the Landlord and Tenant Act 1985 (the 1985 Act). Whilst no consultation has yet been released on the implementation of Part 5 of LAFRA, it contains a similar duty to consult freehold homeowners subject to estate charges and so it seems likely that the responses to this consultation will inform the government’s thinking for the next stage.

Part 4: Regulation of Leasehold

Part 4 focusses on the regulation of leasehold management primarily regarding service charges and seeks to overhaul the existing provisions in the Landlord and Tenant Act 1985 (LTA 1985). It is proposed that:

section 20B notices (18-month rule notices) are in a prescribed form
service charge demands are in a prescribed form
information that leaseholders previously had a right to request (pursuant to sections 21 and 22 of the LTA 1985 Act) must now be provided as a matter of course

Failure to comply with these provisions will give leaseholders rights to apply to the First Tier Tribunal (FTT) to enforce compliance, and damages of up to £5000 may be awarded against landlords. Part 4 also seeks to curtail the costs a landlord can recover from leaseholders as part of FTT proceedings and recovery will not be as of right even where a lease permits recovery.

The second section of this consultation considers raising the consultation threshold under the 1985 Act for qualifying works to £600 per leaseholder (currently £250 per leaseholder), and for qualifying long term agreements to £300 per leaseholder (currently £100 per leaseholder).

Part 4 seeks to assist leaseholders in their understanding of leasehold management, perhaps as a precursor to the eventual transition towards a full commonhold regime. The consultation on Part 4 of LAFRA notes that “opaque and affordable service charges” are the single biggest subject of enquiry among those seeking advice and support from the Leasehold Advisory Service. The government is therefore hopeful that simplification and standardisation will help leaseholders better understand and challenge costs leading to better understanding of the system more generally.

One interesting proposal is taken from the Report of Lord Best in 2019 and pushes for a move towards mandatory professional qualifications (and associated CPD) being introduced for managing agents, both at individual and firm level.

For landlords, this additional regulation comes at a time when they (and their agents) may already be navigating the provisions of the Building Safety Act 2022, preparing for the Renters Rights Bill becoming law this Autumn, and ensuring their properties stay compliant with statutory requirements such as MEEs or HMO licencing.

What matters next

For housebuilders, perhaps the more interesting and relevant part of LAFRA is Part 5 which will limit recovery of estate management charges. As yet, there is no timetable for this Part being brought into force, but we anticipate that responses to this consultation will shape likely next steps and therefore housebuilders may well want to consider responding to the consultation.

Part 5: Regulation of Estate Management

Part 5 seeks to create similar protections for freeholders who are obligated to contribute towards the costs of maintaining common areas as are afforded to leaseholders pursuant to the LTA 1985. Although the Leasehold Reform (Ground Rent) Act 2022 has already banned ground rents on most new long residential leases, government remains concerned over the lack of regulation of estate management charges.

The provisions of Part 5 will require estate managers to issue annual accounts and reports in a prescribed format, supported by documentation such as invoices and receipts, as well as giving homeowners on managed estates enhanced rights to request information and challenge charges – mirroring the rights of leaseholders to challenge the reasonableness of service charge.

Part 5 also contains an obligation on estate managers to consult homeowners where costs will exceed an appropriate prescribed amount – similar to the consultation requirements required under s.20 of the LTA 1985.

Next steps

The Part 4 consultation is open for 12 weeks and closes on 26 September 2025. As always, it is important to remember that this is (as yet) only a consultation, and therefore not all of its proposals will make it into law.

It is however likely that whatever the outcome of the consultation, the winners will be those professional and proactive landlords (for example, of PBSA and BTR stock) who will be better placed to absorb the additional administrative burden.

Once the response from the Part 4 consultation is published, others involved in the living sector, such as housebuilders may find it particularly interesting to observe the overall direction being taken by government, as the changes introduced at this stage could influence how subsequent parts of the Act are put into effect.

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Shoosmiths enables strategic land regeneration

Fri, 22 Aug 2025 00:00:00 +0100

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Article | 4 min read

Shoosmiths enables strategic land regeneration

Partnering with charities, schools, and sports clubs to unlock value from underutilised sites

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Shoosmiths is advising on a series of regeneration projects across the North West of England that will transform disused playing fields into new communities.

Published 22 August 2025

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Working in close partnership with Sophia Fleming Consulting – which assists on site assessment, community consultation and planning applications – and land agents Roger Hannah, Shoosmiths is supporting schools and charities across the North West region to unlock the potential of their underutilised land.

The aim is to reinvigorate these sites by delivering much-needed new housing and community infrastructure, while retaining and enhancing local sports provision.

The first project Shoosmiths advised on involved Kellen Homes, in partnership with Greater Manchester Youth Federation (GMYF), Great Places Housing Group, Sigma Capital Group and Centrepoint, to redevelop the former Mellands playing fields in Gorton, Manchester.

The 22-acre site, previously disused and subject to vandalism, has secured full planning permission for 267 semi-detached homes – of which 60 will be affordable – and 36 apartments reserved for young people aged 18–25 who are leaving the care system and at risk of homelessness. These homes will be managed by Centrepoint as part of their independent living programme – one of the charity’s first new build schemes in the North West.

The planning process involved close engagement with Sport England and Manchester Active, which assesses proposals under its Playing Fields Policy to ensure sports provision is not lost or compromised.

Sophia Fleming, director at Sophia Fleming Consulting, said:

"Having worked both for housebuilders as a Land Director and Chair at an independent school, I understand the financial pressures schools and charities face – which have only increased since the introduction of VAT on private school fees – whilst also recognising the untapped potential of underused land. These projects aren’t about removing green space – they’re about transforming neglected sites into vibrant communities that still retain meaningful sports provision. We’ve worked constructively with Sport England and Local Authority sports and leisure officers throughout, and their input has helped shape proposals that deliver real community value. As planning policy evolves, this collaboration is key."

Extensive community consultation played a key role in shaping the proposals for the Gorton site. The application includes two full-size FA-standard football pitches and a 10,000 sq. ft sports and community hub, to be operated by GMYF. The centre will serve as a hub for community groups and youth-focused programming.

Shoosmiths provided strategic planning advice for the project, including viability assessments, infrastructure and planning agreements, and negotiating Section 106 agreements to secure consent. The firm also advised on the land disposal to Kellen Homes, providing specialist guidance on charity law and tax matters.

Building on this, Shoosmiths is now advising on similar projects in Chorlton, Stockport and Wirral in partnership with Sophia Fleming and Tom Shepherd of Roger Hannah. Clients include charities, academy trusts, independent schools and sports clubs.

Acting on behalf of an academy trust and working alongside Roger Hannah’s wider development advisory business, the group recently secured Secretary of State approval for the sale of redundant playing fields for a residential-led development scheme of around 100 homes – a complex process that took over 18 months. This major success will allow the academy trust to invest the proceeds in providing professional standard sports facilities for their students and wider community.

Shoosmiths’ project team is led by real estate partner Andrew Pattinson, with key support from legal director Will Sanderson and principal associate Jonathan Smith.

Andrew Pattinson, real estate partner at Shoosmiths, said:

"With the pressure to deliver new housing greater than ever, it’s essential that we find ways to bring forward land that can meet this need – without losing sight of wider community priorities. These projects show that it’s possible to unlock disused sites, often in significant disrepair, to deliver high-quality homes while also enhancing local infrastructure, supporting social value, and aligning with planning policy."

Tom Shepherd, director at Roger Hannah, added:

"As a highly experienced professional team, we are able to support trustees, governors and management in identifying opportunities to release significant value from existing land holdings. We sit alongside our clients from the outset and help them navigate complex development processes – from identifying and securing the right developer or housebuilder partner through to realisation of cash receipts.

"Charities, schools, sports and golf clubs face significant pressures to provide state of the art facilities. But given on-going budgetary challenges, this is often impossible without a significant cash receipt. We can support our clients in achieving this."

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Shoosmiths supports charities, schools and sports clubs on regeneration of underutilised land

Fri, 22 Aug 2025 00:00:00 +0100

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Press release | 4 min read

Shoosmiths supports charities, schools & sports

on regeneration of underutilised land

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Shoosmiths is advising on a series of regeneration projects across the North West of England that will transform disused playing fields into new communities.

Published: 22 August 2025

Author: Emily Watts

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Technology M&A: fit over scale in 2025

Thu, 21 Aug 2025 00:00:00 +0100

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Technology M&A: fit over scale in 2025

AI, infrastructure, and strategic value

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Tech M&A is undergoing a strategic reset. In 2025, dealmakers are prioritising fit over scale, with mid-market transactions, AI-native businesses, and infrastructure software leading the charge. As interest rates ease and portfolios realign, investors must act early, think long-term, and target assets that drive innovation and resilience. Shoosmiths explores the trends shaping the next wave of tech M&A.

Published 21 August 2025

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The technology sector remains one of the most active and strategically important areas for global mergers and acquisitions.

As we move through the second half of 2025, dealmakers are navigating a complex environment shaped by AI innovation, macroeconomic uncertainty, and shifting geopolitical dynamics. This article explores the key trends influencing tech M&A today, their implications for acquirers, and what the landscape may look like in 2026.

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Current market trends – advancements shaping the industry today

Mid-market deals take centre stage - One of the most notable shifts in tech M&A is the pivot away from large-cap, high-risk acquisitions toward mid-market transactions. These deals typically involve companies with stable cash flows, strong customer retention, and scalable business models. While the overall number of deals has increased, the total deal value has declined, reflecting a more cautious and selective approach by acquirers. This trend is driven by both strategic buyers and private equity firms seeking lower-risk opportunities with clearer paths to integration and return on investment.

Surging demand for AI-native and infrastructure software - Artificial intelligence continues to dominate the tech investment narrative. Companies that are AI-native (meaning their products or services are built around AI capabilities) are commanding premium valuations. Infrastructure software, including cloud platforms, developer tools, and vertical SaaS solutions tailored to specific industries, is also in high demand. These businesses offer recurring revenue models and are often deeply embedded in their customers’ operations, making them attractive acquisition targets. We are witnessing an AI capex surge, with over $1 billion per day being invested in AI-related infrastructure, research and development, and strategic acquisitions; this surge is not only about expanding capabilities but also about securing control over critical components of AI (including semiconductors and data centres).

Interest rate sensitivity and financing dynamics - The macroeconomic environment remains a critical factor in deal-making. With expectations of interest rate cuts and regulatory easing, buyers (particularly those reliant on debt financing) are re-entering the market. Lower borrowing costs could unlock more deals. However, uncertainty around financing continues to influence the timing and structure of transactions.

Portfolio realignment and strategic divestitures - Many tech companies are actively restructuring their portfolios to focus on core growth areas such as AI, cloud computing, and data infrastructure. This has led to a wave of divestitures, particularly in telecoms and media, where legacy assets are being spun off or sold. These moves are creating opportunities for investors to acquire undervalued assets with turnaround potential.

Strategic vs. financial buyers - Strategic acquirers are increasingly focused on long-term synergies, integration potential, and operational fit. In contrast, private equity firms are targeting high-growth segments like AI infrastructure, often employing roll-up strategies to build scale. Understanding the motivations and criteria of different buyer types is essential for anticipating deal flow and exit opportunities.

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Implications for tech investors

Strategic fit over scale - The evolving tech M&A landscape presents both challenges and opportunities for investors. The shift toward smaller, more strategic deals means that identifying high-quality targets is more important than ever. Investors should prioritise companies with strong fundamentals, drive innovation, and clear paths to profitability.

AI as a strategic driver - AI-native companies are no longer niche but remain a core driver of deal strategy. Whilst these are particularly attractive, they often come with elevated valuations. For those with a longer investment horizon, these businesses offer significant upside potential.

Timing is critical - anticipated improved financing conditions (including the reduction of interest rates) could lead to valuation uplifts, meaning investors could face higher competition, making early entry advantageous; early engagement with targets and proactive capital planning will be key.

Divestitures as a source of value - Portfolio restructuring across the tech industry is creating opportunities to invest in divested assets that may be undervalued but strategically important. Equally, corporate spin-offs and divestitures are creating a rich pipeline of acquisition opportunities; these assets often come with established customer bases and proven technology but may require operational improvement or strategic repositioning.

Geopolitical influence – Geopolitics and supply chain considerations are increasingly influencing M&A strategy and investors should monitor cross-border transactions and onshoring trends, especially in sectors like semiconductors and AI hardware.

Exit strategy - Understanding the exit landscape is key; strategic buyers may offer premium valuations for companies that fit well within their ecosystems, while private equity firms may pursue operational improvements and scale through consolidation.

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Most promising tech Sectors for investment

As ever in recent predictions, AI and machine learning continues to have high-impact across industries, with focus on generative AI and infrastructure. Cybersecurity is set for continued growth, driven by evolving threats and demand for advanced security solutions. We envisage that clean energy and storage will continue to expand due to increasing pressure on climate goals and energy security. Another hot sector on radars is advanced manufacturing and robotics, with automation and smart factories looking to address labour shortages and supply chain needs.

As we look ahead, staying abreast of the latest technology trends is crucial for businesses aiming to remain competitive and innovative. By understanding and leveraging these advancements, companies can position themselves for sustained growth and success in an ever-evolving M&A market.

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What to expect in 2026

For M&A professionals, 2025 is a year of strategic recalibration. The focus is shifting from scale to fit, from speculative innovation to infrastructure, and from reactive dealmaking to proactive portfolio shaping. As we approach 2026, those who align their acquisition strategies with long-term technological and geopolitical trends will be best positioned to create value and drive transformation.

Looking ahead, several trends are expected to shape the tech M&A landscape in 2026:

Return of larger strategic transactions - As interest rates ease and macroeconomic conditions stabilise, we may see a resurgence in large-cap deals, particularly among cash-rich tech giants seeking transformative acquisitions (including the anticipated acquisition of Mistral by Apple).

AI infrastructure consolidation - The race to build AI-driven computing power will continue, with consolidation expected among infrastructure providers, semiconductor firms, and data centre operators. Strategic buyers will seek end-to-end control of the AI stack.

Increased cross-border activity - While geopolitical risks remain, clarity around trade policies may unlock cross-border M&A, especially in regions investing heavily in AI and digital infrastructure.

Focus on ESG and energy efficiency - Sustainability will become a more prominent factor in deal evaluation. Acquirers will prioritise targets that contribute to energy efficiency, clean tech integration, and ESG compliance, especially in data-heavy sectors.

Media and telecom transformation - AI is reshaping media and telecoms, with emerging platforms challenging legacy players. Expect continued consolidation, divestitures, and acquisitions focused on AI-enabled content delivery, advertising, and infrastructure

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Deals that define the future

Wed, 13 Aug 2025 00:00:00 +0100

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Article | 3 min read

Deals that define the future

Why bold M&A is reshaping business strategy

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In a market shaped by disruption, M&A is no longer just a growth lever—it’s a survival strategy. Our corporate team is seeing clients use deals to build resilience, unlock innovation, and accelerate transformation. From AI to integration, we explore the trends driving strategic M&A.

Published 13 August 2025

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In a world shaped by geopolitical uncertainty, volatile financial markets, and the relentless pace of technological and policy change, one thing is clear: disruption is no longer a threat—it’s an opportunity.

At Shoosmiths, we’re increasingly seeing our clients lean into this uncertainty, using M&A as a strategic lever to future-proof their businesses, unlock new markets and deliver new growth.

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A market in motion

Despite headwinds such as US tariffs, rising interest rates, and fluctuating capital markets, strategic M&A activity is on the rise notwithstanding an overall reduction in M&A volumes. According to Dealogic, strategic dealmaking increased by 11% year-on-year in the 12 months to May 2025 (source: First 9 Months M&A Highlights), with notable surges in the technology, financial services, and media sectors. This aligns with what we’re seeing on the ground: a recalibration of priorities, with the market doubling down its focus on quality, resilience and long-term value creation.

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What's driving the deals?

Across our M&A practice, we’re observing several key trends shaping the deal landscape:

1. Quality over quantity

High-quality assets are commanding premium valuations. Competitive auction processes are becoming the norm for businesses with strong management teams, proven track records, and scalable growth models. In this environment, fundamentals matter more than ever.

2. AI as a deal enabler and deal driver

AI is no longer just a sector—it’s a tool changing how deals get done. Dealmakers are increasingly using AI to streamline financial modelling, identify acquisition targets, and map operational synergies. This is accelerating timelines and sharpening decision-making. AI is also, in itself, a very hot sector as companies look to accelerate the adoption and acquisition of greater AI capability via M&A.

3. Integration starts early

Gone are the days of post-deal integration as an afterthought. Today’s canny acquirers are building integration and value creation plans into the deal process from day one. This proactive approach reduces execution risk and ensures value is realised from the moment the ink dries.

4. Creativity triumphs

There is a definite shift to strategic partnerships and collaborations including JVs and non-traditional structures which seek to bridge valuation gaps between the parties. Deferred consideration mechanisms, earn-outs, and alternative deal structures are being used more frequently to align buyer and seller expectations—particularly in sectors where future performance is difficult to predict.

5. Agility is the new advantage

The most successful dealmakers are those who can pivot quickly. Whether it’s responding to regulatory shifts, macroeconomic shocks, or emerging technologies, agility and resilience are becoming defining traits of high-performing M&A teams.

As we move into the second half of 2025, we expect the pace of strategic M&A to remain strong—particularly in sectors aligned with innovation and regulation. For those in the M&A market, the message is clear: disruption favours the bold. Those who embrace uncertainty, invest in quality, and plan for integration from the outset will be best positioned to thrive.

In 2024, Shoosmiths' corporate practice had its busiest year, completing over £10.4bn in transactions across 370 deals. Over the past three years, average deal sizes increased by over 200% in M&A, 100% in PE, and 280% in VC, highlighting the firm's high-quality work and solidifying its position as a leading mid-market specialist.

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Real estate deals that shape the UK

Tue, 5 Aug 2025 00:00:00 +0100

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Article | 4 MIN READ

Real estate deals that shape the UK

Shoosmiths leads £1.5bn investment year

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Published 5 August 2025

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In conversation with

Reflecting on the year gone by, I can see what we’ve accomplished. I can see it in the market, I can see the headlines and I can say that was us; we were involved in that.

Katie McCall

Cohead Shoosmiths’ real estate investment group

For Kate McCall, partner and cohead of Shoosmiths’ real estate investment group, this has been the ultimate marker of success: seeing landmark transactions come to fruition and knowing Shoosmiths’ real estate investment team has played a key role in making them happen.

It follows a breakout financial year for the group, after advising on £1.5bn of transactions across asset classes – including several complex portfolio deals, the creation of a firstofitskind £1bn UK-focused industrial and logistics platform, and close collaboration with Shoosmiths’ living sector specialists on residential transactions, such as one of the largest build to rent deals of 2024.

In this video, Kate McCall and Nathan Rees, coheads of Shoosmiths’ real estate investment group, reflect on the last financial year, share their perspective on the market and themes shaping investor strategies. They discuss the deals that defined the group’s FY 2024/25, the sectors driving investment activity, and how the team is helping clients unlock value and realise opportunities.

Watch Kate McCall and Nathan Rees reflect on the group’s year and outlook

https://youtu.be/AuPNbpWbeAI?si=G-NbRGk-SmpTG4z0

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Continued momentum in H1 2025

The first half of 2025 has seen Shoosmiths’ real estate investment group build on last year’s dealmaking activity, supporting clients through a wave of new transactions. Several have been at larger lot sizes, signalling liquidity in the market and an appetite among investors for scale.

Among the transactions completed so far this year, the group advised on the £99m sale of Festival Place, a 1.1m sq ft shopping centre in Basingstoke. Shoosmiths acted for the seller – instructed by BDO as fixed charge receivers – following assisting a period of focused asset management to enhance value and diversify the centre’s tenant mix before the sale.

The team also advised Custodian Property Income REIT on its £22.1m allshare acquisition of Merlin Properties, bringing a portfolio of 28 largely industrial assets – 99% let and yielding around 8.1% – into the REIT’s ownership. Another sign of sustained activity and strength in the industrial and logistics real estate market, which led the group’s dealmaking in FY 2024/25.

As part of a complex crossborder transaction, the firm acted for Kwik Fit on the acquisition of a portfolio of 83 UK properties, which the tyre, MOT, and car servicing retailer currently occupies.

In the living sector, Shoosmiths advised Packaged Living on its first coliving site acquisition. This was followed by support for BlueCastle Capital on the purchase of Marks & Spencer’s former flagship site in Birmingham, paving the way for hundreds of new build to rent homes. The law firm also advised Torsion Group and Khalbros on their joint venture’s acquisition of the Eastgate Quarter site in Leeds – one of the region’s largest-ever development deals.

The breadth of mandates completed in 2025 so far underscores the group’s role in shaping significant investment activity across UK real estate. As Nathan and Kate reflect in the video: 

“When I think about what success looks like, it is Shoosmiths’ real estate investment team being known as one of the key players in the investment market - to be involved in a high-level of deal activity, in deals that are marketleading and nationally significant.”

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