The English Devolution and Community Empowerment Bill could be a blow to social housing providers with commercial assets

The government argues that such provisions artificially inflate rents, hinder tenant sustainability and contribute to the decline of high streets. 

While the bill has been framed as a lifeline for struggling retailers, its reach extends far beyond the high street. Registered providers (RPs), many of which hold commercial assets such as office spaces and retail units, will be directly affected. 

For RPs, commercial properties often serve as a critical additional revenue stream, helping to cross-subsidise affordable housing delivery and community services. The removal of upward-only rent reviews introduces income volatility, undermines financial planning and could affect loan covenants and investment strategies.

Moreover, RPs typically operate with long-term leases on commercial units, particularly in mixed-use developments. These leases have historically relied on predictable rental uplifts to ensure viability. The proposed changes could force RPs to rethink their leasing models, renegotiate terms and reassess the commercial viability of certain assets. 

Despite its good intentions, the bill suffers from several critical flaws.

First is the overreach. By applying to all commercial property sectors, the bill captures leases that have no bearing on high street vitality. This blanket approach risks unintended consequences for sectors like logistics, offices and social housing. 

Then there’s the lack of consultation. The bill was introduced without industry engagement, leaving landlords, including RPs, scrambling to assess its implications. 

There’s also a risk of market instability. The removal of upward-only clauses could destabilise property valuations and deter investment, particularly from pension funds and institutional investors that rely on predictable income streams.  

The bill may have limited impact on high streets. Many modern high-street retail leases are short term and already exclude rent review clauses. Therefore it may do little to reverse the decline of high streets, while disproportionately affecting other sectors. 

In light of the proposed legislation, social housing providers should begin preparing for a new leasing landscape. They must audit lease portfolios by identifying which leases may be affected and assess the financial impact of potential rent reductions. 

“The removal of upward-only rent reviews introduces income volatility, undermines financial planning and could affect loan covenants and investment strategies”

As the bill does not operate retrospectively, landlords should consider renewing or re-gearing existing commercial leases now to lock in upward-only rent reviews before the bill comes into force. 

RPs should also engage with specialist legal advisors to ensure lease renewals and new agreements are compliant with the bill’s provisions and anti-avoidance measures.  

Landlords can join lobbying efforts to highlight the disproportionate impact on social landlords and advocate for sector-specific exemptions. 

They should also reassess their investment strategy by evaluating the long-term viability of commercial holdings and considering divestment or repurposing where appropriate. 

While the English Devolution and Community Empowerment Bill aims to support small businesses and revitalise high streets, its broad application risks undermining the financial stability of social housing providers.

RPs must act now to understand the implications, adapt their leasing strategies and ensure their commercial assets continue to support their core social mission. 

Amy Brown, partner, Winckworth Sherwood