Overriding Interest Summer 2026

ARTICLES OF INTEREST

UPWARDS-ONLY RENT REVIEW BAN: ACT RECEIVES ROYAL ASSENT, BUT COMMENCEMENT DATE STILL AWAITED

SUMMARY

The bill containing a ban on upwards-only rent reviews in commercial leases received Royal Assent on 29 April 2026 and is now the English Devolution and Community Empowerment Act 2026 (the Act).

The ban will not take effect immediately, and a commencement date will be set by future regulations. Market expectation is that this will not be before 2027 or possibly 2028.

The Act includes a ban on upwards-only rent review clauses in new and renewal commercial leases in England and Wales, which are occupied by the tenant for business purposes or which could be occupied for business purposes. These include high street, office, and manufacturing leases, with limited exemptions, such as certain agricultural or mining leases. Please see our previous alert here.

ARE EXISTING LEASES AFFECTED?

Existing leases containing upwards-only rent review provisions should generally remain unaffected. Similarly, leases granted pursuant to “an arrangement” in place before the ban comes into force will not be affected. “An arrangement” is not a defined term, so it will likely be interpreted as being wider than a contract and will include options as well as agreements for lease.

However, following a late amendment, certain renewal arrangements entered into on or after 17 March 2026 could be affected. The ban on upwards-only rent reviews would apply not only to rent reviews within a lease, but also to the rent payable at the start of a new lease granted pursuant to what are described as “tenancy renewal arrangements”—essentially put or call renewal options contained in an existing lease. This late amendment means that the ban would apply to the rent payable at the start of a new lease (and rent reviews contained in that new lease) if the relevant renewal option was contained in a lease granted on or after 17 March 2026.

RENT REVIEWS WHICH WOULD BE SUBJECT TO THE BAN

The ban would apply to traditional open-market rent reviews, rent reviews linked to inflation or other index or multiplier, and rents linked to turnover, if the rent payable after the review date is unknown and cannot be ascertained when the lease is entered into. A stepped rent and a rent subject to a fixed increase will be unaffected, as both are ascertainable when the lease is granted.

As inflation rarely falls, commentary suggests that landlords may switch to index-linked reviews, so rent will be linked to the increase in the value of money rather than the value of property, which would not be what the Act envisaged. There is currently no guidance on the Consumer Price Index (CPI) as an alternative to the Retail Price Index and whether, for example, an increase based on CPI with a cap and collar would be compliant. The UK government has promised to consult on cap-and-collar rent reviews, so we will need to wait for the outcome of this consultation. While in principle there should be no objection to caps, it is difficult to see how any form of collar would be consistent with the aims of the Act.

PRACTICAL IMPLICATIONS FOR LANDLORDS AND TENANTS

Revisit Current Deals and Template Drafting

Landlords and tenants should review any live transaction or standard form lease that includes a contractual renewal right. Where that right is granted on or after 17 March 2026, the renewed lease may be caught by the new regime. The parties should therefore address at the outset how rent is to be set on renewal, rather than assuming that an upwards-only market review will remain available.

Think Carefully About Term Length and Rental Structure

The ban may influence how parties approach lease length. Some landlords may prefer shorter terms, giving them a further opportunity to reset the rent on re-letting, rather than relying on an upwards-only review during the term. For longer leases, alternatives such as fixed stepped increases or genuinely upwards and downwards index-linked reviews may become more common, although these may not suit every asset or financing structure.

Reassess Valuation, Funding and Investment Assumptions

Where valuations, lending assumptions or investment appraisals rely on a rent floor at review, those assumptions should be revisited. This will be particularly important for assets where renewal options form part of the expected income profile. Investors, valuers and lenders will also need to consider the emerging distinction between leases protected by existing arrangements and newer leases subject to the ban.

If you would like advice on how to adapt your leasing strategy or a review of your current documentation, please contact our Real Estate practice team.

ENERGY PERFORMANCE CERTIFICATES ENERGY PERFORMANCE CERTIFICATES –– UPDATE

INTRODUCTION

On 21 January 2026, the UK government published a partial response to its consultation on the Energy Performance of Buildings regime. The consultation was concerned with proposals on what reformed Energy Performance Certificates (EPCs) will measure and when EPCs will be required. These proposals form part of the key policy decisions about how minimum energy efficiency standards in the private rented sector will be increased. By setting a target of EPC C for all tenancies by 2030, using new EPCs, the government aims to bring more households out of fuel poverty in line with the fuel poverty target. A maximum investment of £10,000 per property is to drive the delivery of fabric measures, smart measures and low carbon heating.

SUMMARY OF PROPOSALS

• For domestic EPCs, the government intends:
  1. To replace the existing single-cost metric with four new headline metrics: energy cost, fabric performance, heating system and smart readiness. The government hopes that the separate metrics will provide more useful information to consumers.
  2. To add a secondary energy demand metric, based on modelled energy use, and to retain a carbon-based metric to provide a snapshot of the modelled emissions produced by the building.
• For nondomestic buildings, the government intends to keep the single carbon-based environmental impact rating.
• The current 10-year validity period will be kept (a reduction to two years had been floated).
• An EPC will be required at the point of marketing rather than, as currently, sale or rent.

Responses to outstanding consultation questions will be published. No date for this has been set. However, the government “is working hard” to deliver new EPCs from October 2026 and while they acknowledge that the timeline is ambitious, we can expect changes to the regulations in the near future.

COMMENT

The focus on domestic properties is understandable. The multiple metrics should allow owners a wider range of retrofit options to improve energy efficiency. There is also a consultation on the Home Energy Model which aims to collect data on the in-use performance of homes. However, there remains a lack of certainty over what changes will be brought in for commercial properties.

NEW TRANSPARENCY REQUIREMENTS FOR CONTRACTUAL CONTROL ARRANGEMENTS OVER LAND

The government has recently published regulations and guidance for a new transparency regime requiring details of certain contractual control arrangements affecting registered land in England and Wales to be disclosed to HM Land Registry. The Provision of Information (Contractual Control) (Registered Land) Regulations 2026 were laid before Parliament on 9 March 2026 and on 8 June 2026, the Government made the Provision of Information (Contractual Control) (Registered Land) Regulations 2026 which form the statutory framework for the new Contractual Controls Register. Contractual controls are rights that give a party the ability to control how and when land is transferred without conferring legal ownership, and they will come into force on 6 April 2027. The changes will be of particular interest to developers, promoters, strategic land investors and landowners who routinely use options, promotion agreements and conditional contracts.

BACKGROUND

For many years, contractual arrangements giving a party future rights over land have largely remained outside the public domain. Whilst notices or restrictions may appear on the register, the nature and extent of the underlying arrangements have often been difficult to ascertain.

The government considers that this lack of transparency can make it more difficult for local authorities, communities and market participants to understand who controls land that may be available for future development. The new regime seeks to address this by requiring prescribed information relating to certain contractual control arrangements to be supplied to HM Land Registry.

WHAT IS A CONTRACTUAL CONTROL ARRANGEMENT?

The regulations apply to a broad range of arrangements that confer rights over future dealings with land, including the following:

• Option agreements.
• Pre-emption rights and rights of first refusal.
• Conditional contracts.
• Promotion agreements.
• Contracts contingent on planning or other future events.
• Other arrangements that give a party a significant degree of control over the future disposal or development of land.

The scope is intentionally broad, and parties should review arrangements carefully rather than assuming that only traditional options are affected. The regime generally applies where the owner holds a qualifying estate, namely the following:

• A registered freehold title.
• A leasehold title with at least 15 years remaining.

WHAT INFORMATION MUST BE PROVIDED?

Although the exact requirements depend on the nature of the arrangement, parties will be required to provide information, including the following:

• Details of the affected land.
• The identity of the beneficiary of the arrangement.
• The nature of the rights granted.
• Relevant dates and duration.
• Prescribed information relating to the contractual control itself.

Some of this information will become publicly available through HM Land Registry records and will be protected on the register by the entry of a notice or a restriction. The information does not include financial or price information, and information is not required for overage or restrictive covenants. Also, if a contractual control right is varied in writing after information has been provided, the grantee must provide information about the variation to HM Land Registry within 60 days of the variation being made. This also includes any assignments of control, which any new grantee must update within 60 days of the assignment period.

WHEN DO THE CHANGES TAKE EFFECT?

The regulations will come into force on 6 April 2027. A transitional period applies to existing arrangements entered into after the regulations are made but before 6 April 2027, when the regime becomes fully operational.

Parties should be aware that notification obligations can arise before that date and may be triggered by specified events during the transitional period. Current guidance indicates that transitional information must be submitted by 6 October 2027.

PRACTICAL IMPLICATIONS FOR THE MARKET

The regulations are likely to have several practical consequences.

Increased Visibility of Strategic Land Positions

Developers, promoters and investors may find that competitors, local authorities and other stakeholders have greater visibility of their land interests and strategic positions.

Due Diligence Considerations

Buyers, funders and joint venture partners will have access to additional information regarding land control arrangements, which may assist with transaction due diligence and risk assessment.

Confidentiality Concerns

Many option and promotion agreements contain commercially sensitive provisions. Whilst the regulations do not require full disclosure of every contractual term, parties should review existing confidentiality provisions and consider whether amendments are appropriate.

Portfolio Reviews

Businesses with significant strategic land holdings may decide to undertake an audit of existing arrangements to identify the following:

• Agreements that fall within the regime.
• Upcoming trigger events.
• Reporting responsibilities.
• Internal compliance processes.

WHAT SHOULD LANDOWNERS AND DEVELOPERS DO NOW?

Parties involved in strategic land transactions should do the following:

1. Review existing option, promotion and conditional agreements.
2. Identify arrangements likely to fall within the new regime.
3. Consider responsibility for compliance and reporting.
4. Review confidentiality provisions and data-sharing implications.
5. Ensure future transaction documents address the new requirements appropriately.

COMMENTARY

The new regime represents one of the most significant changes to the transparency of strategic land arrangements in recent years. While the stated objective is to improve understanding of land availability and support housing delivery, the practical effect will be to bring a level of public visibility to arrangements that have traditionally remained largely private. The obligation to register falls on the grantee or beneficiary of the contractual right, and whilst certain agreements are excluded (such as restrictive covenants, security arrangements for loans or overage security, certain section 106 rights, and matters related to national security and defence), a failure to register can have both criminal and practical consequences.

For landowners, developers and promoters, early preparation will be important. Although the full implementation date is some way off, businesses should use the transitional period to understand the impact on existing portfolios and establish procedures for future compliance.

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.