Property Law Update: The Compensation Cliff Edge

April 2026 rates revaluation and section 25 lease terminations.

For clients who have commercial property portfolios, as the dust has settled on last year's budget, now is the time to consider whether the changes to Business Rates should guide plans for lease terminations.

From time to time most landlords will need to take steps to terminate some leases, whether that be to facilitate redevelopment, or to enable their own occupation etc. Some commercial tenants will benefit from the protections in the Landlord and Tenant Act 1925, which provides that where a landlord terminates a commercial lease through no fault of the tenant, the landlord is liable to pay compensation to the tenant. Compensation is calculated based on a formula underpinned by rateable value. Here is the trap! The key date in the legislation is the date of service of the landlord's termination notice (a section 25 notice) and it is from this date that the compensation is calculated, not the