The proposed end of upward-only rent reviews represents a significant change for the commercial property market in England and Wales. For landlords, a mechanism that has traditionally provided a degree of certainty over future rental income could soon give way to a system in which rents are capable of moving both up and down in line with market conditions.
Although the ban is not yet in force, its implications extend well beyond the wording of future rent review clauses. Landlords may need to reconsider how leases are structured, how rental income is valued and forecast, and how renewal rights, agreements for lease, subletting provisions and other existing arrangements interact with the new regime.
In this article, we explain what the ban means in practice, which commercial leases are likely to be affected and the steps landlords should be considering now.
What is the ban on upward only rent reviews and why has it been introduced?
Upward-only rent reviews have long been a staple of commercial leases in England and Wales. They are a provision within the lease, that allows the yearly rent figure to be adjusted at set times during the lease term but only where the market rent has increased. If the market rent has gone down (or stayed the same) then the rent does not change.
For commercial landlords, the upward-only rent review offers certainty that the rental income will only move in one direction (up). This helps support stable cash flow, facilitates long term financial modelling and reassures lenders and investors. This in turn drives investment into the sector.
The English Devolution and Community Empowerment Act (the “Act”) received Royal Assent on 29 April 2026. The Act includes a prohibition on upwards-only rent reviews in new commercial leases. The Ministry of Housing suggested that the ban is partly intended to address the declining occupancy on the high-street and should help support small retail businesses.
The Government believes that allowing for rent to decrease in times of economic downturn will facilitate a more vivid high street and local community. The crux of the logic then is that commercial rents should align more with the market reality so that tenants aren’t fixed into paying higher rents during times of economic downturn.
For the commercial Landlord, the immediate concern is the lack of certainty and spooked investors. Rental income would become more exposed to market fluctuations which could affect asset values and investor appetite. Landlord’s might respond by charging higher starting rents or offering shorter lease terms.
Does the ban mean commercial rents can no longer increase at rent review?
The ban means that an upwards-only rent review clause will no longer be enforceable in leases caught by the Act (see below). This does not mean rent reviews are abolished; rather, it means that rent reviews must be capable of reflecting market conditions in both directions.
As a result, when a rent review takes place:
- if the revised rent is higher than the rent currently being paid (the passing rent), the rent will increase;
- if the revised rent is lower than the passing rent, the rent will decrease; and
- if there has been no change in rental value, the rent will remain the same.
It may therefore be more accurate to describe the reform as a move away from rent reviews that can only ever increase, towards rent reviews that are able to reflect the reality of the market.
Importantly, the Act does not prevent rent increases altogether. For example, landlords will still be able to use fixed or stepped rent increases, provided these are clearly set out in the lease when it is granted.
When will the ban on upward only rent reviews come into force?
Although the Act has received Royal Assent, the upward only rent review ban is not yet in force. The relevant provisions still need to be brought into effect by commencement regulations, and the current market expectation is that this is unlikely to happen before 2027, with some commentators suggesting 2027/2028.
Until those commencement regulations are made, traditional upwards-only rent review clauses can still be agreed in leases which are completed before the ban takes effect, subject to the important transitional and retrospective rules discussed below.
Landlords negotiating leases now should not assume that the delay in commencement means the issue can be ignored. The timing of exchange, completion, agreements for lease, reversionary leases and renewal options may all affect whether the new regime applies. In particular, landlords should check whether any renewal rights, put/call options or agreements with existing tenants could be treated as tenancy renewal arrangements, especially where they are entered into on or after 17 March 2026.
They should also consider whether the commercial package needs to change if future reviews may have to operate both upwards and downwards, for example by reassessing the initial rent, incentives, term length, break rights, covenant strength and alternative review mechanisms such as fixed stepped rents, index-linked reviews or turnover-based structures.
Will the ban apply to existing commercial leases?
The ban will not generally apply to existing commercial leases that were entered into before the relevant provisions of the Act come into force. Rent review clauses in those current leases should therefore continue to operate in accordance with their existing terms, including any upwards-only wording.
Similarly, a lease granted pursuant to an agreement or arrangement that was already in place before commencement should not usually be caught, subject to the specific rules on renewal arrangements referred to below.
However, landlords should not assume that existing lease arrangements can be ignored. Existing documents may contain renewal options, agreements for lease, reversionary lease arrangements or underletting provisions that interact with the new regime.
In particular, renewal arrangements entered into on or after 17 March 2026 may bring a future renewal lease within the ban, even though the original lease was granted before commencement. Existing headleases may also contain obligations requiring subleases to include upwards-only rent reviews; once the ban is in force, those requirements may be overridden or become ineffective in relation to new subleases.
Landlords should therefore review their portfolios to identify any current leases with future renewal rights, option arrangements, agreements for lease or subletting controls, and consider whether the drafting still protects income, valuation assumptions and lender requirements under the new regime.
Which new commercial leases will be caught by the upward only rent review ban?
Once in force, the ban is expected to apply broadly to new business tenancies of commercial property in England and Wales, including leases which are contracted out of the Landlord and Tenant Act 1954 and leases where the tenant is not actually in occupation but the premises are capable of being occupied for business purposes.
In practical terms, landlords should assume that the following types of arrangements are likely to need particular attention:
New commercial leases granted after the ban comes into force
these will be caught if they contain a rent review where the reviewed rent is not fully ascertainable at the date of grant and the mechanism prevents the rent from falling.
Renewal business leases completed after commencement
statutory renewals under the Landlord and Tenant Act 1954 and contractual renewals are likely to be caught, meaning the renewal lease should not include an upwards-only open market, index-linked or turnover-based review.
Subleases and underleases
New subleases granted after commencement are also likely to fall within the ban. Existing headlease provisions requiring an underlease to contain an upwards-only rent review may be overridden, which could reduce the superior landlord’s control over the rent review structure in the sublease.
Agreements for lease entered into before commencement
Where the agreement for lease is entered into before the ban comes into force, a lease granted under that agreement should not usually be caught, although the detailed transitional rules and the nature of the arrangement should be checked carefully.
Reversionary leases completed before commencement
These may fall outside the ban even if the term starts later, provided the lease itself is granted before the relevant provisions come into force.
Renewal options, put options, call options and other tenancy renewal arrangements agreed on or after 17 March 2026
These are a key risk area. If an existing tenant is given a right to require, or can be required to take, a further lease of all or part of the existing premises, the future renewal lease may be caught by the ban even if the arrangement was agreed before commencement.
The main drafting risk is any review mechanism that produces an uncertain future rent but then prevents that rent from reducing below the passing rent or another minimum level.
Traditional open market reviews, index-linked reviews and turnover-based reviews may therefore be caught if drafted on an upwards-only basis.
By contrast, fixed stepped rents should generally remain available because the future rent is known from the outset. Landlords should therefore check not just the lease date, but also the date and nature of any agreement for lease, option, renewal right or underletting obligation connected with the transaction.
Speak to a commercial property solicitor about rent reviews
The ban on upward-only rent reviews will not prevent commercial rents from increasing, but it will change an established feature of commercial leasing by removing the ability, in many new leases, to protect rent from downward market movements.
For landlords, the consequences are therefore likely to be both legal and commercial. Lease drafting, valuation assumptions, financing arrangements and negotiations over rent, incentives, lease length and review mechanisms may all need to be reconsidered. Existing portfolios should also be reviewed carefully, particularly where there are renewal options, agreements for lease, reversionary arrangements or subletting provisions that could bring future leases within the new rules.
With the commencement date still to be confirmed, there is an opportunity for landlords to prepare rather than react. Taking advice at an early stage can help ensure that new and existing lease arrangements remain commercially robust while complying with the changing legal framework.
Our commercial property team can advise commercial landlords on the implications of the new rent review regime, including the drafting and negotiation of new leases, renewal arrangements and the review of existing portfolios.
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