By Jason Southcott
Upwards-only rent review provisions have long been an industry-standard feature of commercial leases. In essence, they provide that, on an agreed rent review date, the rent will either increase or remain the same, but cannot decrease. The English Devolution and Community Empowerment Act 2026, which received Royal Assent on 29 April 2026, will bring an end to that principle for many new and renewal commercial leases once the relevant provisions come into effect.
The Act is not yet in force, and a commencement date has not yet been confirmed, although implementation is not expected before 2027. Once in force, the Act will prohibit upwards-only elements in variable rent review mechanisms where the reviewed rent is not fixed or ascertainable when the lease is granted. In practical terms, rent on review will be capable of increasing, decreasing or remaining the same in line with the agreed review mechanism and market conditions. This is expected to catch open market rent reviews, index-linked reviews such as CPI or RPI, and any other variable review mechanisms where the reviewed rent is unknown at the outset. The restriction will not apply to fixed rent increases agreed at the start of the lease, such as £X per annum in year one increasing to £Y per annum in year two, and so on.
The Act also contains anti-avoidance and transitional provisions. In particular, upwards-only provisions in certain renewal arrangements entered into on or after 17 March 2026 may be ineffective once the ban comes into force. This means that options or arrangements for future renewal leases, particularly those that commence once the provisions of the Act are in force, should be considered carefully, as a renewal lease granted after commencement may have a void upwards-only rent review mechanism.
Although upwards-only rent review provisions may remain valid for the time being, landlords and tenants should be mindful of the upcoming provisions of the Act when negotiating leases or renewal arrangements now.
For bespoke advice on the impact of these changes on your commercial lease, please contact a member of our Commercial Property Team.
