A Surprise Move in the English Devolution and Community Empowerment Bill
In July 2025, the Government introduced the English Devolution and Community Empowerment Bill. Unexpectedly, the Bill included provisions to prohibit upward-only rent review clauses in commercial leases in England and Wales. This legislative addition has significant implications for landlords, tenants, investors and legal practitioners across the commercial real estate sector.
Scope of the Proposed Ban
The proposed ban will apply to all new commercial leases and lease renewals (including statutory renewals under the Landlord and Tenant Act 1954) that are entered into after the legislation comes into force. Existing leases will not be affected, but any renewal occurring post-implementation would need to comply with the new rules. Clauses that permit only upward movement of rent such as traditional open market upward-only rent reviews, index-linked increases and upward only turnover based rents will be prohibited. However, fixed stepped increases or rent reviews allowing rent to go both up and down will remain lawful.
Legislative Intent and Policy Objectives
The policy underpinning the ban is rooted in tenant protection and market flexibility. The Government argues that upward-only clauses place an undue burden on tenants, especially small businesses, by forcing them to pay above-market rents during downturns. The change is also part of a broader effort to revitalise town centres and high streets by making commercial occupancy more affordable and adaptable.
Market and Legal Uncertainty
Many practical questions remain unanswered. There is currently no confirmed date for the legislation to come into force, though some market observers suggest it may take effect between 2027 and 2028. The Bill anticipates future regulations that may provide exemptions, transitional measures, or anti-avoidance provisions. It is also not yet clear how the law will apply to certain lease types, such as those contracted out of statutory renewal protections. Until those regulations are published, uncertainty remains for parties negotiating leases today.
Commercial Impact for Landlords and Tenants
The removal of upward-only rent review clauses introduces new financial and legal considerations. Landlords will be exposed to the possibility of rent reductions at review, which may affect portfolio valuations and lender assessments. Tenants may gain greater flexibility, but lease terms could become more complex as landlords seek alternative protections, such as shorter lease lengths or fixed uplifts. A dual market may develop, with older leases valued and traded differently from new leases governed by the ban.
The Role of CDS Mayfair
As a leading commercial law firm, CDS Mayfair is already advising clients on how to prepare for this shift. We are assisting both landlords and tenants with lease restructuring, compliant drafting of rent review clauses and risk assessment across their property portfolios. Our team is also monitoring the legislation’s progress and helping clients plan for transitional scenarios, including whether to bring forward or delay lease renewals based on the proposed timelines.
Preparing for What’s Next
Now is the time for landlords and tenants to assess their exposure to upward-only rent review clauses. Leases currently under negotiation should avoid mechanisms that may soon be outlawed. Upcoming renewals should be reviewed with an eye to timing and compliance. Legal advice at this stage is critical, both to avoid future disputes and to ensure that leases remain enforceable and commercially viable under the new regime.
Conclusion
The proposed ban on upward-only rent reviews marks a fundamental change in commercial leasing in England and Wales. Although the Bill is still making its way through Parliament, its impact is already being felt. Stakeholders should act now to future-proof their agreements. At CDS Mayfair, we are here to support our clients through this transition with clear, commercially focused legal advice.
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