Upwards-Only Rent Review Reform Will Not, by Itself, Revive England’s High Streets

A consequential lease reform, not a vacancy strategy

England’s high streets need a more precise policy debate than the usual promise that lower property risk will automatically fill empty units. The restriction of specified upwards-only rent-review provisions is a material intervention in commercial leasing. Where the statutory regime applies, a term that prevents rent falling to the amount produced by the relevant review mechanism is disregarded. That changes the allocation of downside risk between landlord and occupier when market conditions weaken (UK Parliament, 2026) ↗.

That matters to smaller occupiers. A new retailer, café, maker or service business often commits to premises before it has demonstrated repeat demand or established a reliable cash buffer. Removing one mechanism through which rent can remain detached from a falling market may make some lease commitments less hazardous. It may also alter negotiation expectations, particularly where tenants previously saw rent-review terms as an irreducible long-term liability.

It does not follow that the Act is a high-street vacancy policy in its own right. Schedule 7A governs triggering, commencement and transitional operation. Its effects depend on the agreement, the timing of a review and the statutory conditions; it is not a blanket reset of rents throughout the existing town-centre lease stock (UK Parliament, 2026) ↗. Parties will need advice on their individual leases.

The distinction is more than legal technicality. Rent review governs one part of a contractual relationship after a review point. Vacancy is a broader market-matching problem: whether an operator can attract enough customers, finance the fit-out, meet recurrent costs and survive the period before revenues stabilise. Reform may improve the proposition at the margin, but it cannot create local spending power, make a poorly configured unit suitable, repair weak access or substitute for management capability.

The appropriate test, then, is not the number of clauses affected or the first count of newly let units. It is whether viable businesses can remain open, whether uses complement the wider centre, and whether occupation produces local economic value over time. The Act can help create better conditions for that outcome. It cannot deliver it automatically.

Demand and place performance remain the binding constraints

Lease flexibility matters most where there is a viable business to support. High-street pressure is geographically uneven because local demand is uneven. The Local Government Association reports a West Yorkshire case study in which vacancy rose as average local income fell: from around 5% in areas with average incomes of about £19,000, to 10% at about £17,000 and 20% at about £15,000. It also cites market data placing high-street vacancy at roughly 14%, against around 8% for retail parks (Local Government Association, 2026) ↗.

These figures should not be treated as a national causal estimate. The income relationship is a case study, while vacancy also reflects building condition, ownership patterns, transport, competing destinations and planning choices. Yet they illustrate the central limitation of a lease-only response: a more favourable contractual mechanism cannot indefinitely compensate for an insufficient customer base.

The retail environment compounds that challenge. Online sales accounted for 28.3% of total retail sales in Great Britain in July 2026; online sales values increased by 3.0% over the three months to July and by 11.0% year on year (ONS, 2026) ↗. Those national measures do not predict footfall or sales in a particular town, and they do not imply that physical retail is obsolete. They do indicate that premises-based businesses must offer a reason to visit, or operate successfully alongside digital channels, rather than assume that historic patterns of local shopping will return.

This makes use mix and local positioning more important than a generic ambition to fill every shopfront. Research on UK high-street repositioning identifies footfall, use diversity, accessibility, retailer demand, rents, resident population, safety and sense of place among the measures relevant to high-street performance (Ntounis and Parker, 2018) ↗. A viable use may be convenience retail, specialist advice, personal services, hospitality, cultural activity, local production or a blended physical-digital offer. The answer will differ by place and by daypart.

Vacancy should therefore remain on the dashboard, but not become the destination. Fast occupation on unsustainable terms can produce repeat vacancy and wasted fit-out expenditure. Equally, a period of vacancy may allow a more suitable conversion or a better-matched operator to enter. For local economic development, durable trading, complementary activity and customer value are more meaningful outcomes than the first letting.

The mechanism is total occupancy risk, not headline rent

Entrepreneurs do not experience a lease as a single rent figure. They experience a package of fixed commitments, contingent liabilities and up-front costs accepted before their business model is proven. The 2026 reform changes one component of that package. Whether it affects openings, investment or survival will depend on what happens to the rest of the bargain.

A credible premises decision needs to include base rent, review provisions and term length; business rates; service charges, insurance and utilities; repair, reinstatement and dilapidations exposure; deposits, guarantees and professional fees; fit-out, licensing and planning costs; and working capital before trading becomes stable. A tenant may face less prospective downside at a rent review yet still be unable to open because the initial cash requirement is too high.

Business rates illustrate why affordability cannot be assessed from headline rent alone. For 2026–27, qualifying occupied retail, hospitality and leisure properties below £500,000 rateable value can benefit from lower multipliers. The published small-business retail, hospitality and leisure multiplier is 38.2p and the standard multiplier 43.0p, compared with 43.2p and 48.0p for equivalent non-retail, hospitality and leisure categories (HM Treasury, 2026) ↗. This may improve the position of eligible occupiers, but eligibility turns on the property and use, while rates relief does nothing by itself to resolve fit-out costs, service charges or repair risk.

There is also a credible counterargument to an uncomplicated tenant-benefit story. If landlords anticipate greater downside exposure at review, they may seek compensation elsewhere: through a higher starting rent, shorter term, larger deposit, stronger guarantee or lower fit-out contribution. Knight Frank identifies this possibility and notes that many contemporary retail leases are sufficiently short that a rent review may not occur during the term (Knight Frank, 2026) ↗. This is industry analysis, not an independent forecast of market behaviour. Its proposed transmission mechanism is nevertheless commercially plausible.

Earlier academic work found substantial tenant criticism of upwards-only reviews while also observing that leasing practice was already evolving (Seibel and Cheetham, 2011) ↗. The balanced conclusion is that the Act establishes an important boundary around one contractual device, but does not determine the overall division of risk. Its success should be judged partly by whether risk is genuinely reduced for viable occupiers, rather than transferred into less visible parts of pre-lease negotiation.

Build an occupation pathway, not a generic flexible lease

For councils, landlords, business improvement districts and enterprise-support partners, the useful response is not blanket rent discounting or an instruction to eliminate every void quickly. It is to improve the quality of occupation decisions. That means connecting property terms to the commercial realities of the businesses being invited into a centre.

First, partners should develop a street-level demand brief before marketing units. It should bring together catchment, daypart, access, nearby anchors, existing offer, residential population and the purpose of visits. The aim is not an abstract preference for independent businesses. It is to identify the business models most likely to complement the local offer and generate repeat custom.

Second, units should be marketed with a full-cost information sheet available early in the process. Alongside rent, this should cover business-rates assumptions, service-charge history, insurance, energy information, repair obligations, fit-out constraints, deposit requirements and guarantee expectations. Better disclosure will not turn an unviable unit into a viable one. It will, however, enable founders to test cash flow before committing scarce capital and reduce negotiations built on misleading comparisons of headline rents.

Third, lease structures should reflect the route to revenue. A maker-retailer, appointment-led service, café and seasonal visitor business carry different cash-flow profiles. Depending on local market conditions and the property, appropriate tools may include a defined fit-out period, stepped rent, a short initial term with a clear renewal route, or a limited turnover-linked element. These are not universal prescriptions: an ill-designed turnover arrangement can increase administration without resolving a weak margin or inadequate demand.

Finally, property access should be connected to management capability. New operators may need support on margins, customer acquisition, staffing, stock, compliance and cash runway. Pre-tenancy support should function both as business development and as a viability filter, rather than a route for placing unprepared applicants into inflexible commitments. Where public partners fund brokerage, fit-out support or meanwhile use, support should be linked to observable milestones such as occupation, opening and continued trading.

This is Sanctuary’s recommendation, not a claim that the evidence has tested one universal delivery model. It follows from the combined evidence and commercial logic: when demand is uncertain and occupancy costs are layered, productive occupation is more likely when information is clear, capability is tested and early-stage risk is proportionate to the operator’s capacity to bear it.

Measure durability and risk transfer, not the first letting

The statutory change is likely to have gradual and uneven effects. Existing leases will continue to shape many centres, while the scope and transitional operation of the regime mean that not every negotiation will be affected in the same way (UK Parliament, 2026) ↗. Local leaders should therefore resist claims that the reform has revived, or damaged, a high street on the basis of a small number of transactions.

A credible local evaluation should establish a baseline and track the number and type of new lettings; lease lengths and incentives where these can lawfully be collected; full-cost assumptions at the point of letting; take-up and completion of pre-tenancy support; repeat vacancy; and business survival at 12 months, with 24-month follow-up where feasible. These measures should sit alongside place indicators such as footfall, use diversity, safety and resident perception. Comparing outcomes with similar areas that are not using the same occupation-support model would strengthen, though not eliminate, causal inference.

The most revealing indicators will test for risk transfer. Are initial rents rising? Are deposits, guarantees or service-charge exposure increasing? Are fit-out contributions declining? Is occupation becoming more durable for smaller firms, or are tenants simply accepting a different set of liabilities? Without this information, a fall in vacancy could be mistaken for progress even where the underlying business model remains fragile.

For local authorities, the immediate task is delivery capacity: an accurate unit register, sustained landlord engagement, transparent access to support and a realistic pipeline of operators. For landlords, the commercial question is whether deliberate risk-sharing can reduce void periods and improve tenant quality more effectively than reliance on a single protective review mechanism. For entrepreneurs, the discipline is to negotiate from a complete occupancy and cash-flow model rather than a headline-rent calculation.

The reform will have achieved its economic purpose if it makes viable occupation more attainable without displacing risk into opaque charges, inflated starting rents or disproportionate guarantees. That is a demanding standard, but it is the one that matters if England’s high streets are to become more productive places for local enterprise rather than simply less visibly vacant.