Proposed Changes to Rent Reviews | What Commercial Landlords Need to Know

Upwards-only rent reviews have long been a cornerstone of commercial lease drafting in England. They ensure that, on review, rent can either remain the same or increase, but never decrease, providing landlords and investors with valuable protection against potential market downturns.

However, this long-established position is set to change.

A new law, the English Devolution and Community Empowerment Act 2026 (the “Act”) introduces significant restrictions on the use of upwards-only rent reviews, signalling a major shift in commercial property law.

This article explores the Act and the implications for commercial landlords.

Key Takeaways

• Upwards-only rent reviews will be banned under Section 36 of the Act where rent is not fixed in advance.
• Most traditional review mechanisms (market rent and index-linked) are likely to be affected.
• The rules apply widely to leases used for business purposes, including to leases that only potentially qualify as business tenancies.
• Renewal agreements entered into on or after 17 March 2026 are caught, even before the Act comes into force.
• The new law is expected to be in force from 2027 onwards, creating a limited window for current structuring.
• Landlords should act now, review lease pipelines, renegotiate renewals, and consider alternative rent strategies.

What Has Changed?

Section 36 of the Act will limit a landlord’s ability to include upwards-only rent review clauses in commercial leases.

The key rule:
Upwards-only rent reviews will be prohibited where the future rent is not fixed or cannot be determined at the outset.

This has wide-reaching implications because most rent review mechanisms currently rely on:

• Open market rent assessments
• Index-linked increases (e.g. RPI or CPI)

As a result, the reform directly impacts standard market practice and could alter investment assumptions around rental growth.

Which Leases Are Affected by Section 36 of the English Devolution and Community Empowerment Act 2026?

The Act applies broadly to leases that could qualify as “business tenancies” under the Landlord and Tenant Act 1954.

Important Points:

• The tenancy does not need to meet all statutory criteria, but be capable of doing so.
• Subtenants may benefit from the protection.
• Clauses in headleases that force subleases to have upwards-only reviews in subleases will be void.

This wide scope means landlords, tenants, and investors must carefully review both existing structures and future transactions.

When Will the Ban Come into Force?

Although the Act received Royal Assent on 29 April 2026, the provisions are not yet in force.

Expected implementation:

• Likely no earlier than 2027
• Possibly delayed until 2028

Leases granted before the commencement date will generally not be affected, save for the renewal exception below.

A Critical Exception: Renewal Leases

The Act includes a retrospective provision for renewal agreements.

Any agreement for a renewal lease entered into on or after 17 March 2026 will fall within the scope of the ban.

Practical impact:

• Upwards-only rent review clauses in these renewal agreements may become unenforceable
• Ongoing renewal negotiations may require reassessment and amendment

This is a key risk area for landlords currently negotiating lease renewals.

Practical Implications for Landlords

Landlords and their advisers should act now to manage the transition.

1. Timing of New Leases

• Consider completing leases before the Act comes into force
• Ensure documentation is finalised without delay where upwards-only provisions are required

2. Review Ongoing Renewal Negotiations

• Revisit agreements entered into from 17 March 2026 onwards
• Assess whether rent review clauses will remain valid

3. Rethink Lease Structures

Traditional rent review models may no longer provide sufficient protection. Alternatives may include:

• Fixed or pre-determined rent increases
• Shorter lease terms (including contracted-out leases) to allow more frequent rent resets
• Higher initial rents
• More frequent re-gearing of leases

4. Monitor Further Reform

The government is consulting on “caps and collars”, which could:

• Limit maximum rent increases
• Prevent significant rent reductions
• Further changes may follow, so ongoing review is essential and our team are here to help with that.

Market Impact

The Act signals a clear change in direction for commercial property law in England. While its full impact will take time to emerge, the message is clear: reliance on traditional upwards-only rent reviews is no longer guaranteed.

For landlords, the focus now must be on forward planning, careful timing, proactive negotiation, and smarter lease structuring will be essential as the new regime takes shape.

This reform represents a fundamental shift in how risk is allocated in commercial leases.

Likely outcomes include:

• Increased focus on certainty of income
• Greater negotiation around rent mechanisms
• Pricing adjustments to reflect reduced landlord protection

Landlords will need to adopt more flexible and strategic approaches to maintaining asset value and income stability.

How We Can Help

Our commercial property team is advising landlords, investors and managing agents on how to navigate these changes, ensuring lease structures remain robust and commercially effective in a shifting legal landscape.

If you would like to discuss your commercial lease then please get in touch.