Upwards-only rent reviews: what the proposed ban means for commercial leases

The English Devolution and Community Empowerment Act (“the Act”) received Royal Assent on 29 April 2026, following a lengthy negotiation period since its initial introduction in July 2025, and delivers fundamental change to how commercial rents are to be reviewed in England and Wales. Whilst the ban is not yet in force, and is not expected to be before 2027, it is crucial for both landlords and tenants to consider its implications before its commencement.

The Act contains a ban on upwards-only rent review (“UORRs”) and applies to all Business Tenancies, that fall under (or are capable of falling under) the Landlord and Tenant Act 1954 (“the 1954 Act”), including contracted out leases that do not benefit from statutory renewal rights.

Since the first draft Bill was proposed in summer 2025, Parliament has made several amendments to sharpen its commercial impact, removing elements of landlord’s control over rent reviews in subleases and introducing a retrospective element in relation to renewal leases.

Which tenancies are caught under the Act?

The ban applies to all Business Tenancies, which includes not-for-profit organisations, but excludes agricultural or mining leases.

The test is whether the lease permits business occupation, not whether the tenant is actually occupying for business purposes at the time of the review. The ban therefore applies even where the tenant is out of occupation, has sublet the premises, or is occupying otherwise than for business purposes.

How does the ban work?

The ban will render unenforceable any rent review clause where the reviewed rent is not fixed or fully ascertainable at the outset of the lease term and the review is upwards only. In practice, this captures the most commonly used UORR mechanisms – open market, index‑linked and turnover rents. However, stepped or fixed rental uplifts will remain unaffected.

The retrospective element of the Act

As a general rule, the ban is not retrospective – existing leases containing UORRs will continue to operate as originally drafted and any leases granted before the ban is brought into force will also not be caught.

However, there are two slight exceptions to the above, which are as follows:

1. Sub-tenancy provisions – for leases granted before the ban takes effect, any requirement that a sublease must include a UORR will be void if the sublease is granted after the ban comes into effect. Tenants may therefore grant subleases with upwards‑and‑downwards rent reviews without breaching the superior lease; and
2. Renewal leases – A tenancy granted pursuant to a renewal arrangement entered into on or after 17 March 2026 will be subject to the ban (“a Relevant Renewal Agreement”). This includes an option to renew in a lease or a separate agreement with an existing tenant for a future tenancy of the same premises (but not a new lease granted now with a term that takes effect in the future – a “reversionary lease”).

Practically, this means a landlord can still validly grant a lease containing a UORR clause for the current term, but any option to renew within this lease will be caught by the ban whenever it is granted.

There is an element of ambiguity in how the Act is presently drafted with regards to renewal leases. Where there is a lease granted pursuant to a Relevant Renewal Agreement (i.e. a renewal agreement on or after 17 March 2026), but the start date of such lease is to commence before the Act comes into force, it is unclear whether this type of tenancy will be caught. It is thought that this point may be clarified by further secondary regulations.

Potential additional measures

The Act will also include specific anti-avoidance provisions, which will prevent landlords from requiring tenants to enter side agreements, whereby they must pay a ‘top-up’ payment when rent has been reviewed downwards.

Parliament has also committed to undertake a further consultation on the use of cap and collars, where a review to the higher of two upwards/downwards review mechanisms would be permitted. However, there is no guarantee this will be implemented when the Act comes into force and we await further legislative guidance on the practicalities of this.

Future considerations

The commencement date will be set by secondary legislation and is not yet confirmed, though it is anticipated that the Act will not take effect before 2027. The Parliamentary process will continue to its conclusion, following Royal Assent of the Act. We can then expect greater clarity on the outstanding areas of uncertainty and practical implications.

Going forward, landlords may seek greater reliance on short-term leases, with no rent reviews, to provide certainty as to the rental levels for the duration of the lease term. This of course raises the concern for tenants that leases may have artificially higher rental rates to circumvent the need to implement a rent review.

Landlords with shorter-term occupiers may need to think more proactively about property management and to justify rental growth at renewal. Where tenants are agreeable, re-gearing now (renegotiating lease terms before expiry), before commencement of the Act, is worth considering.

Alternatively, we may see a shift towards favoring fixed or stepped rental increase mechanisms.

Both landlords and tenants should consider any current negotiations for new leases and tenancy renewal arrangements which are underway and whether the Act receiving Royal Assent gives them more or less leverage in the negotiations.

The Act raises interesting questions regarding ongoing renewals under the 1954 Act. Although the Act is not yet fully in force, its terms may lend weight to a tenant argument that the deletion of an UORR in a renewal lease can be justified under the O’May principle. Additionally, tenants may wish to delay instigating renewals to try and ensure that any renewal will take effect after the ban comes into force.

For advice on the proposed ban, our commercial property team can assist with reviewing lease arrangements and planning next steps.