Commercial real estate disputes in 2026: what's coming into view

As the year draws to a close, Ashurst's Real Estate Disputes team has reflected on 2025's key developments and considered what we think lies ahead in 2026. Here we distil what those involved in commercial real estate should look out for over the next 12 months. 

Neighbourly matters – less neighbourly and more frequent in 2026 

With the UK Government actively pursuing a "build, build, build" strategy resulting in development density increasing across urban centres, we expect more neighbourly disputes in 2026. Rights of light, party wall issues, nuisance and restrictive covenant claims are all likely to come to the fore, with the key case that caught the attention of the market in 2025 being the Supreme Court's decision in Cooper v Ludgate House Ltd; a landmark judgment clarifying the assessment of damages in lieu of an injunction in rights of light claims.  

Cooper v Ludgate House

In this case, two residential leaseholders were awarded negotiating damages totalling £850,000, rather than an injunction, after substantial loss of light following the construction of the Arbor office block at the Bankside Yards development in London. The court approached quantum by reference to a hypothetical reasonable release fee, including a share of development value, tempered by the flats’ value and development risk. The judgment endorsed the Waldram method as the preferred approach for assessing interference, in preference to the newer radiance software package methods such as median daylight factor method and median daylight illuminance method. 

The decision also underlines the practical significance of section 203 of the Housing and Planning Act 2016 which gives local authorities the ability to override certain rights over land. In this case, Southwark Council used s 203 to allow the developer to build the rest of its Bankside Yards development (save for the Arbor building which was substantially complete) notwithstanding the infringement of neighbouring properties' rights of light. The remedy for those losing their rights following the invocation of s 203 by the local authority is statutory compensation alone calculated by reference to diminution in value (and therefore no injunction or negotiating damages).

Whilst Cooper v Ludgate will give confidence to developers and insurers about the risk of injunction, the specific application of s 203 was important here. The court noted that any injunction would be futile as any rebuild of the development would be covered by s 203 and the court found, even though the injury to the claimants was not insubstantial, granting an injunction would have a disproportionate impact on the defendants, their tenants and the public interest. The next step is to watch how surveyors and insurers respond and factor this decision into their assessments and premiums. It also remains to be seen whether insurers will require or encourage developers to engage with local authorities on the use of s 203. 

There has been lots of movement in the telecoms world this year and this is set to continue into 2026.

The First Tier Tribunal recently granted permission for the Upper Tribunal to hear an appeal in respect of all four of the preliminary issues dealt with in its Castlemaine decision. Taking the four points in turn:

The core dispute was whether, after the contracted‑out lease of the site expired in 2013, the operators’ continued occupation was: a tenancy at will; a periodic tenancy without 1954 Act protection; a periodic tenancy with 1954 Act protection; or a licence. The respondent argued that prolonged post‑expiry rent demands and quarterly payments over years, upgrade requests referencing “landlord’s consent” under “the Lease,” and absence of anything to the contrary objectively gave rise to a periodic tenancy with 1954 Act protection. The operators said occupation should be treated as a tenancy at will, stressing industry practice, passive occupation, and invoice caveats such as “LEASE EXPIRED, HOLDING OVER.” 

The Tribunal found that a quarterly periodic tenancy arose on expiry of the lease in 2013 which enjoyed 1954 Act protection. Prolonged rent demands and payments on usual quarter days, the operators’ 2016 and 2018 correspondence seeking “landlord’s consent” under “the Lease,” and the absence of contrary indicators together made a periodic tenancy the sensible, objective conclusion. 

2. Access to Part 4 of the Electronic Communications Code if there is 1954 Act protection

If the occupation was a 1954 Act‑protected periodic tenancy, the FTT was asked whether the operators could nonetheless seek a new Code agreement under Part 4. The site provider respondent  relied on established authority that operators with 1954 Act protection cannot sidestep into Part 4. The operators sought to distinguish that line of authority, pointing to their inability to renew automatically and potential vulnerability to removal. Given the 1954 Act protection, the Tribunal sided with the site providers and held that the operators could not seek a new agreement under Part 4 of the Code. 

3. Form of application where two operators seek a joint agreement

Each operator served its own paragraph 20 notice seeking a single new agreement in joint names. The issue was whether, as a matter of Code construction, separate unilateral notices could validly pursue a joint agreement, given that each operator’s own occupation is ignored only for the purpose of identifying the “occupier,” and the other operator may itself be the “occupier” requiring service. 

Having found that the operators occupy the site as periodic tenants with security of tenure, the Tribunal struck out the operators' application for the imposition of a new Code agreement for want of jurisdiction. 

4. Validity of the paragraph 20 notices under paragraph 88 of the Code. 

The site provider also separately argued that the operators’ paragraph 20 notices were invalid because they did not follow the OFCOM‑prescribed form: two sentences in the “Supplementary Information” about ADR were omitted. The operators argued the omissions were immaterial and caused no prejudice, urging a purposive approach rather than strict compliance.

Again, having already decided that the operators have 1954 Act protection, the Tribunal did not make a decision on this point. However, obiter observations indicated that the Tribunal's view was that the paragraph 20 notices were invalid because they did not strictly comply with the OFCOM‑prescribed form; paragraph 88 requires strict compliance and expressly treats non‑compliant notices as invalid, regardless of prejudice.  

We look forward to seeing how the Upper Tribunal deals with these issues. In particular, on the first issue, the existing logic (Gravesham / Ashloch) is that operators with 1954 Act security should use the 1954 Act route and not obtain retrospective Code benefits. The operators argued practical vulnerability (no automatic renewal, risk of removal), so the appeal may test whether any factual nuance can open a narrow gateway to Part 4, or whether the door remains firmly closed. On the fourth point, might the Upper Tribunal endorse a strict compliance approach for Code notices under paragraph 88, or will they will accept adequate/substantial compliance where omissions cause no prejudice? The FTT leaned heavily toward strictness; the ADR sentences appeared elsewhere in the template multiple times, but the FTT treated that as irrelevant. If strict compliance is confirmed, those serving notices will need to make sure procedures are in place to check content before sending; conversely, those receiving notices may be able to use technical defences with real bite where forms deviate even modestly from the OFCOM template.

Enhancing energy performance: who pays?

Many commercial landlords are still working towards the EPC C by 2027 and EPC B by 2030 targets proposed by the Conservative Johnson government. Those targets were never enshrined in law and the current government has not confirmed its position. Although an Independent Review of Net Zero recommended that legislation be introduced by 2025 in order to achieve EPC B by 2030 for all commercial buildings, that recommendation has not been implemented. Instead, government activity has focused on how energy performance is measured, with a consultation on the underlying EPC metrics and an indication that any changes to those metrics are likely to take effect in the second half of 2026.

For tenants, the direction of travel seems clearer. The government has consulted on adopting the International Sustainability Standards Board’s IFRS sustainability standards to create UK Sustainability Reporting Standards. Once adopted, the FCA is expected to consult on sustainability disclosure requirements for UK-listed companies, and the government is expected to consult on similar rules for non-FCA regulated companies. From the second reporting year, in-scope companies would need to disclose climate risks and opportunities, including Scope 3 emissions. Scope 3 covers emissions from leased spaces where the tenant reimburses the landlord for energy, which is common in many commercial leases. Many businesses already report voluntarily in line with these standards.

Against this backdrop, landlords seeking to improve EPC ratings and tenants anticipating tighter disclosure obligations are likely to revisit the energy performance of leased buildings. The practical question is who pays for upgrades. The answer will turn on the specifics: what works are proposed, how far the tenant’s repairing covenant extends, and the precise wording of the service charge provisions. Careful analysis of the lease will be critical, including whether energy efficiency upgrades are recoverable through the service charge, whether implementation would breach the tenant's right to quiet enjoyment, and whether any statutory compliance obligations apply to landlord or tenant. Clear early engagement and documented agreement on scope, cost-sharing and payback assumptions can reduce the risk of disputes.

The near-constant stream of litigation under the Building Safety Act 2022 has continued in 2025, as landlords, tenants and developers seek to allocate the liability for and costs of remediating building safety defects in high risk buildings. The appellate courts are due to be equally busy with BSA-related cases in 2026. The Court of Appeal will be considering the appeal of the Upper Tribunal (Lands Chamber) decision in Almacantar Centre Point Nominee Ltd v De Valk and Others, which will largely focus on whether cladding remediation under the BSA only applies to ‘relevant defects’ or whether the provisions apply to a much wider class of buildings and much wider types of landlord repair works. Two Supreme Court cases will also test the retrospective reach of the Act.

In Adriatic Land 5 Limited v Long Leaseholders of Hippersley Point and Secretary of State for Housing, Communities and Local Government the landlord sought to recover from its tenants the costs of works to remediate fire safety defects. The costs were incurred and demanded as service charges before Schedule 8 of the Act came into force. Schedule 8 includes a provision which states that no service charge is payable in respect of legal or other professional services relating to the liability of any person incurred as a result of a relevant defect (such as the fire safety defects this case is concerned with). The Court of Appeal held that the landlord's costs were caught by this statutory restriction and were not recoverable. On the central question of retrospectivity, the court was split but ultimately held that from 28 June 2022 (when the Act came into force), no service charges of the relevant type shall be payable by tenants under qualifying leases, even if the underlying remediation costs were incurred, demanded, or payable before that date. 

Stratford Village Development Partnership and another (Appellants) v Triathlon Homes LLP and another concerned five residential blocks at the East Village in Stratford. The estate manager undertook remediation works funded (in part) by the Building Safety Fund. Triathlon Homes, which holds long leases of social housing units, successfully applied to the First Tier Tribunal under section 124 of the Act for Remediation Contribution Orders against the original developer and the current owner of the development to recover Triathlon’s share of the costs, as well as reimbursement of sums already paid (for example, the cost of a temporary waking watch system). On appeal, one of the points raised by the defendants was that Remediation Contribution Orders cannot extend to costs incurred before the Act came into force; the Court of Appeal found against the defendants on this point but the Supreme Court has granted permission to appeal. 

We await to see how the Supreme Court will deal with this but to date the courts have prioritised holding those responsible for building safety defects accountable; protection of the leaseholders from financial risk; and ensuring that risks from historical defects are remedied without leaseholders having to bear potentially large costs.

Access to justice: transparency pilot

A new court pilot scheme will be introduced on 1 January 2026 which will make it easier for the public to access documents filed and used in court proceedings in certain key courts. The pilot is being introduced to address concerns raised by the Supreme Court in Cape Intermediate Holdings Ltd v Dring about the maintenance of open justice in the courts of England and Wales, and Lady Hale's observation that "[i]t is difficult, if not impossible, in many cases, especially complicated civil cases, to know what is going on unless you have access to the written material".

Implementation: The terms of the pilot are set out in a new Practice Direction 51ZH. 

Scope and duration: The pilot will run for two years from 1 January 2026. Initially it applies to the Commercial Court and London Circuit Commercial Court of the King's Bench Division and the Financial List (both Commercial Court and Chancery Division). However, the guidance note to PD 51ZH indicates that there will be a review after six months and, if the pilot proves successful, it is expected to be extended to other courts, with the Business and Property Courts likely to be next.

Application to existing proceedings: The pilot is not limited to new cases. It will also apply to ongoing proceedings, provided there is a public hearing after 1 January 2026.

Which documents will be accessible?: The document must have been used or referred to in a public hearing. Documents within the scope of the pilot include:

• Skeleton arguments

• Written submissions (including opening and closing submissions)

• Witness statements and affidavits (excluding exhibits)

• Expert reports (including annexes, appendices and exhibits)

• Any other document the judge deems critical to the understanding of the hearing 

• Any documents the parties agree should be made public

How will the public access these documents?: The party that has produced the document must file it on the court's CE-File system. Members of the public will then be able to access these documents online for a small fee (usually £11 per document). This is the key change, as at present, an application must be made to court for permission to access the documents listed above and the court will decide whether the documents should be made available in the interests of open justice. The pilot will allow members of the public to access court documents more quickly and at less cost; we therefore expect to see more non-parties accessing court documents.

Protection of confidential information: If a document contains confidential or sensitive information, there are safeguards in place. A party can make a written request to the court for a Filing Modification Order. This could result in the document being withheld from public access, the filing period being extended, or the document being edited or redacted before publication. 

Existing rights remain unchanged: The pilot is in addition to the public’s existing rights to access court documents. Statements of case, judgments, and orders will continue to be available as before, and applications can still be made to the court for access to other documents not automatically made public under the pilot.

Given the shift towards greater transparency in court proceedings, parties may want to consider the benefits of alternative methods of dispute resolution such as expert determination and mediation. Such methods are usually private processes and the documents exchanged between the parties and the outcome reached can remain confidential.

Commercial leasehold reform has been a priority for the Law Commission in 2025 and is set to remain a priority into 2026.

In June 2025, the Law Commission published an interim statement on reform of the Landlord and Tenant Act 1954, Part II (business tenancies). The provisional conclusions are clear and pragmatic:

• The current "contracting out" model should be kept.  

• The types of tenancies captured by the Act should remain as it is.

• Short tenancies of two years or less should be excluded from the Act's protection (raising the current six-month threshold).

A second consultation will follow on the technical detail of reform, with progress expected in 2026. A likely focus is simplifying the contracting out procedure, which both landlords and tenants find burdensome. 

There are two key points we would like the Commission to address. Firstly, errors when contracting out can unexpectedly give the tenant security of tenure, even where both sides negotiated on the basis that there would be none. Secondly, section 38A(1) of the Act requires the tenancy to be for a term of years certain to contract out, which creates problems where the definition of the term references holding over or a section 24 continuation. A reformed procedure that reduces the risk of technical errors changing the parties' commercial bargain would be welcome.

Further leasehold projects in the Law Commission's 14th Programme

In September 2025, the Law Commission announced two further sub-projects relating to commercial leasehold transactions as part of its 14th Programme of Law Reform. 

The first looks at the Landlord and Tenant (Covenants) Act 1995 and rights of first refusal under the Landlord and Tenant Act 1987. For the 1995 Act, the case law has drawn some hard lines that complicate disposals and restructurings: an original tenant’s guarantor cannot lawfully guarantee an assignee; a guarantor can guarantee the tenant’s obligations under an AGA; and a guarantor cannot take an assignment of the tenant’s lease. We expect the Commission will consider whether the regime can be clarified. On the 1987 Act, the focus includes mixed use buildings and we hope the Commission will address the tricky question of whether residential tenants must be offered a right of first refusal before leases of commercial units are granted—an area that frequently delays transactions and adds cost.

The second sub project will examine the law on maintenance, repair and upgrading of leased commercial premises. This is increasingly important against the backdrop of energy performance policy. Previous government proposals pointed to a potential EPC B requirement by 2030 for commercial premises; while the current government’s direction is less clear, any tightening of minimum energy efficiency standards will raise questions about who pays, who controls the works, and how upgrading interacts with quiet enjoyment and service charge regimes. Clearer rules would help parties plan capital expenditure and avoid disputes.