The English Devolution and Community Empowerment Act received Royal Assent on 29 April 2026 and introduces significant changes to commercial leases in England and Wales. One of the biggest changes is the ban on upwards-only rent review clauses in new and renewed commercial leases.
While the rules are technical, the overall aim is simple: to give commercial tenants greater protection from rents that can only ever increase, regardless of market conditions.
What Is an Upwards-Only Rent Review?
An upwards-only rent review is a clause commonly found in commercial leases which means that, when the rent is reviewed during the lease term, it can either stay the same or increase — but it can never go down.
For example, even if market rents in the area have fallen, a tenant could still be required to continue paying the same rent or a higher amount.
These clauses have long been standard practice in commercial property leases, particularly in retail and office premises.
What Is Changing?
Under the new legislation, upwards-only rent review clauses will no longer be enforceable in:
- New commercial leases entered into after 17 March 2026; and
- Existing leases that are renewed after that date.
The changes apply across the commercial property sector and are not limited to retail premises or high street units.
Importantly, the ban does not prevent rents from increasing altogether. Instead, it means rent review clauses must allow rents to move both upwards and downwards in line with the market or agreed review mechanism.
This means landlords and tenants can still agree rent reviews linked to:
- Market rent
- Inflation or index-linked increases
- Turnover-based rents
However, any clause preventing the rent from falling below the current rent level will no longer be valid.
Why Has the Ban Been Introduced?
One of the main aims of the reform is to support businesses, particularly retailers and smaller commercial tenants, during periods of economic uncertainty.
The Government hopes the changes will help prevent businesses from becoming tied into rents that no longer reflect market conditions, making commercial premises more affordable and sustainable in the long term.
What Does This Mean for Landlords?
The removal of upwards-only rent reviews creates greater uncertainty for landlords, particularly when forecasting rental income across property portfolios.
Potential concerns for landlords include:
- Reduced certainty over future rental income
- Greater exposure to changes in the property market
- Possible effects on property valuations
- Concerns from lenders and investors about unpredictable returns
As a result, landlords may begin restructuring lease terms to offset some of this uncertainty.
Possible changes could include:
- Offering shorter lease terms
- Introducing stepped or fixed rent increases
- Reducing rent-free periods for tenants fitting out premises
- Limiting tenant break rights
- Passing more costs and repair obligations onto tenants
Landlords should also review their existing property portfolios carefully to identify which leases are affected by the new legislation and which existing agreements fall outside the scope of the changes.
What Does This Mean for Tenants?
For tenants, the reforms are likely to provide greater flexibility and protection, particularly during economic downturns or periods where commercial rental values decline.
Key benefits include:
- The possibility of rents reducing where market rents fall
- Greater ability to negotiate fairer lease terms
- Improved flexibility during difficult trading conditions
The legislation also gives tenants the ability to trigger a rent review where market rents have fallen, even if the lease previously allowed only the landlord to initiate the review process.
However, tenants should still approach lease negotiations carefully. Landlords may seek to balance the additional risk by changing other parts of the lease agreement, including incentives, repair obligations, or lease length.
Taking legal advice at an early stage — particularly during heads of terms negotiations — will therefore remain extremely important.
How Can Oliver & Co Help?
The ban on upwards-only rent reviews represents a major shift in commercial leasing and is likely to change how leases are negotiated and structured going forward.
Whether you are a landlord reviewing your portfolio or a tenant negotiating a new lease, obtaining clear legal advice is essential to ensure your interests are protected and your lease terms remain commercially viable.
Our Commercial Property team at Oliver & Co Solicitors has extensive experience advising both landlords and tenants on commercial lease negotiations, renewals, and property portfolio management.
Contact our team today on 01244 312306 to discuss how these changes may affect you and how we can help support your business moving forward. You can also email us at law@oliverandco.co.uk or complete our Contact Form and we’ll be in touch as soon as possible.
