Ref: New Proposed Law: Some good news

Dear Member & Subscribers

Ref: New Proposed Law: Some good news

We wanted to make you aware of a new piece of legislation currently progressing through Parliament that may have significant benefits for many landlords, property businesses, contractors, and commercial property owners.

The Commercial Payments Bill, sometimes referred to as the Small Business Protections Bill, was introduced into Parliament on 19 May 2026. The Government has stated that the purpose of the Bill is to tackle late payments and improve cash flow for small businesses across the UK.

If enacted, the Bill could introduce some of the most significant reforms to commercial payment practices in decades.

Key Proposed Changes

Maximum 60-Day Payment Terms

The Bill proposes a maximum payment term of 60 days in many business-to-business contracts. This would prevent larger organisations from imposing payment terms of 90, 120, or even 180 days on smaller businesses and suppliers.

Mandatory Interest on Late Payments

Businesses that pay invoices late could automatically become liable for statutory interest at a rate of 8% above the Bank of England base rate. Importantly, parties would generally not be able to contract out of this protection.

Stronger Powers for the Small Business Commissioner

The Bill would significantly strengthen the powers of the Small Business Commissioner, including the ability to:

• Investigate poor payment practices

• Resolve payment disputes

• Require corrective action

• Impose financial penalties

• Enforce payment reporting requirements

Financial Penalties for Persistent Offenders

Large businesses that repeatedly fail to meet payment obligations could face substantial fines. Reports suggest penalties may reach up to 1% of UK annual turnover in serious cases.

Construction Industry Reforms

The Bill also proposes to ban retention clauses in the construction sector. These clauses currently allow part of a contractor's payment to be withheld, often creating cash flow difficulties for smaller firms and subcontractors.

Invoice Disputes

Businesses wishing to dispute invoices may be required to do so within strict time limits. This is intended to prevent invoices being challenged purely as a tactic to delay payment.

Why This Matters to Landlords

Although the Bill is not specifically landlord and tenant legislation, many landlords and property businesses may benefit if it becomes law.

The proposals could assist where:

• Managing agents owe commissions or fees

• Contractors delay payments

• Corporate customers are slow in paying invoices

• Service agreements contain excessively long payment terms

• Property businesses provide services through limited companies

For landlords operating commercial property portfolios, development companies, maintenance businesses, or other property-related enterprises, these reforms could improve cash flow and strengthen debt recovery options when dealing with larger corporate clients.

Current Status

The Bill is currently at an early stage in Parliament and must still pass through both the House of Lords and the House of Commons before becoming law. A transition period is expected before any new rules take effect.

The British Landlords Association will continue to monitor the progress of this legislation and provide updates to members as further details become available.

Kind Regards

The British Landlords Association

Legal Team

Telephone: 020 335 56530

Website: thebla.co.uk