COMMERCIAL PROPERTY NEWS
Are you a Commercial Landlord or Tenant?
2026 is looking to promise significant changes to the commercial property sector. These could have serious impacts on negotiations of commercial property purchases, leases and developments.
One such key change is the potential end of upward-only rent reviews in commercial leases.
Legislation is currently making its way through Parliament which could see an end to upward only rent reviews in all new commercial leases, including renewals, whether or not they come under the protection of the Landlord and Tenant Act 1954.
The bill (English Devolution and Community Empowerment Bill) has already passed through the House of Commons and is currently at the report stage in the House of Lords. If the bill passes through the Lords with no significant amendments, then the legislation will receive Royal Assent in its current form and become law.
Currently, the vast majority of commercial leases are drafted so that the rent can never fall below the amount agreed at the commencement of the lease term. However, the proposed ban would allow for rent to be adjusted both upward and downward in line with market conditions and would prohibit certain clauses in the lease used to manage yield risk. Tenants may also be given the right to serve written notice to initial rent reviews.
How will this impact me?
If you are a landlord: the proposed legislation means that income predictability could be affected and potentially impact lending security. Commercial leases usually stipulate rent reviews are to occur every 3-5 years; landlords could therefore consider opting for a staged rent increase rather than a review provision (e.g. a starting rent is £10,000.00 which then increases to £12,500.00 after 3 years).
If you are a tenant: your negotiating position will be strengthened, however there is a possibility that landlords may seek to mitigate potential losses through higher initial rents or not granting a rent-free period up front.
Our Commercial Property Team based at our Telford Central office has the expertise and experience to guide both landlords and tenants through all upcoming changes in legislation and offer appropriate advice.