For many years, leases have commonly included an upwards-only rent review which means that when the rent is reviewed, typically every five years, the rent either stays the same or, if higher, it becomes the current market level or an amount linked to inflation. If the market level or inflation goes down the rent remains at the same level as before the review date. As a result, the rent can rise, but it cannot fall.
That is about to change.
Following hot on the heels of the seismic changes in the residential tenancy arena, the English Devolution and Community Empowerment Act 2026 contains provisions which, when brought into force, will shake up the understanding of rent review mechanisms in the non-residential lease sector in England and Wales. The Act has received Royal Assent, although the relevant provisions are not yet in force.
The practical point for anybody, whether school, charity, business or individual, entering into a business lease with a rent review clause, is that what the lease says may not be the legal position.
Once the law is brought into force, if a future lease says that the rent on review is the higher of the passing rent and the open market rent, that upwards only element may be disregarded. If the market has gone down, the rent may go down too. The same issue may arise with index-linked or turnover-based reviews where the drafting seeks to preserve the existing rent as a lower limit.
This matters now, even before commencement. Landlords, tenants and lenders are negotiating leases, agreements for lease and other agreements now which may have consequences after the new rules come into force. There is even some retrospective action, with some arrangements entered into on or after 17 March 2026 being affected.
Landlords who assume that traditional drafting will continue to deliver traditional protection are in for a surprise. It may not. Rent provisions need careful thought, and leases may not do what they say on the tin. You might say that freedom of contract should apply – if professionally advised organisations have freely decided to enter into a lease on particular terms, those terms should apply – surely what the lease says goes! The law disagrees.
This is not new territory for property law. Leases have long been an area where it is of utmost importance to know the risks, implications and implied terms, of the document, in addition to knowing what the document itself says. Rent review is just the latest to be added to the list.
Of course, this does not mean rent review clauses are redundant. Open market, index-linked and turnover reviews may still have a role. Fixed stepped rents may also be attractive in some cases because the future rent is known from the outset. The point is that the rules have changed, and landlords in particular need to play by the new rules. Working out not just what the lease says but, how does the law impact what the lease says, is crucial.
/Passle/MediaLibrary/Images/2025-11-10-14-49-39-973-6911fb83be557da3fa795f21.jpg)
/Passle/MediaLibrary/Images/2025-11-10-14-49-39-452-6911fb832100bb49e7964a69.jpg)
/Passle/MediaLibrary/Images/2025-11-10-14-55-00-944-6911fcc4a319d5ea6f5badeb.jpg)
