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.