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.

Since 1 May 2026, anyone owning or acquiring such a property needs to understand the significantly reformed legal framework applying to residential tenancies. The Renters’ Rights Act 2025 introduced the most fundamental changes to residential tenancy law in England in almost 40 years. For mixed-use property owners, the Act does not operate in isolation; it sits alongside the commercial lease regime.

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 Changed

The Act received Royal Assent on 27 October 2025, with its principal tenancy reforms came into force on 1 May 2026, although other measures are being phased in and different timing applies to some categories of landlord and tenancy.

From that date, assured shorthold tenancies (ASTs) were abolished. All existing ASTs, including fixed-term agreements that were still running at that point, automatically converted into assured periodic tenancies—open-ended, rolling agreements with no fixed end date. It is no longer possible to grant new fixed-term tenancies.

At the same time, the right of landlords to recover possession by serving a Section 21 “no fault” notice was removed entirely. Landlords must now rely on one of the statutory grounds for possession set out in Section 8 of the Housing Act 1988 (as amended) if they wish to recover possession.

For tenants, this has resulted in significantly enhanced security of tenure. They may still terminate a tenancy on two months’ notice, but a 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.

For mixed-use property owners, this means the residential element of a building now requires much closer, ongoing attention.

The Particular Challenge of Mixed-Use Property

The mixed-use nature of a property introduces a complication that can catch owners off guard: two distinct statutory frameworks may govern the building at the same time, and they do not align.

The commercial element of a mixed-use property—whether a shop, office or workshop—is typically governed by the Landlord and Tenant Act 1954. This legislation provides business tenants with security of tenure in their own right, subject to specific grounds for termination or renewal.

However, the 1954 Act and the Renters’ Rights Act operate independently. A landlord cannot seek to end a residential tenancy simply because it is commercially inconvenient, nor can the terms of a commercial lease override the statutory protections afforded to a residential tenant.

This is particularly relevant where a buyer acquires a mixed-use property with a view to redevelopment, obtaining vacant possession, or consolidating the building for a single use. Any such plan must now factor in the strengthened rights of residential occupiers. Securing possession of the commercial element will not automatically extend to the residential part, and any attempt to apply pressure on a residential tenant outside the Section 8 framework risks significant legal exposure.

For Buyers: Due Diligence Before You Commit

If you are considering acquiring a mixed-use property, the legal and practical checks now go beyond those for a straightforward commercial purchase. In particular:

• Tenure of any residential occupant
  Confirm whether there is a residential tenant in occupation, when the tenancy was granted, and what its current terms are. Since 1 May 2026, all such tenancies fall within the assured periodic regime, regardless of when they were originally created. The price and structure of the transaction 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—early advice is essential. There is no longer a quick route to possession without a valid statutory ground, and timing should be built into your commercial decision-making.
• Section 21 notices
  If a Section 21 notice was served before 1 May 2026, the transitional rules remain important. Any such notice must be followed by a court claim issued by the earlier of the notice’s usual six-month validity period or 31 July 2026. If proceedings are not issued by that date, the notice will lapse and the no-fault route will no longer be available.
• Structure of the deal
  Consider how the property is being sold—whether as a single freehold, with or without existing leases—and whether any overage or clawback provisions apply. The relationship between the commercial and residential elements should be clearly addressed in the heads of terms and sale documentation.

A well-prepared buyer will be better placed to negotiate effectively and avoid surprises after exchange.

For Existing Owners: Taking Stock

For existing owners of mixed-use properties, the implementation of the Act on 1 May 2026 marked a fundamental shift.

On the residential side, it is important to review current arrangements and ensure they remain workable under the new regime, particularly where future plans may require possession.

On the commercial side, existing leases should be considered within the framework of the Landlord and Tenant Act 1954. Where renewals or re-gears are in prospect, terms such as break clauses and redevelopment provisions need to be assessed alongside the more restrictive residential position.

Getting the Right Advice

The Renters’ Rights Act 2025 has significantly altered the legal landscape for residential property. In the context of mixed-use property, its interaction with the commercial lease regime creates a more complex position than many owners or buyers expect.

Careful, joined-up advice is now more important than ever to ensure both elements of a property are properly understood and managed.

If you would like advice on Mixed-Use Property and the Renters' Rights Act or would like to discuss your situation more generally, please contact our Commercial Litigation team on 01689 887887 or email cwj@cwj.co.uk.