Rent reviews have just changed | Advice for landlords

The end of upward-only rent reviews

What commercial landlords should know now

Something significant happened in Parliament on 29 April 2026. The English Devolution and Community Empowerment Act received Royal Assent, and tucked inside largely administrative legislation about local government powers is one of the most consequential changes to commercial leasing in a generation: a ban on upward-only rent reviews in all new commercial leases in England and Wales.

For landlords, the implications are immediate, and the adjustment period will require careful thinking.

What has actually changed

The upward-only rent review clause has been a structural cornerstone of the UK commercial property market for decades. On leases of 10, 15, or 20 years, rents at review could only hold steady or increase, regardless of what the market was doing. That predictability underpinned lender confidence, informed investment decisions, and gave landlords a reliable income floor.

That certainty no longer applies to new agreements. Going forward, new commercial leases must accommodate the possibility of rents moving in either direction at review, in line with market conditions at the time.

The market will adapt, not simply concede

It would be a mistake to read this as a straightforward win for occupiers at landlords’ expense. The risk that upward-only reviews previously absorbed does not disappear from a deal; it redistributes. Landlords are already working through how to protect income security within the new framework.

What is likely to follow, as observed in Scotland following similar legislation enacted in 2012, is a structural shift in how leases are constructed. More transactions will carry index-linked reviews with caps and collars limiting upside and downside exposure. Headline rents may increase to compensate for uncertainty at review. Lease terms are likely to shorten. Tenant covenant quality and trading history will become a more prominent factor in letting decisions. The gap between prime and secondary space is likely to widen, with landlords of secondary stock facing a more difficult environment on refurbishment viability and yield expectations.

17 March 2026: the date many will have overlooked

There is a retrospective element to this legislation that has not received the attention it deserves. Any renewal option contained within a lease entered into on or after 17 March 2026 is already subject to the ban, even though Royal Assent only came on 29 April. If you have had transactions exchanging or completing since mid-March that include renewal options, those clauses now fall within the new framework.

Live transactions need to be reviewed now

The practical question for landlords with deals currently under offer or in negotiation is straightforward: does the structure of your current heads of terms reflect the world you are now operating in? Deals that were structured with upward-only assumptions baked in may need to be revisited before exchange.

It is also worth noting that full commencement of the legislation remains subject to secondary regulations, with July 2026 cited as the likely date for new leases, though this timeline is not yet confirmed. A further consultation on how cap-and-collar mechanisms will be defined is anticipated before the provisions take full effect, and the detail of that consultation will carry significant practical weight.

What this means for your portfolio

At Papilio, we work alongside the wider real estate ecosystem to give landlords the insight and the advisory depth to navigate exactly these kinds of shifts. Our lease advisory capability through SHB Real Estate, combined with our proactive management approach, means we are already reviewing how this affects our clients’ portfolios, their upcoming lease events, and any live transactions currently in play.

Understanding how rent review structures need to evolve, how to negotiate effectively within the new framework, and how to future-proof asset income is where we can add direct, measurable value. The landlords who engage with this now are in a materially stronger position than those who wait for their next review event to find out.

If you have leases approaching review, active negotiations underway, or simply want to understand what this means for your portfolio, we would welcome the conversation.