Legal News | 16.09.26

Ban on upward-only rent reviews: what it means for landlords and tenants

The English Devolution and Community Empowerment Act 2026 introduces a significant reform to commercial leasing in England and Wales by prohibiting upward-only rent review (UORR) clauses in certain commercial leases.

Once the provisions come into force, landlords of leases caught by the Act will no longer be able to prevent rent from decreasing at review. Instead, rents may increase or decrease, allowing them to reflect current market conditions more accurately.

What is an upward-only rent review?

An upward-only rent review allows the rent payable under a commercial lease to increase at each review date but prevents it from decreasing, even if market rents have fallen. The rent will usually remain unchanged or rise, depending on the review mechanism set out in the lease.

When will the ban on upward-only rent reviews take effect?

Although the Act received Royal Assent on 29 April 2026, the UORR provisions are not yet in force. They will come into force on a date appointed by regulations, and current market expectations suggest that commencement is unlikely before 2027. Although the Act does not generally apply retrospectively to existing upward-only rent review clauses, a future renewal lease may still fall within its scope where a “tenancy renewal arrangement” is entered into on or after 17 March 2026. Broadly, a “tenancy renewal arrangement” covers any arrangement that allows either the landlord or tenant to require the grant or taking of a future tenancy, such as renewal options and extension rights.

The Act also provides that any attempt to include an upward-only rent review clause will be unenforceable. Instead, rent review mechanisms, including open market rent, turnover rent, and index-linked reviews, will no longer operate on an upward-only basis.

Which commercial leases will the ban apply to?

The Act covers the following leases:
• Any new commercial lease granted after the UORR provisions come into force; and
• Any renewal commercial lease entered into pursuant to a “tenancy renewal arrangement”, where that arrangement was entered into on or after 17 March 2026.
Which leases are excluded?
• Leases granted before the ban comes into force; and
• Fixed increases and stepped rent reviews, where the future level of rent was known at the outset of the lease.

How will the ban affect underleases?

Where a lease permits underletting but requires any underlease to include an upward-only rent review clause, that requirement will no longer be enforceable. As a result, the superior landlord will lose the ability to insist upon back-to-back upward-only review provisions in underleases.

This may place the head tenant at a disadvantage, as they may receive a reduced rent from a subtenant following a review while remaining liable to pay a higher, unchanged rent under a head lease which pre-dates the UORR provisions.

What should landlords and tenants consider?

Key considerations for landlords:
• Review recent leases containing renewal options: Landlords should carefully review any leases entered into since 17 March 2026 that include renewal rights. These leases will fall within the new regime once the UORR provisions come into force;
• Consider alternative strategies: Landlords may need to explore alternative approaches, such as shorter lease terms or the use of fixed increases or stepped rent reviews; and
• Be aware of anti-avoidance provisions: Landlords will not be able to restructure leases in a way that indirectly recovers losses caused by the UORR provisions where doing so would undermine the purpose of the legislation.

Key considerations for tenants:
• Ability to trigger rent reviews: Tenants may have greater flexibility to trigger rent reviews, reducing the landlord’s ability to delay reviews in a falling market and helping to ensure that rent reflects current conditions;
• Landlord countermeasures: Landlords may seek to offset increased risk by introducing alternative rent mechanisms. Tenants should therefore review all lease terms carefully to understand the overall financial impact; and
• Flexibility: While the ban gives tenants greater flexibility and allows rent to reflect market conditions, it may also lead to more complex lease negotiations as landlords seek to manage their risk.

Preparing for the new rent review regime

The ban on UORRs rebalances the relationship between landlords and tenants by ensuring that rent reviews more closely reflect market conditions and reducing the risk of tenants paying above-market rents.

While tenants are likely to benefit from fairer and more responsive rent reviews, landlords will need to adapt to greater uncertainty in rental income. This may involve alternative leasing strategies, revised rent review mechanisms and other measures designed to support income stability in a changing market.

Landlords and tenants should review proposed leases, renewal arrangements and rent review provisions at an early stage.
If you would like advice on how the new regime may affect your commercial property arrangements, please contact our Commercial Property Team.