The English Devolution and Community Empowerment Act 2026 brings major changes to upwards-only rent reviews. Here is what it means for new and renewed commercial leases.
Commercial lease changes 2026 represent one of the most significant reforms to commercial rent reviews in England and Wales for many years. The English Devolution and Community Empowerment Act 2026 received Royal Assent on 29 April 2026, amending the Landlord and Tenant Act 1954 by introducing new Landlord and Tenant Act 1954 rules around upwards-only rent reviews.
The headline change is the restriction of upwards-only rent reviews in affected business tenancies. Traditionally, many commercial leases have allowed rent to increase following a review but prevented it from falling. The new legislation changes that position for leases and arrangements within its scope.
However, landlords and tenants need to understand an important point: Royal Assent does not mean the new rent-review regime immediately applies. The relevant provisions require commencement regulations. That makes careful legal advice particularly important for leases being negotiated during this transitional period. For support with your own lease, speak to our commercial lease solicitors.
The commercial lease changes 2026 introduce a statutory restriction on upwards-only variable rent reviews in affected business tenancies. When the provisions commence, a qualifying review mechanism cannot effectively require the reviewed rent to remain above the amount produced by the applicable rent-review calculation simply because the previous rent was higher.
The changes are introduced through:
An upwards-only rent review allows commercial rent to increase, or remain unchanged, at the review date but prevents it from decreasing. Traditionally, an open-market review might set the new rent at the higher of the existing passing rent or the property's current open-market rental value.
For example:
| Market Position | Traditional Upwards-Only Review |
|---|---|
| Current rent | £50,000 |
| Market rent rises to £60,000 | Rent becomes £60,000 |
| Market rent falls to £45,000 | Rent remains £50,000 |
This structure has historically provided landlords and investors with greater certainty over future rental income. Learn more about how commercial rent reviews work.
No. The 2026 Act does not freeze commercial rents or prevent landlords from increasing rent. Instead, the legislation targets certain variable rent-review mechanisms that prevent downward movement. Where the statutory rules apply, the contractual mechanism cannot simply impose an upwards-only outcome contrary to the new regime.
This distinction is important. Commercial rents can still potentially increase considerably where the relevant calculation justifies an increase. The legislation is better understood as restricting upwards-only rent review mechanisms, rather than banning rent increases altogether.
The new regime is capable of affecting several common variable commercial rent-review structures where the future rent is not fixed or ascertainable when the lease is granted. This can include open-market, index-linked and turnover-based mechanisms, depending on how the particular lease provisions operate.
Potentially affected mechanisms include:
Fixed or stepped rents require separate consideration because the future rent may already be ascertainable when the lease is granted. For detailed guidance, speak to our rent review solicitors.
The new upwards-only rent review restrictions are not yet in force. Although the English Devolution and Community Empowerment Act 2026 received Royal Assent on 29 April 2026, the relevant Part 5 provisions require commencement regulations before the new regime becomes operative.
This is particularly important for businesses reading about a 2026 ban. The law has been enacted, but landlords and tenants should not assume that every upwards-only rent review clause signed today is already prohibited. The commencement date should therefore be checked whenever a lease is being negotiated, varied or renewed.
Existing commercial leases are generally protected by transitional provisions, meaning the legislation is principally directed at relevant leases granted, or certain rent-review provisions introduced by variation, after commencement. However, the transitional rules are detailed, and renewal arrangements and later variations require particular care.
Landlords should avoid assuming that an existing lease can simply be varied after commencement without considering the new legislation. Likewise, tenants should not assume that an existing upwards-only clause automatically becomes an upwards-and-downwards review. The precise facts and documentation matter.
For support reviewing your position, contact our commercial lease review solicitors.
Once the new provisions commence, landlords and tenants entering affected new business tenancies will need rent-review clauses drafted to comply with the new statutory regime. A clause designed to prevent the reviewed rent falling below a contractual floor may be ineffective to the extent that it produces the prohibited result.
This could affect negotiations over:
Landlords may consequently reconsider how rental risk is priced into a lease. Tenants should equally avoid assuming that the reform necessarily makes every lease financially more favourable. Our solicitors for new commercial lease transactions can guide you through the drafting.
Renewed commercial leases require particular attention because Schedule 7B extends the new regime to certain arrangements under which a new tenancy can be required. The legislation is designed to prevent parties avoiding the rent-review restrictions simply by fixing prohibited rent terms through qualifying renewal arrangements.
Relevant arrangements may include certain:
Importantly, the transitional provisions contain special rules concerning certain tenancy renewal arrangements entered into on or after 17 March 2026. For tailored advice, speak to our commercial lease renewal solicitors.
The legislation is broader than simply protected tenancies enjoying security of tenure. Its definition of a business tenancy can include tenancies that would fall within Part II of the Landlord and Tenant Act 1954 but for particular circumstances, so contracting out should not automatically be treated as avoiding the new rent-review rules.
This is an important distinction between security of tenure, which concerns renewal rights, and rent-review regulation, which concerns how certain rent-review mechanisms operate.
Landlords negotiating new or renewed commercial leases should review proposed rent provisions now rather than waiting until commencement. Heads of Terms, agreements for lease, options and renewal arrangements may all need consideration because transitional protection can depend on when particular arrangements were entered into.
Landlord checklist
Our commercial lease solicitors for landlords can help you structure leases that remain robust and compliant.
Business tenants should understand both the current lease provisions and the forthcoming statutory regime before committing to new premises or renewal terms. Particular attention should be given to rent-review formulas, minimum rents, indexation, break rights and the date on which contractual arrangements are entered into.
Tenants should ask:
For advice on your position, contact our commercial lease solicitors for tenants.
| Issue | Traditional Position | New Regime When Commenced |
|---|---|---|
| Upwards-only variable review | Common | Restricted for affected tenancies |
| Open-market review | Often upwards-only | May need to operate downwards |
| Index-linked review | Often subject to floors | Certain upwards-only structures affected |
| Turnover review | Floors commonly possible | Certain structures affected |
| Existing leases | Existing terms continue | Generally transitional protection |
| New leases | Current law applies until commencement | New statutory restrictions apply when in scope |
| Renewal arrangements | Existing contractual framework | Schedule 7B may apply |
The commercial lease changes 2026 represent a significant shift in how commercial rent reviews will operate in England and Wales. The English Devolution and Community Empowerment Act 2026 introduces restrictions on upwards-only variable rent reviews through amendments to the Landlord and Tenant Act 1954.
However, timing matters. The relevant provisions have been enacted but are not yet in force, and detailed transitional rules determine how existing leases, new leases, variations and renewal arrangements are treated.
Landlords should review lease structures and Heads of Terms before agreeing future transactions. Business tenants should understand exactly how their rent can change and whether the new statutory regime will apply.
Our commercial lease solicitors can advise landlords, tenants, investors and businesses on new commercial leases, commercial lease renewals, rent review clauses, upwards-only rent reviews, Heads of Terms, lease variations, security of tenure, contracted-out leases and break clauses.
Contact Commercial Lease Specialists for advice on how the 2026 commercial lease reforms could affect your proposed new lease, renewal or rent-review provisions.
Legal note: This article is for general information only and does not constitute legal advice.
Last legally reviewed: 1 September 2026. This article will be reviewed again when the commencement regulations are made.