Summary
The English Devolution and Community Empowerment Act 2026, which received Royal Assent on 29 April 2026, introduces one of the most significant reforms to commercial rent review provisions in recent decades. For many years, landlords have relied on upward only open market rent review clauses to preserve investment value by ensuring that rents either increased or remained unchanged at review, even where market rents had fallen.
While the Act has received Royal Assent, the ban will not come into force for some time and probably not until 2027.
Detail
Although the prohibition on upward only rent review clauses has not yet come into force, the legislation is already influencing commercial leasing negotiations. Once commenced, the ban will apply to new leases granted on or after the commencement date. It also contains transitional provisions that may apply to certain “tenancy renewal arrangements” entered into on or after 17 March 2026. Parties with options to renew or agreements for lease made after that date should therefore consider carefully whether the new restrictions will affect any replacement lease.
As the market adjusts, landlords are expected to place greater emphasis on alternative rent review mechanisms. Index linked reviews, typically tied to CPI or RPI, together with fixed increases, are likely to become more common because they provide greater certainty while complying with the new statutory framework.
For tenants, the reforms create an important opportunity to revisit rent review provisions during lease negotiations. Where a draft lease contains an upward only open market rent review clause, it is sensible to consider whether that approach remains appropriate in light of the forthcoming changes. Equally, landlords should review their precedent documents and standard lease templates now so that future transactions reflect the new regime and continue to provide a commercially effective method of reviewing rent.