The English Devolution and Community Empowerment Act 2026 (the Act) introduces a significant shift in commercial leasing by banning upwards-only rent reviews. While the Act received Royal Assent on 29 April, these provisions around Government’s ban have not yet come into effect – it is anticipated that this will happen during 2027.

For local authorities as landlords and tenants, the change will reshape long-established leasing practices. In this insight, we outline what the ban will do, who it affects and what steps organisations should be considering now to prepare for when the ban does eventually come into force.

What is changing?

Section 100 and Schedule 37 of the Act insert a new section 54A into the Landlord and Tenant Act 1954, together with new Schedules 7A and 7B, which will detail the updated requirements around rent reviews in commercial leases.

Effectively, the new legislation means that rent reviews which are upwards only will be unenforceable. This applies across a range of mechanisms commonly used in commercial leases, including open market reviews, index-linked reviews and turnover rents where these operate on an upwards-only basis.

What will be permitted?

Importantly, the legislation does not remove rent reviews altogether. Instead, it requires that rent review provisions allow for movement both upwards and downwards.

This will require landlords and tenants to adopt “two-way” rent review mechanisms in future drafting, which ensure movement in both directions. Further guidance and regulations are expected to clarify how commonly used tools such as caps and collars will operate in practice, and whether these remain viable within the new framework.

For local authorities, this could affect income certainty in commercial property portfolios and may require a reassessment of how risk is managed across estates.

Scope and timing

As stated, the provisions are not yet in force and will require secondary legislation before that stage. It is currently expected that they will take effect in 2027.

Once commenced, the ban will apply broadly to:

• new commercial leases;
• lease renewals; and
• reversionary leases.

However, leases entered into under agreements for the lease to be completed before the new provisions come into effect will not be caught by the changes.

The Act will also render ineffective any provisions in superior leases that require subleases or underleases to include upwards-only rent review clauses. This has implications for more complex ownership and occupational structures often seen in local authority arrangements.

Additional tenant rights

A notable feature of the reforms is the introduction of a new statutory right for tenants to trigger a rent review, even where the lease states that only the landlord may do so.

This represents a shift in the balance of control and may affect how often and how actively rent reviews are pursued. Local authorities will need to consider how this interacts with existing asset management strategies and internal processes.

Conclusion

The ban on upwards-only rent reviews marks a fundamental change to a long-standing feature of commercial leasing. Implementation is still some way off, but local authorities should begin to review their portfolios, standard lease terms and pipeline transactions to understand how these reforms may affect income projections and risk allocation.

Capsticks’ view

This reform is likely to have a wide-ranging impact across the public sector property landscape. For local authorities, the removal of upwards-only reviews introduces greater uncertainty around future rental income, particularly in long-term holdings where such provisions have traditionally underpinned financial planning.

At the same time, the changes may offer opportunities to adopt more flexible and market-responsive leasing models that better reflect economic conditions. The detail of the forthcoming regulations – particularly around caps, collars and valuation assumptions – will be key. We also expect further guidance to emerge as the implementation date approaches and will continue to monitor developments closely. Early engagement with these issues will help organisations avoid last-minute changes to documentation and strategy.

How Capsticks can help

To discuss anything relating to the contents of this insight or how the new Act and the ban on upwards-only rent reviews will impact your organisation, contact our Head of Local Government Tiffany Cloynes, Legal Director Rebecca Gilbert or Principal Associate Megan Tam to find out more about how Capsticks can help.