Wales unequivocally operates without commercial rent control. Governed by the principles established under the Landlord and Tenant Act 1954 (effective 1 October 1954) and freedom of contract, a local Welsh authority cannot legally cap the percentage by which a commercial landlord increases rent on retail, office, or industrial space.

Commercial rent increases in Wales are exclusively governed by the Rent Review clause drafted into the commercial lease contract. If a multi-year lease lacks a rent review clause, the landlord is legally powerless to increase the rent until the lease expires.

The Mechanisms of the Wales Commercial Rent Review

Most commercial leases in Wales lasting 5 years or longer contain cyclical rent review provisions (typically occurring on the 3rd or 5th anniversary of the lease start date).

These reviews follow one of several negotiated structures:

1. The Open Market Rent Review (OMRV)

This is the most prevalent structure in Welsh commercial property. On the specified review date, the rent is adjusted to match the current open market rate for a hypothetical, similar property being let on exactly the same terms as the existing lease.

• The Process: The landlord and tenant (usually through their respective chartered surveyors) attempt to negotiate and agree on the new market rent based on local comparable evidence. If they cannot agree, the dispute is referred to an independent third-party expert or arbitrator (often appointed by the Royal Institution of Chartered Surveyors - RICS) whose decision is binding.

2. The Upward-Only Requirement

The English Devolution and Community Empowerment Act 2026, which received Royal Assent on 29 April 2026, introduces a prohibition on upward-only rent review clauses in new commercial leases and renewal leases in England and Wales.

This ban applies to any tenancy that falls within, or can fall within, Part 2 of the Landlord and Tenant Act 1954. Any upward-only provision in a review clause will have no effect. Instead, the rent is determined as if the upward-only element were not present, meaning the review mechanism operates in both directions, allowing rent to move up or down.

While the ban is not generally retrospective for existing leases, a targeted retrospective provision applies to certain lease renewal options and agreements entered into on or after 17 March 2026. The full commencement date for the ban is expected no earlier than 2027.

3. Index-Linked Reviews (RPI or CPI)

Instead of arguing over hypothetical market values, some leases link rent escalations directly to inflation.

Index-linked reviews are permitted, but the review clause must provide for rents to fall in line with the relevant index if it decreases, not just rise. Any upward-only provision within an index-linked review will have no effect.

These reviews often include a "Collar" (a minimum guaranteed percentage increase) and a "Cap" (a maximum ceiling). However, the government has committed to consult on the use of caps and collars, as collars could be viewed as contravening the ban on upward-only rent reviews if they prevent rent from falling. By 2030, the Retail Price Index (RPI) is expected to be replaced with the Consumer Price Index (CPI) across all new commercial leases.

4. Stepped Rent Increases

Alternatively, a lease may simply specify guaranteed, pre-agreed fixed escalations (e.g., Year 1: £20,000; Year 2: £22,000; Year 3: £24,000). There is no negotiation; the tenant is contractually bound to pay the pre-determined new baseline on the anniversary date.

Rent Increases at Lease Expiry (LTA 1954)

If a commercial lease is protected by the Landlord and Tenant Act 1954 (meaning the tenant has statutory "Security of Tenure"), the rent will invariably be increased when the new lease is granted at the end of the old term.

As part of the Section 25 notice (landlord) or Section 26 notice (tenant) procedure, the parties negotiate the new rent for the renewal lease based on the current open market constraints under Section 34 of the Act. If negotiations fail, a county court judge in Wales holds the authority to definitively dictate the new rent level based on expert surveyor testimony. Note that under the English Devolution and Community Empowerment Act 2026, any new renewal lease is subject to the ban on upward-only rent review clauses.

See our Wales Commercial Eviction ProcessPreview unavailable guide.

Back to Wales Commercial Landlord-Tenant Laws OverviewPreview unavailable.