Rates revaluation 2026: why timing matters for lease renewals under the LTA

Landlords and tenants take note - the next business rates revaluation which is due to take effect on 1 April 2026 - could financially impact lease terminations - which is why timing is crucial.

‘No-fault’ lease terminations

Tenants with security of tenure under the Landlord and Tenant Act 1954 have a statutory right to renew their lease at the end of the contractual term, unless the landlord can successfully oppose renewal on one of the grounds set out in section 30 of the Act.

Some of those grounds are classed as “no‑fault” grounds — most notably redevelopment (ground F). Where renewal is opposed on a no‑fault basis, the tenant is generally entitled to statutory compensation, calculated by reference to the property’s rateable value.

With the next business rates revaluation due to take effect on 1 April 2026, timing is becoming increasingly important.

Property rateable values likely to rise

The Valuation Office Agency - which values properties for council tax and non-domestic rates - has confirmed that this April 2026 revaluation is likely to increase rateable values for many properties.

This is crucial because any statutory compensation a tenant is entitled to is assessed by reference to the rateable value at the date the landlord’s notice to end a tenancy (a section 25 notice) is served. This is not necessarily the same as the termination date of the lease.

Why timing matters when serving a notice to end a tenancy

In practice, this means that should a landlord serve a section 25 notice before 1 April 2026, compensation should be based on the current (lower) rateable value — even if the lease does not end until after the revaluation takes effect.

Advice for landlords and tenants

• Landlords intending to rely on no‑fault grounds should therefore be reviewing their portfolios now and considering whether they are in a position to serve section 25 notices ahead of April 2026, to avoid potentially higher compensation liabilities.
• From a tenant’s perspective, it is equally important to understand how the timing of notices may affect the level of compensation payable, and to factor this into renewal strategy and negotiations.

Early advice on timing and strategy could help both landlords and tenants avoid unexpected costs once the new rateable values come into force.

How Hamlins can help

Our Real Estate Disputes team has expertise in both commercial and residential property disputes. We seek to obtain the best outcome possible for every client, no matter how big or small the issue may be. If you would like a conversation to find out how we might help you, please get in touch.