Ban on upward only rent reviews in commercial leases

Last summer, the Government introduced a surprise proposal to ban upwards-only rent reviews (“UORRs”) in commercial leases, hidden within the English Devolution and Community Empowerment Bill.

The English Devolution and Community Empowerment Act 2026 (the “Act”) received Royal Assent on 29 April. Once the Act comes into force (following commencement regulations) it will fundamentally change how rent review mechanisms operate.

What is the ban and when will it apply?

The Act is not expected to come into force until 2027 / 2028, but it will impact lease negotiations and drafting in the interim.

The Act will mean:

• any upward-only elements of rent review provisions will become unenforceable;
• future reviews will operate on an upwards and downwards basis; and
• any ‘higher of’ wording will be disregarded

 The ban is expected to apply to:

• protected and “contracted out” business tenancies as defined under the Landlord and Tenant Act 1954 (i.e. leasehold properties occupied by tenants for business purposes); and
• certain superior / head leases, even where the head tenant is not in occupation under its lease

There are expected to be limited exclusions for leases in specific sectors, but further details are awaited.

Which types of rent review will be affected?

Once in force, the ban is expected to apply to leases where the rent for the duration of the lease is not fixed or ascertainable at the time the lease is completed and the lease contains a rent review mechanism which includes:

• revised rent calculated by reference to inflation, market rent or turnover; and
• a provision preventing the rent falling below the current or a specified level

Stepped rents agreed at the outset will be unaffected.

Contractual arrangements

There is some ambiguity in how the Act will apply and in some cases it will depend on the date of the lease or relevant agreement. In simple terms we expect to see:

Arrangement type	General position under the Act
Existing leases and reversionary leases  (pre-commencement of the Act)	Rent review is unaffected
Agreement for lease (new tenant and pre-commencement of the Act)	Generally leases will sit outside the ban
Agreement for lease (existing tenant)	May be caught if the agreement constitutes a "tenancy renewal arrangement"
Leases pursuant to an option to renew (granted pre - 17 March 2026)	Expected to be outside the ban
Leases pursuant to an option to renew (granted on/after 17 March 2026)	Expected to be caught (even where the option was in a lease that was otherwise not caught by the ban)
Pre-emption rights	Further clarification awaited

 

Other key implications

Subleases granted post commencement are expected to be caught by the ban even where the headlease requires an upward only review. The Act is understood to include provisions enabling tenants to trigger rent reviews in certain circumstances. Anti avoidance provisions are also expected within the Act.

What does this mean in practice?

• Landlords and tenants should ensure that they review rent provisions in current and upcoming transactions
• Landlords may seek to negotiate higher starting rents, stepped rent increases, longer leases or alternative structures, including reversionary leases
• Template documents should also be updated to reflect the new regime