UK Real Estate Round Up June 2026


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The PROPcast explored the legal and practical considerations arising from the proposals, offering practical insight into the issues landlords, investors and occupiers should be considering now. If you missed it, you can watch or listen back here. PROPcast Episode 6 is at 10 a.m. on 14 July when our subject will be “The End of Retentions – Preparing for the Commercial Payments Bill”. The Government’s newly published Commercial Payments Bill marks a watershed moment for the UK construction industry. With a phased ban on retention payments, tighter final payment deadlines and significant changes to payment mechanisms, the legislation is set to fundamentally reshape how parties manage cash flow, risk and security in construction contracts. In this PROPcast, Lauren Morrison and Josh Curry from our Construction team will unpack the key provisions of the Bill, explore the practical implications for the industry and share proactive strategies to help you navigate and prepare for this evolving landscape. You can sign up for the PROPcast here. Legal Updates Building Safety Act 2022 “Higher risk building” in England: 18m or seven+ storeys high and two or more residential units “Higher risk building” in Wales (for design and construction only): 18m or seven+ storeys high and one or more residential units “Relevant building” in England: 11m or five+ storeys high and two or more dwellings RE:UK responds to consultation on categorisation of HRB work The response confirms RE:UK’s support for greater proportionality within the higher-risk building regime in cases where minor or routine works trigger gateway requirements despite presenting limited fire or structural safety risk. It also states that the consultation appears “heavily focused on residential buildings and does not sufficiently reflect the realities of mixed-use higher-risk buildings”. RE:UK’s response makes the point that proportionality should apply equally to commercial areas within mixed-use buildings, and routine fit out or maintenance works in commercial units should not automatically trigger extensive gateway requirements where there is no material impact on fire or structural safety. Welsh government publishes consultation on building safety remediation and determining building heights The consultation proposes how regulation-making powers set out in the Building Safety (Wales) Act 2026 will be used to (a) create a system for the making of remediation orders and remediation contribution orders by the residential property tribunal, (b) limit the liability of leaseholders for the cost of remediation and related provisions, and (c) provide a method for calculating the height and number of storeys of a regulated building. There are already regimes for these issues in England, and the Welsh government is inviting views on the proposals via this link: https://www.gov.wales/implementing-building-safety-wales-act-2026 Guidance on building HRBs in Wales The Welsh government has published a series of guidance notes on the requirements for building higher risk buildings in Wales, in readiness for the new building control regime which will apply in Wales from 1 July 2026 (subject to some transitional arrangements). The guidance covers building control approval for higher-risk buildings, preparing information for a building control approval application, applying for a completion certificate, keeping information about a higher-risk building through the ‘golden thread’, making changes to a higher-risk building project, operating a mandatory occurrence reporting system, and the criteria for determining whether new or existing buildings fall within the higher-risk building regime. Links to all the guidance notes can be found here: Higher-risk buildings: guidance \| GOV.WALES Contact Standard Commercial Property Conditions in court: can SCPC 11.3 (re obtaining landlord’s consent to assign) be disapplied if the landlord’s refusal is manifestly unreasonable? In Mulberry Homes (Hazel Grove) Ltd v Scoto Ltd [2026] EWHC 1339 (Ch) the High Court dismissed a claim by a buyer for specific performance of a contract for the sale of commercial property. The buyer exercised a right of pre-emption to acquire land from the seller, which included leasehold premises. The lease required the landlord's consent to assign. The sale contract incorporated the Standard Commercial Property Conditions (third edition) (SCPC) which provide in condition 11.3.1(a) that the seller must apply to the landlord for consent to assign "if a consent to let, assign or sub-let is required to complete the contract" and (at 11.3.5) that if consent has not been obtained by the original completion date, completion is postponed until consent is given or a court declares consent unreasonably withheld. Also under SCPC 11.3.6, at any time after six months from the original completion date, either party may rescind the contract in the absence of consent or a court declaration that consent has been unreasonably withheld. The seller sought the landlord’s consent, which was refused, four days after the original completion date. Further requests for consent were made and refused. The seller therefore rescinded the contract on 19 June 2023 (i.e. just over six months from the original completion date). The court considered two novel points: firstly, whether the provisions of SCPC 11.3 cease to apply if it becomes manifestly clear that consent has been wrongfully refused or delayed; and secondly, whether, before completion, a contracting purchaser of leasehold property has standing to apply for a declaration that landlord's consent to assign has been unreasonably withheld or delayed. The answer to the first question was “no” and to the second question, “yes”. The court held that SCPC 11.3.1(a) assesses whether consent is required at a single moment in time, no later than the original completion date. The SCPC also draw no distinction based on the degree of unreasonableness. This construction provided the commercial certainty expected from the SCPCs. Once SCPC 11.3.5 was engaged, the completion date was postponed until either consent was given or a court declared consent unreasonably withheld. Neither condition was satisfied in this case, so the seller was entitled to rescind. Section 1(3) of the Landlord and Tenant Act 1988 (containing landlord's duties to the tenant regarding consent) does not remove the need for formal consent or a court declaration under SCPC 11.3. The court also held that a contracting purchaser has standing to seek a declaration that consent has been unreasonably withheld before completion of the assignment, provided that it joins the seller as a party. ESG Government responds to MEES consultation – EPC B by 2031, but no interim milestone The government has responded to the MEES in the non-domestic private rented sector confirming its intentions: That all non-domestic private rented buildings over 1000 sq m in England and Wales will need to reach EPC B “where cost effective” Buildings below 1000 sq m to continue to be subject to the current minimum standard of EPC E The previously proposed milestone of EPC C by 2027 will not be taken forward Existing exemptions including the 7 year payback test will remain in place ensuring that only improvements that are “practical, affordable and cost-effective” will be required The changes will require secondary legislation before taking effect. Landlord and Tenant Welsh RRA anti-discrimination measures in force Sections 43 to 49 of the Renters' Rights Act 2025 came into force on 1 June 2026. These provisions: Make it an offence for landlords and letting agents of occupation contracts to discriminate against contract-holders with children or who claim benefits, except where required by an existing insurance policy. Introduce new fundamental provisions that apply to all occupation contracts, subject to specified exceptions. These prohibit landlords from restricting a contract-holder's ability to have children in the dwelling or claim benefits Welsh Government guidance suggests that the new fundamental provisions are intended to apply to existing occupation contracts, as well as contracts entered into on or after 1 June 2026. Landlords of existing occupation contracts to which the new provisions apply should either update the terms of their occupation contracts or prepare a written statement of the new terms and give notice of the variation to their contract-holder(s) by 14 June 2026. The Welsh Government has published new versions of its model occupation contracts to reflect the changes. Landlord required to replace hotel cladding – not due to BSA, but as a result of “good condition” and compliance with laws covenants In Essendi UK Hotels 2 Ltd v London Property Company Ltd [2026] EWHC 1354 (TCC), the High Court held that a landlord's covenant to put and keep the structure and exterior of a hotel building in good and substantial condition required the removal and replacement of category 3 ACM cladding panels, despite there being no physical deterioration. The landlord was also subject to a covenant to comply with obligations imposed by legislation including carrying out works to the building where required. The Building Safety Act 2022 did not apply to the property, because it was used as a hotel. Over 20 years before the issues giving rise to the case, Essendi (who was then the freehold owner) reclad the hotel. In 2007, it sold the freehold and took a 12-year lease back with rights to renew, and retained responsibility for dealing with any cladding defects which appeared before 22 May 2017. Essendi subsequently took a new lease in 2019. Its current lease contained landlord's covenants to put and keep the building structure, exterior and cladding in good and substantial repair and condition and to undertake works where required by legal obligations. The lease also contained an indemnity from the landlord to the tenant in relation to losses arising directly or indirectly from the state of repair and condition of the building. In 2024, investigations revealed that the cladding was combustible but the landlord, LPC, refused to replace it (there was no service charge mechanism for it to recoup the costs of these works). The tenant closed the hotel as a result of the safety concerns and commenced proceedings seeking specific performance of the landlord’s good condition and compliance with legal obligations covenants i.e. an order that the landlord replace the cladding. The court considered whether LPC's good condition covenant extended to remedying an inherent fire safety defect where no physical deterioration had occurred – there was no disrepair, so the only element of the covenant in question was that relating to the condition of the building. The court accepted that the weight of authority pointed towards a general presumption that a good condition covenant would not include a duty to remedy an intrinsic defect which had not caused actual damage. However, in this case, that was displaced by the particular circumstances, including the post-Grenfell context and the nature of the building and the absence of any service charge mechanism for cost recovery. The court concluded that a covenant to put and keep a multi-storey building providing sleeping accommodation in good condition includes an obligation to put that building into a condition that would make it reasonably fit for that use as regards fire safety risks. No physical manifestation of the defect was required. Whilst indicating that the same does not necessarily apply to every possible inherent defect, or even every possible safety related defect, in a property and that it would be a question of fact and degree, the judge said (at para 337 of his judgment): “In short, in my view in the post-Grenfell period it ought to be the case that, where there is a multi-storey building providing accommodation in which people live and sleep (including, for present purposes, a hotel) an obligation entered into – at least post-Grenfell - to put and keep the premises in good condition would include an obligation to remove and replace cladding or to address some other inherent defect which: (a) creates a significant fire safety risk; and (b) requires remediation, both to make the building reasonably safe for occupation and to comply with the obligations imposed on the responsible person under the FSO. Of course, the question as to who ultimately bears that expenditure, the landlord as the person typically liable for the structure and exterior, or the tenants assuming there is a typical service charge provision, is a separate question, but it seems to me that as a matter of principle this interpretation ought to apply unless the relevant admissible facts point to a separate conclusion.” The landlord had breached its covenant to put and keep the building in good condition, and its obligation to comply with obligations imposed by legislation (namely the Regulatory Reform (Fire Safety) Order 2005). Separately, the court held the cladding was a dangerous substance under that Order and the Landlord was the responsible person in relation to the structure and exterior. The legal obligations covenant made this statutory duty contractually enforceable. A reminder that it’s not just the BSA that can impose works requirements for landlords. Essentially, the tenant in this case used the lease covenants to obtain the same outcome as a Remediation Order under the BSA, in a building to which the BSA did not apply. Landlord and Tenant Act 1954 The Law Commission has published its second consultation paper on reform of the 1954 Act. The paper can be accessed here. Amongst the 67 questions consultees are asked whether they agree with proposals to include a contracting out warning and declaration within the lease itself, whether leases should be of a fixed term of a year, or even two years, before security of tenure applies (rather than six months), and whether compensation should be based on a multiple of the rent rather than the rateable value. There’s also the suggestion that it should be possible to contract out periodic tenancies. The consultation closes on 16 September this year. Read more in this update from our Real Estate Disputes team here. Landlord & Tenant (Covenants) Act 1995/Landlord and Tenant Act 1987 A second consultation paper from the Law Commission, this time on how to fix troublesome issues with the 1995 Act and the 1987 Act, again closing on 16 September. The Commission’s provisional proposals in respect of the 1987 Act are that the grant of a lease of premises that is exclusively occupied or used for non-residential purposes should not trigger the right of first refusal. This would be subject to a limited exception for areas shared by residential leaseholders which are ancillary to their residential use. The Commission’s proposal is limited to the grant of leases that are exclusively non-residential. It is designed to preserve the core protection that the right of first refusal affords residential leaseholders, while preventing it from applying to transactions that are unlikely to be of benefit to them. Such a change would bring very welcome clarity to the 1987 Act procedure and commercial lettings in mixed use premises. In respect of the 1995 Act the proposals would be welcome facilitation of assignments and guarantees involving group companies, assignments and guarantees between partners in a partnership and the possibility of lawful assignment from a tenant to its guarantor. Premium payable to landlord on assignment In Landy Palmer v Plymouth City Council and Cornwall Council [2026] EWHC 1262, 89 tenants of 21-year leases of recreational chalets at Whitsand Bay challenged lease provisions requiring premiums to be paid on assignment: 75% on the first assignment and 20% on later assignments. The tenants argued that those premium clauses were void and unenforceable. The case turned on the relationship between section 144 of the Law of Property Act 1925, which prohibits fines on alienation unless expressly provided for, and section 19 of the Landlord and Tenant Act 1927, which implies a requirement that consent to assignment must not be unreasonably withheld. The High Court held that the two provisions can operate together. Section 144 allows an express premium clause, but it does not exclude the reasonableness test under section 19. The court also held that the chalet leases were “residential leases” for the purposes of section 19(1E), despite restrictions on permanent occupation and limited rights of holiday letting. As a result, the landlords could not rely on section 19(1A), which can make a pre-agreed condition for consent automatically reasonable. However, because no assignment was actually proposed, the court declined to decide whether requiring payment of the premium would, in practice, amount to an unreasonable withholding of consent. The claim was therefore dismissed. The decision confirms that express premium clauses may be valid under section 144, but their enforcement may still be scrutinised under section 19 where the lease is not a “qualifying lease”. The practical enforceability of such provisions in a live assignment scenario remains unresolved. Local authority landlords may wish to consider whether any premium should be taken on grant rather than on assignment, particularly given their statutory obligation to obtain best consideration. Renters’ Rights Act – new enforcement powers for local councils Parts of the Renters’ Rights Act giving powers to local authorities to issue fines of up to £7,000 came into force on 22 June. The fines relate to “Category 1” hazards under the Housing Act 2004 and include issues like damp and mould. Where a category 1 hazard is identified councils will have a duty, not just a power, to act. The power to issue fines sits alongside existing enforcement measures such as carrying out emergency works and recovering the costs from landlords. The Housing Health and Safety Rating System has also been updated for the first time in 20 years, with further guidance and case studies on the operation of the new assessment and scoring process for hazards promised by the government. More information here: Crack down on dangerous rented homes as new £7k fines kick in - GOV.UK Planning Government response to planning committee reform consultation MHCLG has published its response to the recent planning committee reform consultation, alongside guidance on the new national scheme of delegation. The Government will proceed with proposals that will allow certain larger development schemes an opportunity to return to planning committee at the reserved matters stage, despite responses from the BPF/RE:UK strongly opposing it. Searches New online service opens access to centuries of coal mining history The government has launched a free online tool, giving access to thousands of historic mining plans. The collection includes detailed maps and plans from former collieries in England, Scotland and Wales, some dating back to the 17th Century. Users can search the Interactive Map Viewer or access individual records via the Mine Plans Catalogue. You can read more here: New online service opens access to centuries of coal mining history - GOV.UK Other Law Commission Annual Report and Business Plan The Commission has continued its review of the contracting out regime, supporting retaining the concept of contracting out and is now turning its research to how best to achieve that. The Commission also produced its report on chancel repair liability in the hope that purchasers will one day only be bound by such liabilities if they are registered on the title (and casting doubt on whether CRL is the sort of interest that can be overreached). The Commission has also started a new commercial leasehold project focusing on residential tenants’ rights of first refusal, in so far as they relate to commercial premises (where reform would be very welcome indeed) and issues arising under the Landlord and Tenant (Covenants) Act 1995, such as the trouble with assigning a lease to a guarantor. There are also ongoing projects considering bona vacantia and the law of escheat for ownerless land and looking at whether house owners should have the option to take over the management of their housing estate, in a “right to manage” way. Annual report 25-26 – Law Commission Government's Home Buying and Selling Reform Roadmap A phased programme to modernise the residential property transaction process in England. At its core is the introduction of mandatory upfront "sales packs" — standardised bundles of information (including title documents, search results, leasehold terms, EPC ratings, and property condition reports) that sellers and their agents will be required to provide before a sale progresses. The Government intends to issue best-practice guidance first and legislate later, giving conveyancers and surveyors time to build capacity. The roadmap envisages conveyancers retaining responsibility for gathering and verifying legal and title information within the pack. Consultation on mandatory qualifications for estate and letting agents and on binding conditional contracts is anticipated in 2027–2028. Using powers under the Leasehold and Freehold Reform Act 2024, the Government will also consult on secondary legislation capping the fees and turnaround times for leasehold and managed freehold estate sales information requests. A significant strand of the reforms concerns digitalisation and technology. HM Land Registry is to deliver a fully digital, geospatial title register by 2035, with machine-readable data standards in place by 2030. The Government will promote digital identity verification, Qualified Electronic Signatures, and digital property logbooks. On AI, the newly launched AI Growth Lab — with legal services and conveyancing as its first focus — will establish standards for the appropriate use of AI conveyancing technology, covering tasks such as document classification and data extraction. Home buying and selling reform roadmap - GOV.UK Articles & Publications Our Real Estate Disputes team have published an update on The Product Security and Telecommunications Infrastructure Act 2022 (Conferral of Tribunal Jurisdiction under the Landlord and Tenant Act 1954 etc.) Regulations 2026. These Regulations were made earlier this month and mean that from and including 30th July 2026 the FTT will have the jurisdiction to hear claims relating to the renewal of certain telecommunication leases under the Landlord and Tenant Act 1954. You can read more here. Also from our Real Estate Disputes team: The Law Commission recently published its second consultation on reform of the Landlord and Tenant Act 1954, looking closely at how the regime operates in practice for landlords and tenants across England and Wales. From potential changes to security of tenure and lease terms, to how disputes are resolved, there is a lot on the table and plenty that could shape the commercial property landscape in the years ahead. Read more here. The materials on the Eversheds Sutherland website are for general information purposes only and do not constitute legal advice. While reasonable care is taken to ensure accuracy, the materials may not reflect the most current legal developments. Eversheds Sutherland disclaims liability for actions taken based on the materials. Always consult a qualified lawyer for specific legal matters. To view the full disclaimer, see our Terms and Conditions or Disclaimer section in the footer. Services Real Estate and Planning Industries Real Estate Key contacts Heather Tomlinson Professional Support Lawyer United Kingdom David G. 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Our PROPcast series continued in June with Episode 5 and our subject was “Upwards only rent reviews - latest FAQs on the proposed ban”. With potential reform on the horizon, we discussed what the proposed ban on upwards-only rent reviews means in practice. The PROPcast explored the legal and practical considerations arising from the proposals, offering practical insight into the issues landlords, investors and occupiers should be considering now. If you missed it, you can watch or listen back here.

PROPcast Episode 6 is at 10 a.m. on 14 July when our subject will be “The End of Retentions – Preparing for the Commercial Payments Bill”. The Government’s newly published Commercial Payments Bill marks a watershed moment for the UK construction industry. With a phased ban on retention payments, tighter final payment deadlines and significant changes to payment mechanisms, the legislation is set to fundamentally reshape how parties manage cash flow, risk and security in construction contracts. In this PROPcast, Lauren Morrison and Josh Curry from our Construction team will unpack the key provisions of the Bill, explore the practical implications for the industry and share proactive strategies to help you navigate and prepare for this evolving landscape. You can sign up for the PROPcast here.

Legal Updates

Building Safety Act 2022

“Higher risk building” in England: 18m or seven+ storeys high and two or more residential units
“Higher risk building” in Wales (for design and construction only): 18m or seven+ storeys high and one or more residential units
“Relevant building” in England: 11m or five+ storeys high and two or more dwellings

RE:UK responds to consultation on categorisation of HRB work

The response confirms RE:UK’s support for greater proportionality within the higher-risk building regime in cases where minor or routine works trigger gateway requirements despite presenting limited fire or structural safety risk. It also states that the consultation appears “heavily focused on residential buildings and does not sufficiently reflect the realities of mixed-use higher-risk buildings”. RE:UK’s response makes the point that proportionality should apply equally to commercial areas within mixed-use buildings, and routine fit out or maintenance works in commercial units should not automatically trigger extensive gateway requirements where there is no material impact on fire or structural safety.

Welsh government publishes consultation on building safety remediation and determining building heights

The consultation proposes how regulation-making powers set out in the Building Safety (Wales) Act 2026 will be used to (a) create a system for the making of remediation orders and remediation contribution orders by the residential property tribunal, (b) limit the liability of leaseholders for the cost of remediation and related provisions, and (c) provide a method for calculating the height and number of storeys of a regulated building. There are already regimes for these issues in England, and the Welsh government is inviting views on the proposals via this link: https://www.gov.wales/implementing-building-safety-wales-act-2026

Guidance on building HRBs in Wales

The Welsh government has published a series of guidance notes on the requirements for building higher risk buildings in Wales, in readiness for the new building control regime which will apply in Wales from 1 July 2026 (subject to some transitional arrangements). The guidance covers building control approval for higher-risk buildings, preparing information for a building control approval application, applying for a completion certificate, keeping information about a higher-risk building through the ‘golden thread’, making changes to a higher-risk building project, operating a mandatory occurrence reporting system, and the criteria for determining whether new or existing buildings fall within the higher-risk building regime. Links to all the guidance notes can be found here: Higher-risk buildings: guidance | GOV.WALES

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Standard Commercial Property Conditions in court: can SCPC 11.3 (re obtaining landlord’s consent to assign) be disapplied if the landlord’s refusal is manifestly unreasonable?

In Mulberry Homes (Hazel Grove) Ltd v Scoto Ltd [2026] EWHC 1339 (Ch) the High Court dismissed a claim by a buyer for specific performance of a contract for the sale of commercial property. The buyer exercised a right of pre-emption to acquire land from the seller, which included leasehold premises.

The lease required the landlord's consent to assign. The sale contract incorporated the Standard Commercial Property Conditions (third edition) (SCPC) which provide in condition 11.3.1(a) that the seller must apply to the landlord for consent to assign "if a consent to let, assign or sub-let is required to complete the contract" and (at 11.3.5) that if consent has not been obtained by the original completion date, completion is postponed until consent is given or a court declares consent unreasonably withheld. Also under SCPC 11.3.6, at any time after six months from the original completion date, either party may rescind the contract in the absence of consent or a court declaration that consent has been unreasonably withheld. The seller sought the landlord’s consent, which was refused, four days after the original completion date. Further requests for consent were made and refused. The seller therefore rescinded the contract on 19 June 2023 (i.e. just over six months from the original completion date).

The court considered two novel points: firstly, whether the provisions of SCPC 11.3 cease to apply if it becomes manifestly clear that consent has been wrongfully refused or delayed; and secondly, whether, before completion, a contracting purchaser of leasehold property has standing to apply for a declaration that landlord's consent to assign has been unreasonably withheld or delayed. The answer to the first question was “no” and to the second question, “yes”.

The court held that SCPC 11.3.1(a) assesses whether consent is required at a single moment in time, no later than the original completion date. The SCPC also draw no distinction based on the degree of unreasonableness. This construction provided the commercial certainty expected from the SCPCs. Once SCPC 11.3.5 was engaged, the completion date was postponed until either consent was given or a court declared consent unreasonably withheld. Neither condition was satisfied in this case, so the seller was entitled to rescind. Section 1(3) of the Landlord and Tenant Act 1988 (containing landlord's duties to the tenant regarding consent) does not remove the need for formal consent or a court declaration under SCPC 11.3. The court also held that a contracting purchaser has standing to seek a declaration that consent has been unreasonably withheld before completion of the assignment, provided that it joins the seller as a party.

ESG

Government responds to MEES consultation – EPC B by 2031, but no interim milestone

The government has responded to the MEES in the non-domestic private rented sector confirming its intentions:

That all non-domestic private rented buildings over 1000 sq m in England and Wales will need to reach EPC B “where cost effective”
Buildings below 1000 sq m to continue to be subject to the current minimum standard of EPC E
The previously proposed milestone of EPC C by 2027 will not be taken forward
Existing exemptions including the 7 year payback test will remain in place ensuring that only improvements that are “practical, affordable and cost-effective” will be required

The changes will require secondary legislation before taking effect.

Landlord and Tenant

Welsh RRA anti-discrimination measures in force

Sections 43 to 49 of the Renters' Rights Act 2025 came into force on 1 June 2026.

These provisions:

Make it an offence for landlords and letting agents of occupation contracts to discriminate against contract-holders with children or who claim benefits, except where required by an existing insurance policy.
Introduce new fundamental provisions that apply to all occupation contracts, subject to specified exceptions. These prohibit landlords from restricting a contract-holder's ability to have children in the dwelling or claim benefits

Welsh Government guidance suggests that the new fundamental provisions are intended to apply to existing occupation contracts, as well as contracts entered into on or after 1 June 2026.

Landlords of existing occupation contracts to which the new provisions apply should either update the terms of their occupation contracts or prepare a written statement of the new terms and give notice of the variation to their contract-holder(s) by 14 June 2026.

The Welsh Government has published new versions of its model occupation contracts to reflect the changes.

Landlord required to replace hotel cladding – not due to BSA, but as a result of “good condition” and compliance with laws covenants

In Essendi UK Hotels 2 Ltd v London Property Company Ltd [2026] EWHC 1354 (TCC), the High Court held that a landlord's covenant to put and keep the structure and exterior of a hotel building in good and substantial condition required the removal and replacement of category 3 ACM cladding panels, despite there being no physical deterioration. The landlord was also subject to a covenant to comply with obligations imposed by legislation including carrying out works to the building where required. The Building Safety Act 2022 did not apply to the property, because it was used as a hotel.

Over 20 years before the issues giving rise to the case, Essendi (who was then the freehold owner) reclad the hotel. In 2007, it sold the freehold and took a 12-year lease back with rights to renew, and retained responsibility for dealing with any cladding defects which appeared before 22 May 2017. Essendi subsequently took a new lease in 2019. Its current lease contained landlord's covenants to put and keep the building structure, exterior and cladding in good and substantial repair and condition and to undertake works where required by legal obligations. The lease also contained an indemnity from the landlord to the tenant in relation to losses arising directly or indirectly from the state of repair and condition of the building.

In 2024, investigations revealed that the cladding was combustible but the landlord, LPC, refused to replace it (there was no service charge mechanism for it to recoup the costs of these works). The tenant closed the hotel as a result of the safety concerns and commenced proceedings seeking specific performance of the landlord’s good condition and compliance with legal obligations covenants i.e. an order that the landlord replace the cladding. The court considered whether LPC's good condition covenant extended to remedying an inherent fire safety defect where no physical deterioration had occurred – there was no disrepair, so the only element of the covenant in question was that relating to the condition of the building.

The court accepted that the weight of authority pointed towards a general presumption that a good condition covenant would not include a duty to remedy an intrinsic defect which had not caused actual damage. However, in this case, that was displaced by the particular circumstances, including the post-Grenfell context and the nature of the building and the absence of any service charge mechanism for cost recovery. The court concluded that a covenant to put and keep a multi-storey building providing sleeping accommodation in good condition includes an obligation to put that building into a condition that would make it reasonably fit for that use as regards fire safety risks. No physical manifestation of the defect was required. Whilst indicating that the same does not necessarily apply to every possible inherent defect, or even every possible safety related defect, in a property and that it would be a question of fact and degree, the judge said (at para 337 of his judgment): “In short, in my view in the post-Grenfell period it ought to be the case that, where there is a multi-storey building providing accommodation in which people live and sleep (including, for present purposes, a hotel) an obligation entered into – at least post-Grenfell - to put and keep the premises in good condition would include an obligation to remove and replace cladding or to address some other inherent defect which: (a) creates a significant fire safety risk; and (b) requires remediation, both to make the building reasonably safe for occupation and to comply with the obligations imposed on the responsible person under the FSO. Of course, the question as to who ultimately bears that expenditure, the landlord as the person typically liable for the structure and exterior, or the tenants assuming there is a typical service charge provision, is a separate question, but it seems to me that as a matter of principle this interpretation ought to apply unless the relevant admissible facts point to a separate conclusion.”

The landlord had breached its covenant to put and keep the building in good condition, and its obligation to comply with obligations imposed by legislation (namely the Regulatory Reform (Fire Safety) Order 2005). Separately, the court held the cladding was a dangerous substance under that Order and the Landlord was the responsible person in relation to the structure and exterior. The legal obligations covenant made this statutory duty contractually enforceable.

A reminder that it’s not just the BSA that can impose works requirements for landlords. Essentially, the tenant in this case used the lease covenants to obtain the same outcome as a Remediation Order under the BSA, in a building to which the BSA did not apply.

Landlord and Tenant Act 1954

The Law Commission has published its second consultation paper on reform of the 1954 Act. The paper can be accessed here. Amongst the 67 questions consultees are asked whether they agree with proposals to include a contracting out warning and declaration within the lease itself, whether leases should be of a fixed term of a year, or even two years, before security of tenure applies (rather than six months), and whether compensation should be based on a multiple of the rent rather than the rateable value. There’s also the suggestion that it should be possible to contract out periodic tenancies. The consultation closes on 16 September this year. Read more in this update from our Real Estate Disputes team here.

Landlord & Tenant (Covenants) Act 1995/Landlord and Tenant Act 1987

A second consultation paper from the Law Commission, this time on how to fix troublesome issues with the 1995 Act and the 1987 Act, again closing on 16 September.

The Commission’s provisional proposals in respect of the 1987 Act are that the grant of a lease of premises that is exclusively occupied or used for non-residential purposes should not trigger the right of first refusal. This would be subject to a limited exception for areas shared by residential leaseholders which are ancillary to their residential use. The Commission’s proposal is limited to the grant of leases that are exclusively non-residential. It is designed to preserve the core protection that the right of first refusal affords residential leaseholders, while preventing it from applying to transactions that are unlikely to be of benefit to them. Such a change would bring very welcome clarity to the 1987 Act procedure and commercial lettings in mixed use premises.

In respect of the 1995 Act the proposals would be welcome facilitation of assignments and guarantees involving group companies, assignments and guarantees between partners in a partnership and the possibility of lawful assignment from a tenant to its guarantor.

Premium payable to landlord on assignment

In Landy Palmer v Plymouth City Council and Cornwall Council [2026] EWHC 1262, 89 tenants of 21-year leases of recreational chalets at Whitsand Bay challenged lease provisions requiring premiums to be paid on assignment: 75% on the first assignment and 20% on later assignments. The tenants argued that those premium clauses were void and unenforceable.

The case turned on the relationship between section 144 of the Law of Property Act 1925, which prohibits fines on alienation unless expressly provided for, and section 19 of the Landlord and Tenant Act 1927, which implies a requirement that consent to assignment must not be unreasonably withheld.

The High Court held that the two provisions can operate together. Section 144 allows an express premium clause, but it does not exclude the reasonableness test under section 19. The court also held that the chalet leases were “residential leases” for the purposes of section 19(1E), despite restrictions on permanent occupation and limited rights of holiday letting. As a result, the landlords could not rely on section 19(1A), which can make a pre-agreed condition for consent automatically reasonable.

However, because no assignment was actually proposed, the court declined to decide whether requiring payment of the premium would, in practice, amount to an unreasonable withholding of consent. The claim was therefore dismissed. The decision confirms that express premium clauses may be valid under section 144, but their enforcement may still be scrutinised under section 19 where the lease is not a “qualifying lease”. The practical enforceability of such provisions in a live assignment scenario remains unresolved. Local authority landlords may wish to consider whether any premium should be taken on grant rather than on assignment, particularly given their statutory obligation to obtain best consideration.

Renters’ Rights Act – new enforcement powers for local councils

Parts of the Renters’ Rights Act giving powers to local authorities to issue fines of up to £7,000 came into force on 22 June. The fines relate to “Category 1” hazards under the Housing Act 2004 and include issues like damp and mould. Where a category 1 hazard is identified councils will have a duty, not just a power, to act. The power to issue fines sits alongside existing enforcement measures such as carrying out emergency works and recovering the costs from landlords. The Housing Health and Safety Rating System has also been updated for the first time in 20 years, with further guidance and case studies on the operation of the new assessment and scoring process for hazards promised by the government. More information here: Crack down on dangerous rented homes as new £7k fines kick in - GOV.UK

Planning

Government response to planning committee reform consultation

MHCLG has published its response to the recent planning committee reform consultation, alongside guidance on the new national scheme of delegation. The Government will proceed with proposals that will allow certain larger development schemes an opportunity to return to planning committee at the reserved matters stage, despite responses from the BPF/RE:UK strongly opposing it.

Searches

New online service opens access to centuries of coal mining history

The government has launched a free online tool, giving access to thousands of historic mining plans. The collection includes detailed maps and plans from former collieries in England, Scotland and Wales, some dating back to the 17th Century. Users can search the Interactive Map Viewer or access individual records via the Mine Plans Catalogue. You can read more here: New online service opens access to centuries of coal mining history - GOV.UK

Other

Law Commission Annual Report and Business Plan

The Commission has continued its review of the contracting out regime, supporting retaining the concept of contracting out and is now turning its research to how best to achieve that. The Commission also produced its report on chancel repair liability in the hope that purchasers will one day only be bound by such liabilities if they are registered on the title (and casting doubt on whether CRL is the sort of interest that can be overreached). The Commission has also started a new commercial leasehold project focusing on residential tenants’ rights of first refusal, in so far as they relate to commercial premises (where reform would be very welcome indeed) and issues arising under the Landlord and Tenant (Covenants) Act 1995, such as the trouble with assigning a lease to a guarantor. There are also ongoing projects considering bona vacantia and the law of escheat for ownerless land and looking at whether house owners should have the option to take over the management of their housing estate, in a “right to manage” way.

Annual report 25-26 – Law Commission

Government's Home Buying and Selling Reform Roadmap

A phased programme to modernise the residential property transaction process in England. At its core is the introduction of mandatory upfront "sales packs" — standardised bundles of information (including title documents, search results, leasehold terms, EPC ratings, and property condition reports) that sellers and their agents will be required to provide before a sale progresses. The Government intends to issue best-practice guidance first and legislate later, giving conveyancers and surveyors time to build capacity. The roadmap envisages conveyancers retaining responsibility for gathering and verifying legal and title information within the pack. Consultation on mandatory qualifications for estate and letting agents and on binding conditional contracts is anticipated in 2027–2028. Using powers under the Leasehold and Freehold Reform Act 2024, the Government will also consult on secondary legislation capping the fees and turnaround times for leasehold and managed freehold estate sales information requests.

A significant strand of the reforms concerns digitalisation and technology. HM Land Registry is to deliver a fully digital, geospatial title register by 2035, with machine-readable data standards in place by 2030. The Government will promote digital identity verification, Qualified Electronic Signatures, and digital property logbooks. On AI, the newly launched AI Growth Lab — with legal services and conveyancing as its first focus — will establish standards for the appropriate use of AI conveyancing technology, covering tasks such as document classification and data extraction.

Home buying and selling reform roadmap - GOV.UK

Articles & Publications

Our Real Estate Disputes team have published an update on The Product Security and Telecommunications Infrastructure Act 2022 (Conferral of Tribunal Jurisdiction under the Landlord and Tenant Act 1954 etc.) Regulations 2026. These Regulations were made earlier this month and mean that from and including 30th July 2026 the FTT will have the jurisdiction to hear claims relating to the renewal of certain telecommunication leases under the Landlord and Tenant Act 1954. You can read more here.

Also from our Real Estate Disputes team: The Law Commission recently published its second consultation on reform of the Landlord and Tenant Act 1954, looking closely at how the regime operates in practice for landlords and tenants across England and Wales. From potential changes to security of tenure and lease terms, to how disputes are resolved, there is a lot on the table and plenty that could shape the commercial property landscape in the years ahead. Read more here.

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