What legal developments are on the horizon for the built environment in England in 2025?

We expect another busy year with significant reforms to planning, residential leasehold and renters' rights already in the pipeline. Commercial landlords and tenants will be keeping a keen eye on the continued focus on improving sustainability in the built environment and the progress of proposals to reform the security of tenure framework.

Commercial landlord and tenant

Security of tenure

The Law Commission has published a first consultation paper seeking views on potential reform to Part 2 of the Landlord and Tenant Act 1954. It proposes four high-level models, ranging from abolition to mandatory security of tenure, with intermediate options of either contracting in or contracting out. It also questions whether there should be any reform to the scope of the regime and whether certain tenancies or properties should be excluded.

However, any actual change in practice remains some way off. The consultation remains open until 19 February 2025, during which the Law Commission hopes to gather sufficient evidence to identify and support the model on which to reform the regime. Once this is selected, a further consultation is expected, seeking views on the finer detail of how that model should work, before the Law Commission reports to the government with its recommendations. For further details, see our Insight.

Business rates

The government has committed to reforming business rates to create a "fairer system". A discussion paper sets out the priority areas of reform, although meaningful change could take time to implement.

For 2025-26, the discount offered to retail, hospitality and leisure will be 40% with a cap of £110,000 per business. The small business multiplier will also be frozen in 2025-26. Further details on the new multipliers to be introduced from April 2026 are awaited.

RICS service charge standard

The new version of the service charge professional standard is due to be launched this summer. Further to the brief consultation last autumn, we anticipate a greater focus on transparency, prescribed timescales for the issue of budgets and year end certificates, and clearer guidance on dispute resolution.

We may also see additional clarification on the circumstances where landlords should be able to recover the costs of improvement works via the service charge, which is particularly important in the context of the increasing use of green lease clauses (such as those published by the Better Building Partnership last year).

The service charge standard does not override lease terms, but must be followed by RICS members in the management and interpretation of commercial service charges.

High street auctions

In December 2024, new powers were granted to local authorities in England to auction vacant commercial rental premises in designated high streets and town centre.

Over the coming months, landlords and investors with interests in properties in such locations will be interested to find out how often these discretionary powers are utilised by under-resourced local authorities. It remains to be seen whether these measures will succeed in reducing vacancy rates at a time when small businesses are also contending with various market pressures including high borrowing costs and business rates bills. There may also be potential for disputes where new tenancies are imposed on dissatisfied landlords. For further details, see our Insight.

Telecoms

Operators with telecoms apparatus agreements made before the 28 December 2017 continue to await the planned revision to the basis of rent assessments on renewal. 2025 may see sections 61 and 63 of the Product Security and Telecoms Infrastructure Act 2022 finally brought into force, which will bring the valuation basis for older agreements still governed by the Landlord and Tenant Act 1954 into line with the way in which newer agreements are renewed under the Telecoms Code.

Commercial: energy efficiency and sustainability

The government plans to reform the Energy Performance in Buildings (EPB) regime to improve the accuracy of Energy Performance Certificates (EPCs) and support the improvement of the energy performance of buildings. Its consultation published last December seeks views on proposals which include reducing the period of an EPC's validity (currently 10 years) and addressing compliance concerns. It is possible that we may see additional EPC metrics, although the government's preliminary view is that the current carbon emissions focused headline metric remains appropriate for commercial property. See our Insight for further details.

Urgent clarity is required on the future trajectory for increasing the minimum EPC rating for buildings to be rented under the minimum energy efficiency standards (MEES). While rented homes have been given a reprieve from previous targets, any relaxation of the current timescales for commercial buildings remains unconfirmed. Despite this uncertainty, tightening standards over the coming years are virtually inevitable. Demand in the market for high class sustainable buildings (and in some cases, corporate reporting requirements, investor demands and lending criteria) will also incentivise landlords to upgrade their buildings.

A pilot version of the UK Net Zero Carbon Building Standard was published last year and the first official version is expected to be launched in late 2025. Its intention to provide agreed methodology for a net zero carbon building should prompt greater clarity and consistency in the market.

The debate over retrofitting versus rebuilding has been spotlighted in recent months through Marks and Spencer's successful appeal against the previous government's refusal of its planning application to redevelop its flagship store at Marble Arch. While the industry was keen to see how this played out, the final decision was careful to warn that it was based on very specific facts which places limitations on its use as a precedent. Planning authorities are likely to continue to insist on reasoned consideration of "greener" retrofit solutions, although these are often more expensive than a rebuild.

Expensive retrofits to upgrade older, inefficient buildings may pay off in the long term if these generate higher rental yields and reduce operating costs. However, this will depend on the location, nature and condition of the building. Older building stock in certain areas of the country will be unable to generate the necessary level of rent to cover the costs of a retrofit, and risk becoming "stranded assets" – where the owner is unable to let the building (due to its being below minimum energy efficiency standard) nor profitably upgrade the building for letting.

We expect to see continued cautious adoption of "green" lease clauses such as those introduced by the Better Building Partnership last year. More investor landlords are embracing sustainability-driven goals and are driving a shift to a more collaborative relationship with tenants based on mutual decarbonisation aims. The additional service charge costs are more acceptable to some tenants than others, depending on their own corporate strategies. It will be necessary for parties to ensure early discussion on any green provisions to be incorporated.

Public venues: protect duty

The Terrorism (Protection of Premises) Bill (also known as Martyn's law)  is expected to become law this year. Its purpose is to enhance public safety and protection from terrorism at qualifying public venues where at least 200 people are reasonably expected to be present at the same time. Requirements are imposed on duty holders, with enhanced duties for premises or events with 800 or more people reasonably expected to be present at the same time. The bill will be relevant to owners of qualifying premises and operators of public events in the retail, entertainment, hospitality and higher educational sectors.

The Security Industry Authority has been confirmed as the regulator for the purposes of these obligations. Sanctions for non-compliance include significant financial penalties and certain criminal offences. Further guidance detailing how the regulator will use its powers is expected.

For more information, please see our Regulatory Outlook and our 30-minute webinar.

Building safety

With government and business still digesting the sobering conclusions of the Grenfell Final Report, 2025 will bring further building safety-related law, regulation and guidance for industry to grapple with. Staying abreast of these developments will be crucial for those impacted by these issues. See our detailed Building Safety in 2025 Insight.

Accelerating remediation 

The focus on building safety standards has continued under the new government. December's Remediation Acceleration Plan (RAP) sets out objectives to ensure that residential buildings of at least 11 metres with unsafe cladding are identified, to accelerate the remediation of those buildings and to provide support to leaseholders. Significant changes to building safety legislation are proposed. They include a new legal duty on "those responsible" for buildings 11 metres and over to fix unsafe cladding and a deadline of the end of 2029 for the remediation of unsafe cladding for buildings 18 metres and over in a government funded scheme, while buildings of 11 metres and over must at least have set a remediation completion date by then. Tightening the rules on building assessments to help identify buildings with unsafe cladding is also proposed. Financial and criminal sanctions are proposed for non-compliance. 

Additionally, new powers are proposed to be granted to the secretary of state and regulators to compel building owning entities to disclose their beneficial owners. The government also intends to introduce requirements around providing such information as it plans to expand the existing building register. A new requirement to register residential buildings between 11-18 metres high is also to be introduced.

Meanwhile, the Public Accounts Committee is currently holding an inquiry into the progress of the remediation of dangerous cladding. Further measures could be proposed depending on the committee's findings and recommendations.

Building Safety Levy and VAT recovery

The Building Safety Levy is also referred to in the RAP and is  expected to be introduced from this autumn. It will be charged on new residential buildings in England (subject to exemptions) which require building control approval.

Details are awaited but exemptions are likely to include social and affordable housing. The levy is likely raise viability concerns for developers if the resulting costs are considered too high. Any exemptions and transitional provisions provided for in implementing legislation will need to be reviewed carefully to ascertain whether prospective buildings (including those for which planning permission has been granted by the time the levy comes into effect) are within scope.

Recovery of the VAT on costs incurred in connection with remediation work has been a complex issue, but in a welcome revision to the previous position,  guidance published in December extends the circumstances in which VAT may be recovered. 

Litigation

As the industry continues to grapple with this complex series of legislation, we expect further claims to be brought where clarification on interpretation is still needed. Several appeals are in the pipeline, which should also offer important clarification.

We await the Supreme Court's ruling on the meaning and effect of section 135 (which seeks to give retrospective effect to the 30 year limitation period for Defective Premises Act claims). The decision will be key to understanding legal responsibility for the costs of rectifying building safety defects (see our Insight).

Two significant cases will be heard by the Court of Appeal in March. Triathlon Homes LLP v Stratford Village Development Partnership and others (2024) relates to the scope of Remediation Contribution Orders, which the First-Tier Tribunal found can apply to costs incurred before the commencement of the Building Safety Act 2022. In Adriatic Land 5 Ltd v Long Leaseholders at Hippersley Point, the Upper Tribunal ruled that the Building Safety Act prevented the landlord recovering the cost of applying for dispensation from the service charge consultation processes from qualifying leaseholders where the proposed works relate to a building safety defect (even though the costs had been incurred before the relevant leaseholder protection provisions of the Act came into force).

We are also awaiting the adjourned appeal in Almacantar Centre Point v Various Leaseholders of Centre Point House to understand in particular what is meant by a "cladding system" (in the context of qualifying leaseholders not being required to pay for removal or replacement of unsafe cladding).

Housebuilding, development and planning

Housebuilding

Housebuilding is expected to remain high on the government's agenda to support its ambitious targets. Progress made under the New Homes Accelerator programme would be welcomed by housebuilders. The programme was launched last August to assist in unblocking and accelerating the delivery of housing developments which have become stuck or delayed. It was accompanied by a call for evidence, and further announcements are awaited.

The New Towns Taskforce is due to provide its recommendations on locations for the creation new settlements by July 2025. A call for evidence closed last December and further announcements are awaited, as is the publication of the new towns code. It will provide rules on infrastructure and public services considered necessary to support the communities. There will be a target of 40% affordable housing.

We also await the publication of the final Future Homes Standard (FHS). The FHS is anticipated shortly and will be mandatory for new homes in England, although it is expected that transitional provisions will apply. It will prescribe standards for new homes to improve their energy efficiency.

Consultation and legislative reform can be expected in response to the findings from the Competition and Markets Authority's report on UK housebuilding, which was published in February last year. In particular, the government has committed to launch a consultation on the management and funding of shared amenities on new housing estates, to introduce enhanced consumer protection measures for freeholders living under private management arrangements, and to implement the New Homes Ombudsman Scheme and mandatory consumer code for new homes. The CMA also criticised and made recommendations in relation to the planning system. Read our Insight for more information.

Updated planning framework

Developers and local authorities will be getting to grips with the updated National Planning Policy Framework published on 12 December 2024. Substantial changes have been made with the aim of delivering an ambitious 1.5 million new homes over the parliament and driving economic growth.

The new framework acknowledges that there is not enough previously developed (brownfield) land to achieve these goals and in a bold move, introduces the idea of a "grey belt", being green belt land that has either been previously developed or which fails to contribute strongly to certain specified green belt purposes. We are accordingly likely to see applications for development of green belt land increase from 2025. However, interest groups, developers and local authorities will no doubt contest the exact criteria for classifying land as grey belt meaning it could be some time before we see wide-spread grey belt development. Further detail on key measures will be set out in the government's National Planning Policy Guidance due to be updated in January. The policy and guidance landscape is likely to be further amended later in the year, when the government consults on the introduction of national policies for planning decision-making and on further devolution.

The Planning and Infrastructure Bill is likely to bring further change in 2025, including through amendments to the planning committee process and reform of the compulsory purchase regime. The proposal to reduce the level of compensation paid to landowners whose property is acquired by compulsory purchase in certain circumstances is likely to be controversial and open the door to legal challenge.

While planning policy failings have been a major factor holding up developments, it is not the whole story. The government must also address the other causes of subdued delivery rates such as viability concerns, weaker than expected economic sentiment and market demand, and construction sector capacity.

Environmental impacts including nutrient neutrality

The issues faced by sites stalled by nutrient neutrality should be addressed this year. It has been estimated that more than 160,000 new homes are currently blocked as a result of the nutrient neutrality rules, so their relaxation would be welcomed by developers.

The Planning and Infrastructure Bill is expected to include provisions that will shift responsibility for identifying actions to address environmental impacts away from multiple project-specific assessments to a single strategic assessment and delivery plan, with the aim of making it easier and clearer for developers to discharge environmental obligations, including those relating to nutrients. The measures will be supported by amendments to the Habitats Regulations 2017 and the Wildlife and Countryside Act 1981, and the shift from environmental assessments to Environmental Outcomes Reports (the framework for which was set out in the Levelling Up and Infrastructure Act 2023). Finding an acceptable position while addressing both housing delivery targets and conservation concerns will be a difficult political balancing act for the government.

2025 will also see CJ Fry & Son v Secretary of State  head to the Supreme Court to appeal the Court of Appeal's decision that a Habitats Regulation assessment can be required prior to the discharge of a pre-commencement condition. 

Biodiversity net gain

Developers are now required to provide a minimum of 10% biodiversity net gain for most developments. The requirement can be satisfied onsite, offsite or by purchasing credits (if the alternative options are unfeasible).

The offsite gain market is expected to continue to develop and we have seen the creation of new gain sites and habitat banks and online market places.

Energy infrastructure planning

A flurry of publications at the end of the year sets out many of the of the government's ambitious reforms for 2025 and beyond. This includes the Clean Power 2030 Action Plan, which outlines how it intends to achieve its "clean power goal" of generating at least 95% of Great Britain's electricity consumption from clean sources by 2030, including proposed changes to the grid connection process, accelerating works to the transmission and distribution networks vital to support low-carbon energy generation, and providing benefits to communities hosting clean energy infrastructure. Further announcements in the 10-year infrastructure strategy are also keenly anticipated.

The Planning and Infrastructure Bill due in early 2025 is expected to contain the key legislative changes for the sector with the aims of "accelerat[ing] the delivery of major infrastructure projects" and "streamlining the delivery process for critical infrastructure including accelerating upgrades to the national grid and boosting renewable energy".

The government is looking to reintegrate onshore wind back into the nationally significant infrastructure project (NSIP) regime and has also committed to add data centres, gigafactories and laboratories to the list of projects that may request to opt-in to the NSIP regime. Many developments are anticipated including increasing the NSIP threshold for solar projects to 100MW, updates to the National Planning Policy Statements for Energy and Planning Policy Guidance in 2025, a consultation on the application of biodiversity net gain to NSIPs, and the government's response to its consultation proposals aimed at reducing the number and impact of high court challenges to NSIP projects.

For renewable energy and low carbon energy developments consented under the Town and Country Planning Act 1990, the December amendments to the National Planning Policy Framework (NPPF) have provided welcome policy support, as well as more general support for commercial development on green belt land. As with the housing reforms, the government has confirmed that the National Planning Policy Guidance will be updated in 2025 to provide clarity on how local authorities should apply the NPPF policies, and that further changes can be expected through the creation of national development management policies.

Construction: Late payments

With the construction sector remaining the worst-affected industry for insolvencies in England and Wales last year, the government will take various measures to address the persistent issue of late payments to SMEs, including a Fair Payments Code, new regulations on reporting retention clauses and new procurement measures.

Fair Payments Code

The Fair Payments Code is a voluntary accreditation system which introduces a tiered system, awarding firms gold, silver, or bronze awards depending on how quickly the majority of their invoices are paid. It aims to improve cash flow, support supply chains and reduce disputes by helping SMEs identify reliable and trusted partners.

The uptake of this scheme is yet to be seen, but it may signal that the payment practices of larger market players will be subjected to higher expectations, greater scrutiny and enhanced accountability.

Retention clause reporting

New regulations requiring in-scope companies and LLPs to report information related to retention clauses twice yearly, seek to address the problems that unpaid or late retentions can cause to small business in the supply chain. The regulations will apply to companies and LLPs defined as "medium-sized" under the Companies Act 2006 (or equivalent for LLPs), meaning that this will apply to large employers, contractors and subcontractors.

Procurement

The publication of two new Procurement Policy Notes (PPN 015 and PPN 018) set out how a supplier's approach to payment can be taken into account in the procurement of major government contracts under the Procurement Act 2023 (see more on the new Procurement Act).

Residential leasehold

Residential leasehold reform

We are expecting important developments in leasehold reform over the coming year. The previous government's Leasehold and Freehold Reform Act (LAFRA) provided the framework for reform, parts of which are intended to be brought into force this year.

In January we expect to see the removal of the requirement for leaseholders to wait two years after purchasing their property before they can buy the freehold or extend their lease. The provisions which make it easier and cheaper for residents to exercise their right to manage a leasehold block will come into force in the spring.

Some of the more controversial provisions of LAFRA may need to be revisited before being brought into law. Proposals that affect the premiums payable on the purchase of a lease extension and of a freehold, and which may bring substantially more mixed use developments into the scope of residents' right to manage are likely to need further attention to avoid opening the door to litigation.

Additional reforms are planned, to be brought forward in a new Leasehold and Commonhold Reform Bill towards the end of this year. In preparation we can expect:

• a white paper on commonhold reform together with a consultation aimed at understanding the pathway to making commonhold the default tenure for both new and existing flats;
• consultation on achieving transparency and fairness of fees payable by home owners via service charges, with the imposition of standards for managing agents of residential blocks; and
• consultation on addressing unaffordable ground rents, the threat of forfeiture and problems with current private estate management arrangements.

Right to manage

The Upper Tribunal's decision in Avon Freeholds Ltd v Cresta Court E RTM Company Ltd, that failing to serve a notice of invitation to participate on a tenant whose lease had not yet been registered, did not invalidate the claim is likely to be heard by the Court of Appeal.

Right to Buy

Reform to the Right to Buy scheme in England is also on the horizon. Potential reforms proposed in the recent consultation aim to support the government's commitment to increasing social and affordable housing and to protect social housing stock. These include increasing the period for which someone has to be a secure tenant before they qualify to buy their home, adjusting the discount offered and increasing post-purchase restrictions.

Views have also been sought on the impact of increased flexibilities for councils in connection with the use of Right to Buy receipts on accelerating and boosting replacement homes.

Residential SDLT

From 1 April 2025, the residential SDLT nil rate threshold on a purchase price will reduce to £125,000 and a 2% rate will apply on the amount between £125,001 and £250,000.  The thresholds for first time buyer's relief will also be reduced to £300,000 at 0% and thereafter 5% SDLT is payable  on the portion up to £500,000 (first time buyer's relief is not available if the price is over £500,000). These figures relate to the standard residential SDLT rates and do not include any applicable surcharges.

The nil rate SDLT threshold applicable to rent consideration on new residential leases will also be reduced from 1 April 2025.

Residential renters

Private rental sector

The Renters Rights' Bill proposes the most significant reforms to private rental sector in England in several decades. These include the abolition of "no fault" evictions, abolition of fixed terms for assured tenancies (with an exception expected for purpose-built student accommodation), measures designed to prevent rental bidding wars, limiting rent increases (no more than once a year and no higher than market rent) as well amended grounds for landlords to regain possession.

The bill also allows for regulations to extend the Decent Homes Standard to the private rental sector. Awaab's law (under which landlords must fix health hazards within fixed time limits) will also be extended. In addition, it prohibits discrimination based on benefits status or having children who live with or visit the tenant, provides for the creation of a private rental sector database and a compulsory ombudsman scheme which landlords will be obliged to join and expands enforcement powers. Our Insight provides further details.

In respect of disputes and possession proceedings, the proposals need to be viewed in the context of the serious backlogs in the court system. Landlords already encounter significant delays in removing a tenant who is not paying full rent, and in the face of ever-diminishing returns that can be obtained from rental properties, we are likely to see fewer property owners willing to take the risk involved in letting. As the supply of rental properties decreases, rents could be driven upwards, meaning even if a market value cap is in place, tenants could face higher rents.

Energy efficiency: domestic buildings

Domestic lettings have seen a "reprieve" from the former aim of achieving a minimum C rating on the Energy Performance Certificates (EPC) (previously to be phased in from 2025). Current indications suggest that the C rating will be required by 2030.

The government is consulting on proposed amendments to the Energy Performance in Buildings (EPB) regime. In the domestic context, it is proposed that additional information should be added to EPCs to cover energy costs, insulation levels and the potential to integrate smart technologies to optimise energy consumption. These largely reflect the recommendations put forward by the Climate Change Committee which were made with the aim of supporting consumers to make better informed decisions and to reduce emissions from homes.

Updated assessment methodologies for domestic dwellings are already in train, with a consultation on the detail for the Home Energy Model (which will be implemented alongside the Future Homes Standard) anticipated shortly.

It is also suggested that the 10-year validity period for an EPC should be reduced and that residential landlords should be required to renew an EPC on its expiry rather than, as at present, renewal (in the domestic sector) only being required on the property being re-let. 

Transparency

Who controls land?

We await confirmation from the new government whether it will pursue its predecessor's intended policies on land ownership and control transparency. Two significant consultations closed last spring, for which the outcomes are still awaited.

The first relates to increasing public access to information about beneficiaries under trusts holding UK land, which is intended to tackle financial crime and corruption through enhanced transparency. However, there are concerns over the broad scope of the proposals and the cost and administrative burdens it will impose on legitimate investors.

The government also consulted on requiring the disclosure of information about those who control land, which is likely to include option agreements, conditional contracts, pre-emption rights and promotion agreements (subject to exceptions and exclusions) as provided for in the Levelling Up and Regeneration Act 2023. The retrospective scope of these proposals has caused particular concern. Read more in this Insight.

In the context of building safety and cladding remediation, potential disclosure obligations for certain building owners relating to their beneficial owners under the government's Remediation Acceleration Plan are discussed above.