2026 has so far set the stage for important UK real estate developments, beginning with a high-profile proposed ban on residential ground rents in existing leases, while the government continues its push to abolish upwards-only rent reviews in new commercial leases. The drive towards greater transparency and disclosure also continues, with new requirements in the land control and sustainability arenas.
We review some of the key developments from the year to date and look ahead to spring and summer.
Upwards only, never again?
In July 2025, the English Devolution and Community Empowerment Bill attracted significant attention by proposing a ban on upwards-only rent review clauses in new commercial leases. Several months on, and despite strong lobbying from real estate investors and lenders, the Bill continues to progress through Parliament, with ongoing modifications following the Commons Committee stage.
The modifications primarily aim to close potential loopholes and tidy up unexpected consequences in the Bill’s initial drafting, and the key message remains unchanged: upwards-only rent reviews in new leases will be banned. This approach aligns with the Bill’s wider objectives, including tackling high street vacancies and supporting the resilience of retail and other commercial sectors. At present, there is no implementation date; given the slow progress of the Bill (and the Bill’s wider scope, unrelated to rent review), we do not expect any ban to take effect before 2027.
Residential ground rents: reform proposals for existing leases
Commercial rents are not the only rents in the firing line. Earlier this year, the government announced a major reform of the residential leasehold system, proposing that ground rents in existing residential long leases will be capped at £250 per year, before transitioning to a peppercorn after 40 years. Published alongside the draft Commonhold and Leasehold Reform Bill in January 2026, this move represents one of the most significant interventions in the leasehold market in recent years.
According to government statements, the cap is intended to ease cost of living pressures and address the long-criticised practice of escalating ground rent clauses, which have affected marketability and mortgageability of leasehold properties. The government estimates that 770,000 to 900,000 leaseholders will benefit directly from the cap.
However, pension funds, institutional investors and landlords point out that the reforms will reduce or eliminate their ground rent incomes – which were expected to provide secure, stable long-term investments that were contractually guaranteed. The ban will bring about an enormous transfer in value from landlords to tenants. The Residential Freehold Association estimates that capping ground rents at £250 per year could wipe out £18.7 billion from investment values. The government’s move reinforces concerns that regulatory and political intervention may become an increasing risk for long-term investment strategies in the UK.
The Bill will now be reviewed by the Housing Committee before moving through Parliament, with the government indicating that the cap may come into force in late 2028. We anticipate strong lobbying from industry groups like RE:UK and potential legal challenges to the Bill for interfering with existing property rights.
Commonhold reform: what the draft Bill proposes
The draft Commonhold and Leasehold Reform Bill also intends to implement the government’s ambitious plan to make commonhold the default tenure for new flats, replacing long-leasehold structures.
Under commonhold, unit owners hold their flats on a freehold, non-expiring basis and collectively manage the building through a commonhold association operating under a standardised community statement.
The draft Bill proposes a ban on new leasehold flats so that commonhold will be mandatory, save for some exclusions such as student and social housing, with strict advertising and registration requirements and penalties for non-compliance. Existing leasehold buildings will be able to convert to commonhold with only 50% leaseholder support and lender consent, a substantial reduction from the current requirement for unanimity.
The existing (and largely unused) commonhold framework will be modernised by introducing sections for mixed-use schemes, mandatory reserve funds, a strengthened court-based enforcement regime and new financing mechanisms for major works.
The draft Bill represents a major shift in flat ownership, potentially strengthening leaseholder rights and governance but requiring investors, landlords and lenders to reassess valuation models, income predictability, development structures and financing strategies in response to the phasing out of traditional leasehold structures.
Land control transparency: the new register of contractual control rights
Further transparency will be required in the real estate market in relation to land controls (rather than just land ownership), with the launch of the new public register of contractual control rights (CCRs), originating from Part 11 of the Levelling-up and Regeneration Act 2023. Specified information in written agreements that give third parties control over future land development (such as options, pre-emptions, conditional contracts and promotion agreements), with some exceptions, will be published on the public register where the CCR is held for the purposes of an undertaking, such as a business or charity.
The draft regulations were recently laid before Parliament and will come into force on 6 April 2027, with the Land Registry launching its digital system for submitting the required information on this date. The requirements will apply where CCRs are entered into on or after the regulations are made (with a longer grace period for submitting the information if the relevant CCR was entered into after the regulations are made but before they come into force on 6 April 2027). The requirements will not apply retrospectively to CCRs which were entered into before the regulations are made, other than where a CCR is varied or assigned after the regulations are made. Where a relevant CCR expires, is exercised or is terminated, the Land Registry must also be notified.
The purpose of the public register is to increase transparency for local authorities, communities and developers by making information about land control arrangements more accessible. The government’s wider aims are to encourage housebuilding, deter anti-competitive practices and ‘land banking’ and assist smaller and medium sized developers.
Many landowners and developers meanwhile feel that the public register will add to their red tape and costs and result in some commercially sensitive information being publicly available; they argue that the measures will have limited practical impact as the main challenges for housebuilding are strained viability, the complex planning system, building safety regulatory delays and the shortage of skilled construction workers.
An industry wide concern is whether the Land Registry is equipped to resource this extra register, when its backlog on processing land ownership applications remains long, leading to numerous issues for the real estate market during the so-called ‘registration gap’, which we discuss in our article on delays in Land Registry registration.
ESG in real estate: key sustainability developments
It would not seem right to issue a key update briefing without commenting on sustainability issues, and 2026 looks set to further embed ESG considerations in the commercial real estate sector and increase the bifurcation in the market between the value and liquidity of buildings with strong sustainability credentials and those with a poor environmental performance.
Revised metrics for energy performance certificates are anticipated soon, and minimum energy efficiency standards are expected to be raised to a minimum Grade B rating for let commercial property by 2030. A non-compliant property will not be lettable, and breach may lead to financial penalties and reputational damage. Energy performance resilience and upgrade costs therefore need to be carefully factored into investment decisions.
BREEAM version 7, launched in September 2025, updates the mandatory life-cycle assessments and embodied-carbon reporting requirements for achieving an ‘Excellent’ or ‘Outstanding’ rating. For developers wanting to remain attractive to ESG focussed investors and occupiers, developments will need to demonstrate lower carbon emissions not just at the design stage, but throughout the entire building lifecycle – from the materials used in construction to maintenance, refurbishment and eventual demolition.
Following the pilot version, version 1 of the UK Net Zero Carbon Buildings Standard has just been released. The NZCBS is the result of a collaboration between key industry groups to produce the UK’s first industry wide methodology for assessing the net zero carbon performance of buildings.
While industry benchmarking standards are becoming both more universal and more rigorous, RICS’s fourth edition of its global ESG and sustainability valuation standard (due to take effect in April 2026) reinforces that sustainability performance and compliance costs are now integral to asset pricing and lending decisions – affecting valuations, rental viability and marketability.
Increased transparency and reporting are also on the horizon, with the government and FCA consultation on the Sustainability Reporting Standards relating to disclosure of sustainability related financial information, and climate related disclosures, due to close on 20 March 2026. Anticipated changes include mandatory sustainability reporting for ‘economically’ significant and listed companies, and voluntary reporting for others.
The topics above aside, there are plenty more legislative changes on the horizon in 2026. Our disputes experts explore the key trends and practical implications arising in property litigation, including developments linked to the Renters’ Rights Act, building safety, and evolving development rights. We also look ahead to anticipated changes in the planning world in 2026.
Many thanks to Christina Tennant for their help in writing this article
This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.
© Farrer & Co LLP, March 2026