A Legal Guide to Mixed-Use Property After 1 May 2026

Mixed-use properties (buildings that combine commercial premises with residential accommodation) are a familiar feature of the UK’s towns and high streets. The flat above the shop, the office with a caretaker’s dwelling, the converted warehouse with a ground-floor retail unit: these are common arrangements, and they attract buyers ranging from small investors to established property businesses involved in buying and selling commercial property.

From 1 May 2026, anyone owning or acquiring such a property needs to understand that the residential element will be governed by a significantly reformed legal framework. The Renters’ Rights Act 2025 introduces the most fundamental changes to residential tenancy law in England in almost 40 years. For mixed-use property owners, the Act does not exist in isolation; it sits alongside the commercial lease regime and impending changes to energy performance standards, creating a legal picture that requires careful attention.

This article applies to England. While certain provisions of the Act extend to Wales, the position there differs in some respects, and separate advice should be sought for Welsh properties.

What the Renters’ Rights Act 2025 Changes

The Act received Royal Assent on 27 October 2025, with its principal provisions due to come into force on 1 May 2026. The reforms are sweeping and apply to all assured and assured shorthold tenancies in the private rented sector.

The key changes are as follows. From 1 May 2026, assured shorthold tenancies (ASTs) will be abolished. All existing ASTs, including fixed-term agreements still running on that date, will automatically convert to assured periodic tenancies: open-ended, rolling agreements with no fixed end date. No new fixed-term tenancies may be granted after that date. Separately, the right of landlords to recover possession by serving a Section 21 “no fault” notice will be removed entirely. From 1 May 2026 onwards, a landlord wishing to recover possession must rely on one of the specified grounds set out under Section 8 of the Housing Act 1988, as amended.

For tenants, this represents considerably enhanced security of tenure. They may terminate at any time on two months’ notice, but the landlord’s ability to bring the tenancy to an end is now tied to proving a specific ground, such as persistent rent arrears, antisocial behaviour, or a genuine intention to sell or occupy the property. Crucially for mixed-use situations, a landlord cannot use the commercial arrangements governing one part of a building to sidestep the residential regime applying to another.

The Particular Challenge of Mixed-Use Property

The mixed-use nature of a property introduces a complication that catches some owners off guard: two distinct statutory frameworks govern the building simultaneously, and they do not align.

The commercial element of a mixed-use property, whether it is a shop, office or workshop, is typically governed by the Landlord and Tenant Act 1954. Landlords and tenants should ensure any commercial leases and licences to occupy are reviewed alongside the residential arrangements. This legislation provides business tenants with security of tenure in their own right, subject to specific grounds for ending the lease. However, the 1954 Act and the Renters’ Rights Act operate independently. A landlord cannot, for example, seek to end a residential tenancy on the basis that it is commercially inconvenient, nor can the terms of a commercial lease override the protections the Act confers on a residential occupier elsewhere in the same building.

This matters most acutely where a buyer acquires a mixed-use property with a view to future redevelopment, vacant possession, or consolidating the building for a single use. Any such plan must now account for the fact that a residential tenant in the building will have considerably stronger rights than before. Gaining possession, even where the commercial lease permits it, will not automatically extend to the residential element, and attempting to apply pressure on a residential tenant in ways that fall outside the Section 8 grounds could expose the landlord to significant legal liability. For the business tenancy side, our guide on how to evict a commercial tenant explains the separate considerations that may apply.

Where possession, redevelopment or lease rights are contested, early advice from our commercial property disputes team can help reduce risk.

EPC Compliance: Two Regimes, Two Timelines

Energy Performance Certificate requirements add a further layer of complexity for mixed-use property owners, because the residential and commercial parts of the building are subject to separate regulatory frameworks, each on its own trajectory.

For the residential element, the government has confirmed that all private rented properties in England and Wales will be required to meet a minimum EPC rating of C from 1 October 2030. This is a significant uplift from the current minimum of Band E.

The EPC assessment methodology itself is also being overhauled:

The government intends to introduce new-style domestic EPCs, based on the Home Energy Model, from October 2026, with the new system proposed to become compulsory for assessments from October 2029. The detail of how the new methodology will work is still subject to consultation, and final regulations have not yet been published

The government has indicated its intention that landlords who secure an EPC C rating under the current system before October 2029 should be treated as compliant until that certificate expires, though this has not yet been confirmed in legislation.

Those who have not done so by then will be assessed against the new metrics, under which it may be harder to achieve the equivalent of a C rating.

Based on the proposed metrics under consultation, achieving the required standard under the new system may, in many cases, require installation of a heat pump or solar panels, though the final requirements will depend on the outcome of the government's consultation.

For the commercial element, the position is less settled. Commercial properties are currently required to achieve a minimum of Band E under the Minimum Energy Efficiency Standards (MEES) regime introduced under the Energy Act 2011. The government has signalled its intention to raise this to Band B by 2030, but the precise timeline and compliance windows for non-domestic property have not yet been legislated. Landlords of commercial premises should be aware that the trajectory points firmly upward and plan accordingly.

For a mixed-use property owner, the practical implication is that both the residential and commercial elements require separate EPC assessments and separate compliance planning. The two parts of the building may have different certificates, different ratings, and different deadlines. Conflating them, or assuming that a single EPC covers the whole building, is a common and potentially costly error.

For Buyers: Due Diligence Before You Commit

If you are considering acquiring a mixed-use property, the legal and practical checks required go beyond those for a straightforward commercial purchase. The following points warrant particular attention:

• Tenure of any residential occupant: Establish whether there is a residential tenant in occupation, when the tenancy was granted, and what its current terms are. If the property is acquired after 1 May 2026, any such tenancy will be an assured periodic tenancy under the new regime. If it is acquired before that date but the transaction completes after it, the same will apply on completion. The price and structure of the deal should reflect this.
• Possession requirements: If vacant possession of the residential element is important to your plans, for example for redevelopment, conversion or owner-occupation, take advice on what Section 8 grounds might realistically be available and on what timescale. There is no quick route to possession under the new regime absent a qualifying ground.
• Section 21 notices: If the seller has served or is contemplating serving a Section 21 notice prior to 1 May 2026, understand the transitional rules. Any such notice must be followed by a court claim issued by the earlier of the notice’s normal six-month validity or 31 July 2026. If proceedings have not been issued by that date, the notice lapses and the no-fault route is lost permanently.
• EPC ratings: Obtain separate EPCs for the residential and commercial elements and review both against the upcoming compliance timelines. Where either part falls short of the anticipated future minimum, factor upgrade costs into your pricing.
• Structure of the deal: Consider how the property is being sold, whether as a single freehold, with or without existing leases, and whether there are any overage or clawback provisions tied to future changes of use. The interplay between the commercial and residential elements should be addressed clearly in the heads of terms and the sale contract.

Your solicitor will be able to raise enquiries of the seller covering many of these points, but the more prepared you are before those enquiries are raised, the better placed you will be to negotiate effectively and avoid surprises after exchange.

For Existing Owners: Taking Stock Now

If you already own a mixed-use property with a residential element, the 1 May 2026 commencement date is an important marker.

On the residential tenancy, consider whether the existing arrangements work for you under the new regime. If you have been relying on the ability to serve a Section 21 notice as a backstop, that option is expected to be removed once the reforms are fully in force.

On the commercial element, review the terms of any existing lease against the 1954 Act framework. If a lease renewal is approaching, be aware that the terms you agree now, including any break clauses and redevelopment provisions, will need to be considered in light of the fact that the residential part of the building is now subject to a more restrictive regime. It is also worth reviewing how to negotiate a commercial lease if renewal or variation is likely.

On energy performance, commission assessments for both parts of the building if current EPCs are approaching expiry or if you have not reviewed them recently. For the residential element in particular, it is worth understanding where you stand against the confirmed Band C target for 2030, and against the proposed 2029 transition to the new assessment methodology rather than leaving compliance works to the last moment, when contractor availability and costs are likely to be under pressure.

Getting the Right Advice

The Renters’ Rights Act 2025 represents a significant shift in the legal landscape for anyone involved in residential property, but its implications for mixed-use property are particularly layered. The interaction between the residential tenancy regime, the commercial lease framework, and the evolving EPC requirements creates a set of issues that benefit from specialist legal advice rather than a one-size-fits-all approach.

Our commercial property solicitors work with businesses and investors in Eastbourne, Bexhill-on-Sea and Hastings, and across East Sussex, as well as further afield. With experience working on high value property transactions and major developments across the UK, our solicitors offer the right expertise for even the most complex commercial property matters.