Find out the changes to the Bill.
On 10 July 2025 the Ministry of Housing Communities and Local Government (MHCLG) introduced the English Devolution and Community Empowerment Bill (Bill) into Parliament.
The Bill will amend the Landlord and Tenant Act 1954 (1954 Act) – a piece of legislation associated with lease renewals - to outlaw upward-only rent review clauses in almost all new business leases, so that rent can fall as well as rise on a review. Despite being included in the 1954 Act, it does not only apply to rent reviews falling at or just before lease expiry but all rent reviews during the lease term.
The prohibition against upward-only rent reviews will apply if (a) Part II of the 1954 Act applies to the lease; (b) the lease is granted after the Bill comes into force and was not granted pursuant to a contract entered into before that date; (c) the lease contains rent review provisions which operate by reference to inflation or a multiplier, to open market rent, or by reference to the tenant’s turnover; and (d) the lease provides for rent reviews take place on an upward-only basis. The Secretary of State may grant further exceptions to the prohibition by regulations.
The Bill also introduces several anti-avoidance provisions to ensure that the tenant will always have the power to trigger a rent review and to take action to enable the rent review mechanism to operate effectively.
The prohibition will apply to all business leases, including those which are contracted out of the security of tenure provisions of the 1954 Act, because those are still leases to which Part II of the 1954 Act applies.
The prohibition does not apply to stepped rents, i.e., where the rent increases upon a set date to a set level specified in the lease when it was granted.
When negotiating new business leases, landlords and tenants will need to be aware of the possibility that the Bill may be enacted after Heads of Terms have been drawn up but before their lease or any agreement for lease has legally completed, in which case any agreement for rent reviews to take place on an upward-only basis will be legally ineffective.
Before the Bill comes into law, we may see a push by landlords for tenants to take longer leases with upward-only rent review provisions. Conversely, we may see tenants seeking to delay lease renewals, in the hope that they may be able to take advantage of the new legislation. Once the Bill comes into force, we may see landlords move towards stepped rents or alternatively towards inflation-linked indexed rents. We may also see more shorter leases, as landlords may prefer to negotiate new leases than be stuck with a reduced rent on review.
