European real estate finance: Market update – Q2 2026

Data centres: new legislation and grid connection rules to accelerate development

The loi de simplification de la vie économique (the "SVE Law"), adopted by the French Parliament on 15 April 2026, introduces a dedicated legal category for large-scale data centres considered of strategic importance for France's digital or ecological transition or national sovereignty. Such data centres may, by decree, be qualified as projets d'intérêt national majeur (PINMs) based on their scale in terms of investment, installed power or contribution to competitive domestic ecosystems. The PINM regime was originally created for industrial projects by the loi industrie verte of October 2023, which established a new accelerated regime for the delivery of urban planning authorisations and accelerated updating of planning documents for compatibility purposes, in order to accelerate industrial developments. The SVE Law extends this regime to data centres. The SVE Law is currently under review by the Conseil constitutionnel (French Constitutional Court); and its promulgation therefore remains pending.

PINM qualification would unlock several advantages designed to accelerate data centre development in France:

• from a planning perspective, the competent authority may grant derogations from the height restrictions contained in local urban plans (plans locaux d'urbanisme) for projects qualified as PINMs, within limits set by a Conseil d'État decree (to be enacted);
• from a land-use perspective, various exceptions to France's binding zero net artificialisation land consumption targets would be introduced to accommodate the building of data centres subject to certain conditions;
• from an environmental perspective, eligibility for recognition as serving a major overriding public interest (raison impérative d'intérêt public majeur) would be extended to PINM-qualified data centres enabling derogations from protected species rules;
• from a grid connection perspective, the minister responsible for energy may instruct RTE, the public electricity transmission system operator, to reserve capacity on the transmission network sufficient to give electricity-intensive industrial and digital infrastructure projects access to the network;
• the SVE Law would amend the 2023 renewable energy law so that the facilitated grid-connection regime applies to works for the grid-connection of PINM-qualified data centre projects, and so that the Préfet may, on RTE's proposal, re-rank favourably PINM projects in the connection queue.

Data centres: grid connections

Independently of the SVE Law, the grid connection landscape (in part included the RTE's documentation technique de référence) for data centres has recently evolved significantly through RTE's new Fast Track procedure. Under the standard connection procedure, connecting to France's 400 kV high-voltage transmission network takes five to seven years at a minimum. The Fast Track procedure aims to reduce this to three to four years for very high-power installations on certain State-identified sites. Importantly, RTE must be notified of the building permit within 16 months of signing the connection commitment, failing which the reserved capacity is released. This compressed timeline means that permitting and grid connection processes must be run in parallel from the earliest stages of the project rather than sequentially.

RTE has also tightened its rules on the transfer of connection rights, which may now only be assigned within the same corporate control as the original applicant. This is a change with direct implications for how data centre projects are legally structured and for the use of special purpose vehicles.

Looking ahead, RTE is consulting on a potential shift from a "first come, first served" to a "first ready, first served" logic for connection queue management. If adopted, this change would allow operationally advanced projects to move ahead of earlier entrants in the queue, marking a significant change in the dynamics of capacity allocation. The contemplated reforms referred to above reflect the French government's desire to position France as a leading European destination for large-scale data centre investment.

Wirecard on shareholder damages claims

On 13 November 2025, the German Federal Court of Justice handed down its judgment on the subject of shareholder damages, ruling that shareholder damages are not to be treated as ranking pari passu with claims of other unsecured creditors, but instead subordinated to such claims. This judgment ends years of uncertainty in this area, not least because it follows a court of first instance judgment in line with the Federal Court of Justice ruling, which was overturned by the appellate court in 2024. The Federal Court were clear that damages claims (based on capital markets law) by shareholders are not ordinary insolvency claims under Section 38 of the German Insolvency Code.

In the case at hand, shareholders filed claims for damages against the insolvency estate of Wirecard AG stating that they purchased shares based on false and misleading information (being a breach of capital market laws). A judicial decision was sought on the ranking of such claims – did these rank with the claims of other unsecured creditors, such as supply contract providers (such to dilute the recovery rates for other such creditors) or were they subordinated to such claims? In upholding the basic premise of German insolvency law, the Federal Court of Justice upheld the importance of the difference between debt and equity, stating that shareholders had an equity position only and were therefore subordinated. The court were also wary of preventing equity claims via the backdoor, by differencing between general shareholder claims and shareholder damages claims.

The case brings welcomed clarity for all our clients, particularly on unsecured lending transactions.

RETT Act – draft tax regulations

In January, the German government approved a draft act, which, amongst other things, changes the rules related to real estate transfer tax (RETT). The changes will provide welcome certainty to share transaction involving real property, where holding companies were uncertain of their obligations with respect to a potential double RETT exposure, where signing and closing took place on different dates (as is typical of such transactions), with both being classed as taxable events.

Under the new draft act, only the signing of the share transaction will be subject to RETT; provided that the shares are transferred at closing, in accordance with the terms of the share purchase agreement. In this case, the closing of the transaction will not amount to a separate RETT-triggering event for the same transaction and there will be no notification obligations in respect of the closing. In addition to this change, the notification period for such transactions will be extended to one month (increased from the current two-week period) in line with the period given to non-German taxpayers.

The changes will be a welcome relief for our investor clients, particularly given the uncertainty that the previous rules have created; and will make investment in Germany more attractive.

Deferred capital payments for S.à r.l.s

On 28 April, the Luxembourg Parliament adopted a law designed at facilitating the speedy incorporation of S.à r.l.s (or private limited liability companies, whether with a sole or multiple shareholders), by introducing the possibility to defer the payment of the minimum share capital subscribed in cash, by a period of time of a maximum 12 months.

Under the former regime, if the minimum share capital amount (EUR 12,000) was subscribed in cash, it required a minimum cash contribution and payment in a corresponding amount at the latest on the incorporation date. Given the local banking environment and KYC constraints and requirements, the relevant company was unlikely to have an operational bank account in time. As a result, it was generally considered that this placed Luxembourg at a competitive disadvantage, as a number of other European jurisdictions (France, Germany, Belgium and Netherlands, for example) already allow for deferred or partial payment or have abolished minimum capital requirements altogether in some cases.

Importantly, it should be noted that this change in regime only applies to the minimum EUR 12,000 cash payment. In a scenario where the initial share capital exceeds such EUR 12,000 minimum threshold or consists of a contribution in kind, such contribution must be subscribed and paid up in full at the time of incorporation. In addition, if a share premium is paid, the full amount of such premium must also be paid up in full on incorporation.

It is also noteworthy that the voting rights attached to shares in respect of which payments have not been made shall be suspended for as long as such payments, having fallen due and been duly called by the management, remain outstanding. Names of shareholders that have not made their contributions, together with an indication of the amounts owed by them, are to be published within the annual accounts. Founding shareholders remain fully liable for any unpaid capital, and the Luxembourg notary will continue to verify that all shares have been fully subscribed at incorporation, even where payment of the cash contribution is deferred. These safeguards are designed to protect creditors and ensure transparency.

With Luxembourg well known for incorporating special purpose and holding vehicles, this new possibility will be appreciated by the industry and our investor clients, particularly where time is of the essence.

Luxembourg withholding tax on share premium repayment

A recent decision by the Luxembourg Administrative Tribunal (25 March 2026, No. 45846a) carries important practical implications for real estate and finance structures making use of Luxembourg holding or financing entities, a common feature of many investment platforms in the sector.

The case concerned a company's attempt to return funds held in its share premium reserve to shareholders without undertaking a formal capital reduction, on the basis that such a return should be treated as a tax-neutral restitution of contributed funds. The Tribunal rejected this approach, confirming that the withholding tax exemption available under Luxembourg income tax law is strictly conditional on a formal capital reduction having taken place. In this case, the distribution was treated as a dividend subject to 15% withholding tax.

This decision serves as a timely reminder that careful attention must be paid to the mechanics of any planned return of funds to shareholders in Luxembourg structures, and that relying on the existence of a share premium reserve alone may not be sufficient to achieve a tax neutral outcome.

For sponsors, asset managers, and investors active in the real estate and finance space using Luxembourg structures, now is a good moment to review existing structures and distribution execution in light of this decision.

End of the Polish Lex Deweloper Act – and the rise of ZPIs

Sunset of the residential fast‑track: on 1 July 2026, the so‑called lex deweloper regime for residential projects will expire. It currently allows large housing schemes to be approved by a municipal council resolution even where the local zoning plan does not provide for residential use; provided certain statutory standards are met (public transport, primary school, public green areas, minimum green ratios, height limits and access to utilities). After this date, new projects will no longer be able to use this route, although proceedings already initiated will continue under the existing rules.

ZPI – a zoning plan initiated by the investor: the new tool, replacing lex deweloper, is the Integrated Investment Plan (zintegrowany plan inwestycyjny or ZPI). A ZPI is a special form of local zoning plan adopted at the investor's request. It covers both the main project area (for example PRS, mixed‑use, logistics) and related supporting infrastructure. Once a ZPI enters into force, it replaces the existing local plan for that area but must remain consistent with the municipality‑wide general plan and with local urban standards (planning zones, density and minimum green requirements).

The urban planning agreement – infrastructure for a tailored plan: the core of a ZPI is an urban planning agreement between the investor and the municipality. Under this agreement, the investor commits to deliver or co‑finance the "public side" of the project – for example roads and utilities, social and educational facilities or public green areas – and in some cases to transfer parts of the land to the municipality. In return, the municipality may take on part of the works and may waive, in whole or in part, the planning gain levy on the increase in land value. The agreement must be in notarial form and only becomes fully effective once the ZPI enters into force in the form attached to the agreement.

The ZPI process – full planning, but with an investor package: a ZPI goes through the full Polish planning process: a draft plan drawn up by a qualified planner, justification, environmental assessment, regulatory opinions and clearances, public consultations and a final council vote. The difference is that the investor starts the process with a ready draft plan plus a proposal for the scope and funding of public‑side infrastructure. Drafts, reports and the signed urban planning agreement must all be disclosed in a central digital Urban Register, which significantly increases transparency for the market and for local stakeholders.

ZPIs mark a move away from a one‑off statutory shortcut toward a negotiated but system‑integrated "plan on demand". They can be attractive for larger or more complex schemes on sites that need planning changes, provided the investor is prepared to take on a defined share of urbanisation costs in a clear contractual framework. Early engagement with municipalities and careful structuring of the "infrastructure offer" will be key to making the ZPI route work in practice. On the other hand, urban planning agreement becomes a central document in planning due diligence. It impacts project CAPEX (through additional infrastructure), the security package (for example mandatory land transfers to the municipality) and the regulatory risk profile (including potential compensation claims linked to the adoption or amendment of a ZPI). In many deals it is likely to be reviewed and monitored in a similar way to key project contracts in a traditional project finance structure. Our clients are therefore advised to take note of the change in procedure and factor this into their planning of new projects.

Foreign direct investment reporting requirements

A new foreign direct investment reporting regime is now in force in Spain. This significant reform, driven by Royal Decree 571/2023 and its implementing regulation Order ECM/57/2024, replaces the previous mainly paper-based system with an electronic submission process using standardised online forms – thus aligning Spain's system with international standards and EU guidance on foreign investment transparency.

Under the new framework, all mandatory declarations for foreign direct investment must now be submitted electronically. The same electronic process applies both to foreign investments in Spain and to Spanish investments abroad. A critical procedural simplification has also been introduced for transactions formalised before a Spanish notary; with notaries now responsible for submitting transaction information directly, therefore releasing non-resident investors from filing obligations in most cases. Our investor clients are nonetheless advised to ensure that notarial deeds and any information provided is complete and accurate, as errors or omissions can lead to follow-up requests or, in serious cases, sanctions.

Further, Royal Decree 571/2023 clarifies transactions that trigger a filing obligation. Among others, the decree includes a specific threshold for real estate acquisitions, requiring non-resident investors to declare any purchase of real estate in Spain exceeding €500,000 per property (based on acquisition value). The new system operates, for most investments, as a post-closing reporting regime rather than a prior approval mechanism, with declarations generally due within one month of closing and submitted exclusively through the digital platform. This reporting framework, however, coexists with Spain's foreign investment screening rules, which may still require prior clearance in sensitive sectors or for certain types of investors. Our clients are advised to familiarise themselves and seek guidance on such reporting requirements, prior to committing to such investments.

Extraordinary extension and rent cap measures

Against the backdrop of rising geopolitical tensions in the context of the conflict in Iran, the Spanish Government enacted Royal Decree-Law 8/2026 (Decreto Ley), of 20 March, invoking the extraordinary urgency powers afforded by Article 86 of the Spanish Constitution. The measure entered into force on 22 March 2026. The Government justified the use of this form of emergency legislation on the grounds that deteriorating economic conditions were generating acute pressure on the rental market, particularly for lower and middle-income households in large urban areas already experiencing structural housing shortages.

The decree-law introduced two principal measures: (i) it granted tenants a right to request an extraordinary extension of up to two additional years for residential lease contracts whose mandatory or tacit renewal period expired between 22 March 2026 and 31 December 2027 (similar to those during the COVID-19 pandemic and operated as a unilateral right in favour of the tenant, meaning landlords were generally unable to refuse the request, unless they could demonstrate a legally recognised ground for recovery of the property); and (ii) it capped the annual rent increase applicable during 2026 and 2027 at 2%, applicable to all landlords irrespective of whether they qualified as large holders (grandes tenedores) under Housing Law. This cap operated alongside the existing residential rent indexation mechanism used to cap annual rent updates for residential leases, with the lower of the two limits prevailing in each case.

On 28 April 2026, the Spanish Congress of Deputies (Congreso de los Diputados) declined to ratify the Royal Decree-Law, which accordingly ceased to have effect. The non-ratification is expected to give rise to increased litigation, as stakeholders dispute whether certain provisions of the Royal Decree-Law may continue to have legal effects notwithstanding its non-ratification. As a result of the uncertainty caused, our real estate finance clients are advertised to monitor progress in this space, should they be impacted by this legislation.

Contractual controls register

In March, the UK government published draft regulations for a new contractual controls register that will be maintained by HM Land Registry. Due to come into force on 6 April 2027, the new regime aims to improve transparency around land control. The register will do this by publicly recording certain land agreements relating to registered land – most notably options, conditional contracts and pre-emption rights.

If such an arrangement exists, the register will require the grantee (which would typically be the developer or land promoter) to provide details of: (i) the parties; (ii) conditions of use; (iii) the land to which the rights exist; (iv) usage period; and (v) any extension rights. Such information would need to be provided with 60 days of the agreement, with separate notification obligations in respect of the expiry, exercise of or early termination of, any such rights. Failure to notify, would mean that HM Land Registry will not register a notice or restriction to protect the rights granted, as well as other ramifications.

The obligation will only apply to agreements entered into from 6 April 2027 (a change from consultation which had suggested that it would apply retrospectively to agreements entered into from 6 April 2021), and from 6 April 2028, the information will be held on a publicly available database.

Our clients are advised to clearly document any such agreements, so that they are able to timely notify HM Land Registry of these, if and when applicable.

National Security and Investment Act: March update

In March, the Government published its formal response, following its consultation on its proposed changes in respect of the National Security and Investment Act. In its consultation, amongst other things, the Government put forward changes to certain definitions related to the 17 sensitive areas which trigger mandatory notification obligations.

For our real estate finance clients, one of the most critical changes relates to the Data Infrastructure mandatory notification category, which will now be updated to removing the requirement that an entity be involved with the public sector for it to fall within the category. Instead, the proposed new definition of "relevant data centre infrastructure" would include all third-party operated data centres and certain cloud and managed service providers.

Proposed secondary legislation to implement these changes are anticipated later this year and our clients are advised to be aware of their new mandatory notification obligations in these circumstances.

Commonhold and Leasehold Reform Bill

In January, the Commonhold and Leasehold Reform Bill was finally published, with the consultation closing in April. The Bill puts forward the findings of the government's white paper from March 2025 on commonhold reform, proposing to ban the sale of new leasehold flats and make commonhold the default tenure. Commonhold is a form of freehold ownership, whereby each unit holder owns its own unit, but also, with the other members, owns the communal areas related to that unit, through a company (or "commonhold association"). The commonhold association will be obliged to organise the repair, insurance and maintenance of these areas, but can appoint a managing agent to perform this role. It is anticipated that this approach will be used for residential flats, as well as mixed-use blocks, although the white paper suggests it could also be used for commercial blocks, retail and shopping centres too.

It has been possible for residential units to be let on a Commonhold basis since 2004, but it has rarely been used.

Interestingly, the Bill also addresses ground rent – capping ground rent in existing leases to £250 from 2028, which will then reduce down to zero after 40 years, a policy point from the current government. At present, it is unclear if the government also intend the commonhold reform aspects to also be implemented at the same time. Further details are awaited now that the consultation has closed and our clients are advised to keep abreast of this.

Proposed prohibition of upward only rent reviews

On 29 April 2026, the English Devolution and Community Empowerment Act 2026 received royal assent and with it brought the prohibition of upward only rent review for new commercial leases, as well as renewal leases. Upward only rent reviews have been a common feature of the commercial leases across England, whereby upon the occurrence of a review (typically taking place at five-year intervals), rents are either maintained or increased. However, under the terms of this new Act, rent will still be reviewed in accordance with the method set in the lease, but it must now allow the ability for the rent to go down also. It will not be possible for parties to contractually agree otherwise – any such provision will be unenforceable. Interestingly, stepped increases, which apply at pre-agreed intervals, fixed at the time that the lease is entered into, will continue to be enforceable.

The rationale for this change is to encourage businesses back to high streets. The government has suggested that rents have increased or stayed the same despite the market downturn, resulting in persistent vacant possession of premises. However, the ramifications will be felt by the whole commercial property sector and options such as the stepped increases highlighted above, may become more prevalent if upward only rent reviews are banned.

Timing for the implementation of the Act remaining unclear, although suggestions have been that it will come into force in 2027/2028. However, it also applies to "tenancy renewal arrangements" from 17 March 2026 and therefore our clients are advised that this means that the Act will have retrospective effect in those cases.

Economic Crime and Corporate Transparency Act 2023 (ECCTA) – Identity verification

One of the reforms introduced by ECCTA was identity verification for those interacting with Companies House. With the aim of increasing transparency, identity verification will be required for: (i) all new and existing company directors and limited liability partnership members; (ii) all new and existing persons with significant control (PSCs); and (iii) anyone who delivers documents to Companies House on their own behalf or on behalf of another, including authorised corporate service providers (ACSPs).

A director should not take any actions on behalf of the company until their identity is verified. Continuing to act as a director without being verified will amount to an offence committed by the company, punishable by a fine. Directors who persistently act without having been verified may also face disqualification. The company will also commit an offence if it allows a person who has not verified their identity to act as a director.

Companies House introduced the ability to voluntarily verify identities from 8 April (whereby Companies House verify the identity of the individual directly), with the compulsory regime applying from 18 November 2025 in respect of new appointments. This latter date also saw the start of the 12-month transition period for existing directors, LLP members and PSCs to verify their identity. Existing directors and members, as applicable, will be expected to verify their identities ahead of delivery of their annual confirmation statements during this 12-month period; and for existing PSCs (that are not directors), within a 14-day period starting from the first day of their month of birth. Our clients are advised to be mindful of their verification obligations, given time periods for compliance will differ for all.

Statutory registers

Another reform arising from ECCTA was the abolition of the requirement for entities to maintain certain statutory company registers. As with identity verification, the requirement came into effect on 18 November 2025. As of that date, companies are no longer required to maintain local registers of: (i) directors; (ii) directors' residential addresses; (iii) secretaries; or (iv) persons with significant control. Instead, the relevant information must be filed and held on the central register at Companies House.

There will be an obligation to keep the information up-to-date, with updates to take place within 14 days of the relevant event. In the case of director appointments, the notification will need to be accompanied by a statement that their identity has been verified along with details of the personal identification code and confirmation that said person is not disqualified from being a director. Whilst failure to notify within the period does not invalid the appointment (or acts of that director), it is punishable by fine.

It should be noted however that companies are obliged to maintain a copy of their register of members at their registered office (from 26 January 2026, the option for companies to keep member information on the central register at Companies House has been removed). Our clients are advised to familiarise themselves with their obligations in this respect.

Building safety levy

From 1 October 2026, new residential developments in England (with certain exemptions) will incur the building safety levy, to raise revenue to be spent on building safety. The levy will be charged on all new dwellings and purpose-built student accommodation in England (with certain exemptions) in excess of 10 dwellings or 30 bed-spaces in student accommodation. The levy charge will depend on the floorspace of the development. Rates per square metre will be set per local authority area to capture the geographical variation in house prices. Any amounts collected by the local authority will contribute to fixing building safety defects across England.

Exemptions include affordable housing, NHS hospitals, care homes, supported housing, children's homes, domestic abuse shelters, accommodation for armed services personnel and criminal justice accommodation.

The sanction for non-payment of the levy will be the withholding of a building control completion certificate. As completion certificates are a legal requirement for buildings over 18m in height (and are required by many mortgage lenders), it could mean that developer struggle to sell and occupy buildings upon completion if the levy is not paid. The local authority will also have the power to impose penalties for late payment.