Landlords with commercial lettings on their farms and estates need to be aware of a forthcoming change in the law. The English Devolution and Community Empowerment Act 2026 became law in April and enables the introduction of a ban on upwards-only rent reviews in new commercial leases in England and Wales.
The ban is not yet in force, and current indications are that it won’t come into effect until 2027 at the earliest. Landlords should, however, be preparing now.
What are upwards-only rent reviews?
An upwards-only rent review clause guarantees that the rent payable under a commercial lease will stay the same or increase at review but will never fall, even if market conditions have deteriorated.
For landlords, these clauses have traditionally provided income security and investment certainty.
What is changing?
Once the ban takes effect, any variable rent review mechanism — whether open market, index-linked or turnover-based — will be interpreted by disregarding any upwards-only requirement, so that the review can result in a downward as well as an upward adjustment.
Tenants will also gain a statutory right to trigger a rent review, even where the lease currently reserves that right to the landlord alone. This will effectively prevent landlords from delaying or avoiding reviews in a falling market.
The ban will apply to all new business tenancies once it’s brought into force and will therefore affect lettings such as retail premises in rural courtyards, workshops, storage units, offices or other business premises. It also appears that the ban will apply to leases of renewable energy installations such as solar parks, which are typically let to developers under business tenancies.
What does this mean for rural landlords?
For landowners with diversified commercial portfolios, the removal of upwards-only protection introduces a new income risk. Rental income streams will become less predictable, which could affect property valuations and lending decisions. Landlords will no longer be able to rely on a guaranteed minimum income floor from their commercial lets.
Key considerations
- Existing leases already in place are unaffected. This includes any new leases granted before the ban is brought into force, subject to the point below
- Any lease containing an option to renew entered into on or after 17 March 2026 will be subject to the ban when that option is exercised. This provision is intended to prevent landlords from being able to ‘lock in’ upwards-only rent reviews now by agreeing options to renew with tenants before the ban comes into force.
Practical steps to take now
- Review your portfolio: check expiry and renewal dates across all commercial lets so you can plan ahead. For example, is it possible to exercise a break clause now with a view to agreeing new terms with the tenant? Where tenants are amenable, renegotiating lease terms now, before the ban comes into force, may enable the current upwards-only structure to be preserved for longer
- Consider alternative lease structures: fixed or stepped rent increases will not be covered by the ban and may offer greater certainty to both landlords and tenants. Shorter lease terms may also be attractive to both parties, as they allow the rent to be renegotiated on each renewal.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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