Portfolio Management and Commercial Property Law: What Growing Businesses Miss
Article summary
- Your legal obligations can grow considerably as your commercial portfolio expands.
- Under the Landlord and Tenant Act 1954, tenants in leases that have not been contracted out have a statutory right to renew. Which leases in your portfolio carry that right has a direct bearing on what you can do with each asset.
- When a lease changes hands, the outgoing tenant may have given a personal guarantee covering the new tenant’s performance. That obligation can come back years later in ways that catch investors off guard.
- Proposed regulations would require commercial properties to hold an EPC rating of B by 2030. If your older stock has not been assessed, you are carrying a cost you have not yet quantified.
Buying your first commercial property typically feels straightforward because the process is familiar, but buying several is quite different. Every lease, every repair clause, every planning condition, and every change of tenant adds another moving part, and those parts do not sit in isolation. An investor who treats each property as its own separate concern, without keeping an eye on how everything connects, tends to accumulate problems quietly until they become expensive.
None of the obligations involved are especially complicated on their own, but they stack up. One modest dilapidations liability across a single building is a minor issue; spread across six buildings, it becomes a budget conversation. A handful of leases where tenants have the right to renew can quietly become the main obstacle to a redevelopment or sale you had not yet started planning. Mapping all of this before a problem surfaces is always cheaper than dealing with it once one has.
Security of tenure across the portfolio
The Landlord and Tenant Act 1954 gives most commercial tenants automatic security of tenure at the end of their lease, unless the tenancy was contracted out of the Act’s protection before it began. A landlord wishing to oppose renewal must serve a section 25 notice and rely on one of the grounds under section 30(1). Redevelopment is available as a ground under section 30(1)(f), but the landlord must demonstrate a genuine, settled intention to carry out the works and must be in a position to proceed without the tenant remaining in occupation.
For a portfolio investor whose strategy includes asset rotation or redevelopment, knowing which leases are inside the Act and which are outside is a basic management requirement. If you discover two years before a planned redevelopment that your tenants have a statutory right to renew their leases, you have time to deal with it. If you discover that six months out, your options are far more limited. A lease audit with Askews’ commercial property team will tell you exactly where you stand across your portfolio before timing becomes a problem.
Authorised Guarantee Agreements and hidden liability
When a commercial lease changes hands, the landlord can require the outgoing tenant to sign an Authorised Guarantee Agreement (AGA) as a condition of giving consent. Under the Landlord and Tenant (Covenants) Act 1995, that agreement means the outgoing tenant stands behind the performance of whoever takes the lease from them, for as long as that person holds it. If the new tenant falls behind on rent or leaves the property in poor repair, the landlord can call on the guarantee.
For an investor acquiring a property mid-lease, checking whether an Authorised Guarantee Agreement exists, who gave it, and what it actually covers is a straightforward but often overlooked due diligence step. Buying the landlord’s interest means inheriting the benefit of any AGA that is in place, which is a useful protection if the current tenant runs into financial difficulty. It is equally worth establishing whether the current tenant is itself bound by an AGA from an earlier transfer, since that affects what remedies are available if things go wrong further down the line.
EPC compliance and the 2030 deadline
Under proposed Minimum Energy Efficiency Standards regulations, commercial properties will need an EPC rating of B to remain lettable from 2030. The current MEES regime already prevents landlords from granting new leases on properties rated below E, so the direction of travel is clear. For a portfolio with a lot of older stock, the total cost of getting every building to B is a real financial exposure that belongs in the investment model, not buried in a legal footnote. GOV.UK guidance on energy performance certificates for commercial buildings sets out where the compliance requirements currently stand.
Getting a portfolio-wide EPC audit done now gives you time to work out what the improvement costs actually look like before they become urgent, to explore whether green lease terms with existing tenants can share some of that burden, and to decide whether certain properties are worth improving or better sold. A building that needs structural work to reach B is a fundamentally different proposition from one that just needs better glazing or updated heating controls. Askews’ commercial property acquisition and disposal team advises on lease structuring, MEES compliance, and portfolio-level due diligence.
Final words
Every property added to a portfolio brings new obligations that do not sit neatly alongside the ones already there. Legal review at portfolio level, rather than property by property, tends to surface the things that accumulate quietly: the AGA called by a landlord four years after the original tenant moved on, the lease that blocks a planned disposal because the tenant has a statutory right to renew, the EPC rating that was fine in 2022 and becomes a compliance problem before 2029. Dealing with these questions early costs a fraction of what it costs to resolve them once a transaction or development programme is already in motion.
Frequently asked questions
How does the 1954 Act affect a redevelopment plan?
Where tenants hold inside-Act leases, the landlord cannot recover possession simply because the contractual term has ended. Redevelopment is a recognised ground for opposing renewal under section 30(1)(f) of the Landlord and Tenant Act 1954, but the landlord must demonstrate a genuine and settled intention to carry out substantial construction or demolition works, and must be able to begin those works without the tenant remaining in occupation. An intention that is aspirational rather than concrete will not satisfy the test.
What is an Authorised Guarantee Agreement and who is bound by it?
An Authorised Guarantee Agreement is a personal guarantee given by an outgoing tenant covering the performance of their immediate assignee. Under the Landlord and Tenant (Covenants) Act 1995, the guarantee is limited to the period during which the assignee holds the lease. It falls away when the assignee itself assigns on. The AGA cannot extend beyond the immediate assignee, but it is a valuable protection for a landlord whose consent to the original assignment was given on the strength of it.
How should an investor approach EPC compliance across a portfolio?
Start with a portfolio-wide EPC audit, identifying each property’s current rating and the improvement works required to reach the proposed B standard. Commission building surveyor assessments for the properties most at risk. Consider whether green lease provisions can be introduced on renewal. Review whether any property is likely to fall below the current E threshold under the existing MEES regulations before a new lease is granted, which would prevent a letting in the meantime.
What should an investor know about rent review clauses in new leases?
Upward-only rent review clauses prevent rent from falling below the passing level at a review date, even where market rents have declined. They are standard in most existing institutional commercial leases of any significant term. Proposed legislation would prohibit them in new leases going forward, leaving existing leases unaffected. Investors acquiring properties under long leases with upward-only clauses should note that those clauses may become harder to negotiate into new grants once legislation passes. Advice on existing commercial lease terms is available from Askews’ commercial property leasing team.
This article is provided for general information only and does not constitute legal advice. It reflects the law of England and Wales as at 23rd April 2026. Specific legal advice should be obtained before acting on anything contained here. Askews Legal LLP is authorised and regulated by the Solicitors Regulation Authority.
