The English Devolution and Community Empowerment Act 2026 introduces a statutory ban on upward-only rent review provisions in commercial leases in England and Wales. Although the Act received Royal Assent on 29 April 2026, the relevant provisions are not yet in force and are expected to come into effect following secondary legislation, likely during 2027 (although it could be later). This reform represents one of the most significant changes to the law relating to commercial leases in recent decades.

What are upward-only rent reviews?

Upward-only rent reviews have historically been a central feature of commercial leases in England and Wales. Typically, rent is reviewed periodically and set at the higher of the passing rent or the market rent. This means that rent cannot decrease on review, even where market rents have fallen.

What is changing?

The Act renders unenforceable any rent review provision in which the revised rent is not fixed at the outset and the mechanism allows only for upward movement or guarantees a minimum increase. As a result, common structures such as open market, index-linked and turnover-based reviews will be permitted only on an upwards and downwards basis.

What is permitted?

The legislation does not prohibit rent review mechanisms entirely. Fixed or stepped rents, where future rents are ascertainable at the date of the lease, remain permissible, as do genuine upwards and downwards review mechanisms. Further detail on permitted alternatives may be clarified through secondary legislation, including whether “caps and collars” (maximum/minimum increases) may be permitted (in some form).

Scope

The ban applies broadly to business tenancies in England and Wales, including new leases and renewal leases, whether or not they are contracted out of the Landlord and Tenant Act 1954. It is not limited to retail leases and will apply across all sectors of the commercial property market.

Existing leases and transitional position

The Act is not generally retrospective. Existing leases will not be affected, and leases granted pursuant to pre-commencement agreements will typically fall outside the scope of the ban. However, there is a limited retrospective element affecting certain renewal arrangements entered into on or after 17 March 2026.

Commercial implications

For landlords and investors, the removal of upward-only rent reviews introduces greater income uncertainty, which may affect asset valuations, lending structures and investment appetite. For tenants, the reform provides greater flexibility and protection against being locked into above-market rents during downturns. The market is likely to respond through revised lease structures, including shorter terms, pricing adjustments (such as higher initial rents) or alternative rent mechanisms.

Practical considerations

Pending implementation, both landlords and tenants should consider the impact of the ban when negotiating new leases, even though it is not yet in force. In particular, careful thought should be given to rent review drafting, renewal rights and overall deal structure, taking into account the likely future prohibition on upward-only rent reviews.

If you need advice on how this may affect your business going forward, and steps that you can and should consider taking now, please Contact us.

Stamp Duty Land Tax (SDLT) is a key consideration in any property transaction, including lease arrangements. While the rules around SDLT are generally well-understood for the grant of a new lease, there’s often confusion about whether SDLT applies when a lease is renewed. This article explains when SDLT is payable on lease renewals, how it is calculated, and what tenants and landlords need to be aware of.

What Is a Lease Renewal?

A lease renewal typically refers to the grant of a new lease to replace an expiring one, often with similar terms and involving the same parties. Renewals can be:

• Statutory renewals, under the Landlord and Tenant Act 1954 (for business leases),
• Contractual renewals, agreed between the parties outside of statutory procedures.

Regardless of how the renewal occurs, the new lease is treated as a new grant for SDLT purposes, which can trigger tax liability.

How Is SDLT Calculated?

There are two components of SDLT for leases:

1. Lease premium (if any): Nothing is payable on premiums of up to £150,000.  For anything over that, the next £100,000 (the portion from £150,001 to £250,000) is charged at 1% and the remaining amount (the portion above £250,000) is charged at 2%.
2. Rent (NPV): SDLT is charged on the net present value (NPV) of rent over the life of the lease, using a specific formula.

Again, the current nil-rate threshold for non-residential or mixed leases is £150,000.  If the NPV exceeds this, SDLT is chargeable on the excess of up to £5 million at 1% and any NPV exceeding £2 million at 2%.

If the chargeable consideration includes both rent and non-rent consideration, he SDLT on each element is calculated separately and aggregated. 

Linked Transactions

If the lease renewal is linked to the original lease — for example, granted to the same tenant and for the same premises — HMRC may treat the leases as connected, affecting the NPV calculation. This could increase the SDLT liability, especially if the earlier lease had low or no SDLT due to shorter term or lower rent.

Key Compliance Obligations

Even if no SDLT is payable, an SDLT Return still needs to be filed in certain cases, particularly where:

• The lease term is over 7 years,
• There’s a premium involved.

Returns must be filed (and any SDLT that is payable paid) within 14 days of the effective date of the transaction (usually the date of completion).

Reversionary Lease Renewals

Timing is important to bear in mind in the case of “reversionary” lease renewals.  A ‘reversionary’ lease is one where the term commences after the date of grant.  The effective date of a reversionary lease for SDLT purposes is the date of grant, not the date the term commences.  So if a lease extension/renewal is agreed during the term of the original lease (with the term of the new lease to commence immediately following expiry of the original lease), the effective date for calculating the deadline for filing the return (and paying the tax) would be the date the renewal lease is granted (completed), not the date on which the term of the new lease starts.  So, the return would need to be filed (and tax paid) within 14 days of completion of the renewal lease, even though the term might not start for several months.

Holding Over

One other point to be aware of is potential liability for SDLT during any periods of “holding over” (where there is a gap between the expiry of the original lease and the grant of a renewal lease, with the tenant remaining in occupation during that period).  In certain cases, where certain conditions or circumstances apply, SDLT returns may be required, and SDLT may be payable, during the holding over period, as well as when the new lease is granted.

Common Pitfalls

• Assuming no SDLT is due: Many assume renewals are exempt, but, as they are treated as the grant of a new lease, SDLT may be due.
• Incorrectly calculating NPV: Errors here can lead to underpayment or HMRC penalties.
• Missing return deadlines: Even if no tax is due, failure to submit a return on time can result in fines.

Conclusion

Lease renewals can trigger SDLT liability, particularly for longer leases or those with significant rent. It’s important for both landlords and tenants to assess the potential tax implications and meet filing obligations promptly.