Six things for 2026: what commercial tenants should be thinking about 

For commercial tenants, 2026 is likely to remain a year where occupier decisions are made under pressure. Businesses want flexibility, cost certainty and operational resilience. Many organisations are still adjusting their footprint, responding to evolving working patterns, and keeping a close eye on budgets. At the same time, landlords are often seeking stronger protection and clearer control, particularly around income security, user covenants and how buildings are managed.

From a legal perspective, tenant risk is rarely contained in a single clause. Instead, it sits in how the lease behaves when circumstances change: when the business needs to adapt, when the space needs to be altered, when costs rise, or when relocation becomes necessary.

Here are six key issues commercial tenants should keep firmly in view in 2026.

1. Flexibility should be real, not theoretical

Break rights, assignment and subletting provisions are often the first things tenants focus on, and for good reason. Flexibility can be the difference between a lease supporting the business and a lease becoming a constraint. In practice, however, many “flexible” provisions come with conditions that make them difficult to use, such as strict notice requirements, compliance with all covenants, or pre-conditions that are hard to satisfy at speed.

In 2026, tenants should treat flexibility as something to be tested, not assumed. A break clause that cannot be exercised cleanly creates risk, not protection. Conditions requiring full compliance with every lease covenant can be problematic where minor historic breaches exist. Notice provisions that demand specific timing or methods can be missed inadvertently, with serious consequences.

For assignment and subletting, the question is not just whether consent can be withheld unreasonably. It is whether the process is workable in practice: how quickly the landlord must respond, what information can be demanded, and whether delays or uncertainty make the right commercially useless.

Where a business anticipates possible relocation, downsizing or portfolio consolidation, break rights and alienation provisions should be negotiated with that reality in mind. Flexibility that works on paper but fails in practice can leave tenants locked into space they no longer need, at a point when the business can least afford it.

2. Repair obligations can be the most expensive surprise

Tenants often negotiate hard on rent, incentives and term, but repair obligations can represent a much bigger liability over time. This is particularly true where premises are older, previously altered, or where condition is uncertain at lease commencement. Full repairing and insuring obligations can be onerous, especially where the building has inherent defects or is nearing the end of its economic life.

In 2026, tenants should place real weight on surveys, schedules of condition and yielding-up provisions. A schedule of condition can protect the tenant by recording the state of the premises at the start of the lease, and limiting repair exposure to preventing deterioration beyond that baseline. Without one, tenants can be liable for reinstating or repairing elements that were already in poor condition when they took occupation.

Repair and reinstatement obligations tend to become most visible at lease end, when businesses are already focused on relocation, expansion or restructuring. Dilapidations claims can be substantial, and landlords may use the prospect of a claim as leverage in exit negotiations. Tenants benefit from understanding their exposure early, during lease negotiations, rather than discovering it years later when the liability has crystallised and options are limited.

Where premises require significant adaptation or fit-out, tenants should also clarify what must be reinstated at lease end. Removing improvements that enhanced the building, or reinstating previous layouts that are no longer operationally useful, can be expensive and commercially pointless. Clear drafting at the outset about what stays and what goes can avoid disputes and unnecessary cost later.

3. Service charge is not background spend anymore

Where a tenant occupies space in a multi-let building, service charge can move quickly and unpredictably. Changes in building management, maintenance requirements, insurance costs and operational expenditure can cause significant increases, even where headline rent remains stable. For many tenants, service charge now represents a material proportion of overall occupancy cost.

In 2026, tenants should look for clarity over what can be recovered, what cannot, what information they can demand, and whether meaningful protections are available. The drafting matters, but so does the practical reality of how the building is run. Tenants benefit from understanding whether the landlord has broad discretion over procurement and maintenance strategy, and whether tenants have meaningful consultation rights on significant expenditure.

Service charge disputes are common, and they can damage the landlord-tenant relationship at a point where both parties would usually prefer to focus on leasing and operational priorities. Tenants who understand their service charge obligations, monitor costs, and question expenditure early tend to avoid larger disputes later. Where service charge is uncapped or poorly defined, tenants can find their occupancy costs rising in ways that make the space unaffordable, even if rent reviews remain favourable.

Tenants negotiating new leases should resist vague service charge definitions and seek specific exclusions for capital works, improvements, and costs that do not relate to the tenant’s occupation. Where caps are not available, provisions requiring transparency, advance notice of significant expenditure, and appropriate consultation can provide some practical control.

4. Alterations should be planned as a legal project, not just a fit-out

Fit-out works are often critical to business operations, but the lease may impose restrictions that slow progress or make works more expensive. Landlord consent requirements, reinstatement obligations, requirements to use specified contractors, and compliance with building standards can all add cost and delay.

In practice, alterations clauses are often more restrictive than tenants assume. Even non-structural alterations may require landlord consent, and landlords can attach conditions to that consent, including reinstatement obligations at lease end. Where works affect building systems, structure or external appearance, landlords may refuse consent entirely or require significant documentation and security before approving.

In 2026, tenants should treat alterations as something to map legally as well as operationally. This means understanding what the lease permits, what requires consent, and what the realistic timeline and cost implications are. Where consent is required, tenants should factor in time for landlord review, professional approvals, and negotiation over conditions. Assuming consent will be quick or automatic can derail fit-out programmes and delay trading.

Tenants should also clarify early whether alterations must be removed at lease end. Reinstatement obligations can be expensive, particularly where works improved the premises, or where removal causes damage. Where substantial fit-out is planned, negotiating clear terms about what stays and what must be reinstated can prevent significant cost and dispute at lease expiry.

5. Security of tenure remains a strategic choice, and reform is under active consideration

Security of tenure under the Landlord and Tenant Act 1954 is a major strategic consideration for business tenants. It can provide valuable continuity and negotiating leverage at lease expiry. Equally, some tenants prefer the freedom that comes with contracting out, particularly where flexibility and future relocation are key to business planning.

The Law Commission is currently reviewing the operation of the 1954 Act and has published provisional conclusions following its first consultation, which closed in February 2025. A second, more technical consultation is anticipated before final recommendations are made to Government. While reforms are not yet settled, the direction of review suggests changes may affect the scope of protection for shorter-term tenancies and the practical operation of the contracting-out process.

For tenants negotiating leases in 2026, this matters because the regime under which a lease operates may shift during the lease term, or because lease strategy should anticipate the possibility of change. The key point is that security of tenure is not a technicality to be addressed at completion. It is a commercial decision with long-term consequences that should be made consciously, not by default.

For some occupiers, the ability to renew and remain in place is fundamental to business planning and investment decisions. Renewal rights also have inherent value. For others, being able to exit cleanly without negotiation matters more. What is risky is drifting into one outcome without appreciating what it means for leverage, cost and future flexibility.

Where security of tenure is important to a business, tenants should ensure the lease is not an excluded lease, and should understand how renewal negotiations may play out in practice. Where contracting out is proposed, tenants should be clear about the impact on renewal rights, and whether the lease terms provide other protections or flexibility that support operational continuity if circumstances change.

6. Landlord protections are tighter, and tenants should ensure leases remain workable

Tenants may encounter stronger provisions around rent payment, interest on late payment, guarantees, rent deposits and enforcement mechanisms. In uncertain trading conditions, landlords often want earlier warning signs and stronger levers if a tenant defaults. That is commercially understandable. The legal question is whether the lease remains workable for the tenant’s operating model.

Provisions that allow landlords to take immediate action for minor breaches, draw on deposits without appropriate safeguards, or accelerate payment obligations can create disproportionate risk. A temporary cashflow issue or an inadvertent technical breach should not trigger consequences that are destabilising or commercially catastrophic.

In 2026, tenants should be wary of “hair-trigger” default provisions and ensure there are clear notice and remedy provisions where appropriate. Lease terms should provide a reasonable opportunity to remedy issues before the landlord can take drastic action. Tenants should also check the practical implications of security requirements, including internal approvals needed for guarantees or deposits, and the ongoing exposure these arrangements can create.

Rent deposits are common and often commercially acceptable, but tenants should ensure deposit terms are clear, that interest arrangements are documented, and that the deposit is returned promptly at lease end if no breaches exist. Guarantees from parent companies or directors can create ongoing liability that outlasts the tenant’s occupation, and tenants should ensure guarantees are appropriately limited in scope and duration.

Conclusion

For commercial tenants, 2026 is a year where lease negotiations should be treated as business protection, not just premises acquisition. The biggest tenant risks tend to appear later: when flexibility is needed, when costs increase, or when premises no longer match the business’s operational requirements.

With security of tenure remaining a strategic decision, and continued pressure on total occupancy costs, tenants who take time to stress-test break rights, understand repair exposure, secure service charge transparency and plan alterations properly will be better placed to keep their property portfolio aligned with business needs.

A lease should support the business, not constrain it. That means negotiating with an eye to what might need to change over the life of the lease, not just what the business needs on day one.