There was big news from Parliament today, 29 April 2026.
The English Devolution and Community Empowerment Act received Royal Assent this afternoon.
Hidden within this seemingly dull act (largely based around the devolving of power from Whitehall down to local government) is one of the biggest changes to commercial leasing in a generation. One that we are likely to see having a big change in the landscape for both occupiers and landlords alike: a ban on upward-only rent reviews in all new commercial leases in England and Wales.
For years, the upwards-only rent review clause has been the most reliable part of a commercial lease of over 5 years. Typically, on office/industrial leases of 10, 15, or 20 years, when rents were reviewed, they either went up or stayed the same, but never went down, irrespective of whether market rents had gone down. That certainty shaped how investors lent money, how landlords set prices, and how the entire UK commercial property market worked.
That rule no longer applies to any new agreement, and occupiers and landlords will want to know how this will affect them going forward.
On the surface, it should ring in good news for occupiers, and in principle, it is. Before anyone celebrates too early, the small print needs to be looked at.
Shifting risk down the timeline
Upward-only reviews were there because investors and lenders needed steady income to support long-term financing. If you remove that certainty, the market doesn’t just become fairer; it reacts and changes to make up for the lost security.
What the Government intended with this legislation is for high street shops and small businesses to receive a boost, whereby in longer-term leases, if the market rents go down, tenants can benefit from an upward and downward review, thereby setting the rent lower to reflect market conditions.
What it may actually turn into though, could be higher headline rents, shorter lease terms, stepped or indexed review clauses, and more frequent reviews that benefit landlords. The risk doesn’t leave the deal; it just gets built in differently. If you go into your next negotiation without understanding this, the result may not be as positive as it first appears.
17th March 2026 – when things quietly shifted
There’s a retrospective element to this legislation that most businesses currently in negotiation aren’t aware of. Any “renewal option” contained in a lease entered into on or after 17th March 2026 is already caught by the ban – even though it only became law on 29th April.
If you’ve been negotiating a lease with a renewal option in the last six weeks, this affects you now.
Deal under offer?
The ban is already live and needs to be considered
This is the practical problem sitting inside every live transaction right now.
Your deal is under offer, lease commencement is before the ban formally comes into force but you haven’t exchanged yet. Do you renegotiate terms or just let the status quo remain?
The answer isn’t simple and depends entirely on where you are in the process, what your heads of terms say, what the deal structure looks like, and whether you can afford to have papers pulled by the landlord due to trying to change the structure of the deal. The occupiers who ask the question now are in a fundamentally better position than those who find out after exchange.
It is also not 100% clear when this will come into effect, with July 2026 stated as the likely time for new leases.
However, this is dependent on secondary regulations/commencement orders and might not be fully seen until next year. Another hurdle that landlords and tenants have to add to the list of confusing rhetoric coming out of the Government after the ‘all buildings must have an EPC Rating of C or above by 2027’ story.
Defining consultation
What does this actually mean?
Whilst the ban is now law, the details aren’t yet settled, and property professionals alike will be scrambling around discussing the pros and cons of each transaction. The likelihood will be that a consultation on caps and collars of the rent at review – the maximum and minimum a rent can move – is expected before the provisions formally come into force. That consultation will matter more to the day-to-day reality of commercial leasing than the Act itself.
A well-designed and negotiated cap-and-collar mechanism provides lenders with sufficient certainty to continue financing commercial development, but could mean tenants pay more than they would have done had an upward only rent review played out as normal…and if you’re foreseeing a downturn any time soon, that could spell disaster for already cash-strapped occupiers in the future with nowhere to go.
What do we think will happen?
It’s probably too early to tell how this will affect the market in England and Wales. We can look to Scotland in the first instance to see how their markets have been affected by legislation enacted in 2012. Scottish landlords have spent the last 15 years pricing these changes into their deals with a mixture of index-linked reviews for longer leases with caps and collars minimising up and downsides, new up & down review clauses but also many shorter lease terms.
The likelihood across England and Wales is that we will see over the next few years a shift in leasing structure similar to Scotland with more CPI linked leases, wider use of caps and collars, shorter more flexible leases and a greater focus on tenant quality (i.e. how good is a tenant’s trading history and profitability). Ultimately, both tenants and landlords will share the pain of a downturn in the market when it happens; it is even more essential than ever for occupiers to get advice on what is best for them.
What does this mean for commercial tenants?
This reform creates genuine leverage in new lease negotiations, but it also creates new complexity, and landlords are already working out how to protect their position within the new framework.
Prime leveraged commercial space will likely not be hugely affected and landlords will continue to get high headline rents to continue to satisfy their lenders’ requirements, but the real effects are likely to be seen in subprime areas around the country and with secondary space where the cost of improving their buildings gets squeezed through a combination of increased yields, lower headline rents and increased market incentives.
All of this leads to an increase in unlettable buildings, unviable development/refurbishment schemes and the gap between the prime and secondary market getting larger and larger.
Understanding exactly where the risk has migrated – and how to negotiate against it – requires current market intelligence and an adviser working solely in your interests.
We specialise in advising occupiers on all matters. The conversations we have, every negotiation we run, every data insight we surface is coming from decades representing tenants.
If you want to understand what today’s change means for your current lease position, your upcoming renewal, or any heads of terms currently in play, we’re already having those conversations.
Speak to someone on your side
We can help you make sense of what this means for your business. We can review your lease or the clauses in heads of terms to see what this might mean for your business.
