What goes up might now come down – the new ban of upwards only rent reviews in commercial leases

The English Devolution and Community Empowerment Act 2026 received Royal Assent on 29 April 2026 and includes a ban on upwards only rent review provisions in commercial leases by amending the Landlord and Tenant Act 1954. We previously reported on the proposals in July 2025 - A turning point for commercial leasing: reforming rent reviews in England and Wales | Foot Anstey We do not yet know the date on which the ban will come into force as this will require secondary legislation.

Upwards only rent review provisions are lease clauses under which, when rent is reviewed, the rent can only stay the same or increase. It cannot go down, even if market rents or other review measures have fallen. The legislation will mainly operate prospectively, but with some important carve‑outs and potential traps for landlords. In summary:

• Upwards only rent reviews in commercial leases completed before the ban comes into force will not be affected and will remain enforceable.

• Rent review provisions in new commercial leases completed after the ban comes into force will be of no effect to the extent that they require the reviewed rent to be higher than the "reference amount". The reference amount is an amount determined by reference to the effect of indexation, an open market rent or the tenant's turnover. It will be acceptable for rent review provisions to state that the new rent will be equal to the "reference amount", but not to require the rent to be higher. For example, it would not be acceptable to require the rent to remain at the passing rent where the reference amount produced by the review mechanism is lower. If this is the case, the new passing rent will instead be the reference amount.

• The provisions will not affect leases completed pursuant to an agreement for lease or other arrangement exchanged before commencement of the ban. However, there is an exception to this relating to existing leases. Any lease granted to an existing tenant pursuant to an arrangement entered into on or after 17 March 2026 for the renewal of its tenancy (including agreements for lease and put or call options whether contained in a lease or a standalone document) will be affected and cannot have an upwards only rent review. This ensures that landlords cannot use arrangements put in place with existing tenants in anticipation of the upcoming ban to avoid its application on renewal.

• If a lease allows for underletting but requires an underlease to include an upwards only rent review, once the ban takes effect the superior landlord will not be able to insist on that requirement. Instead, if the lease requires the underlease to contain an upwards only rent review, the parties to the underlease will be allowed to determine different rent review provisions for the underlease without reference to the superior landlord. This means underleases granted after commencement of the ban could include a review mechanism which the superior landlord cannot control, even though the lease rent review itself would remain upwards only.  It also leaves the parties with a misalignment between the headlease and underlease rent review processes.

• Anti‑avoidance provisions prevent landlords from recovering the “missing” rent by other means (for example via side letters).  Tenants will be entitled to operate any trigger on which a rent review depends, preventing landlords from blocking a review which might be disadvantageous to them.

• Fixed stepped rents with predetermined increases are not affected.

Potential mitigation strategies

Landlords may wish to, as an alternative:

• use fixed or stepped rents;
• use indexation linked reviews;
• agree more frequent rent reviews;
• require more break options (perhaps on both sides);
• agree shorter terms (for example five years) with no rent review;
• restructure an option for a tenant to renew their lease and instead grant a reversionary lease before the ban takes effect as any such reversionary lease will not be impacted by the ban; or
• include protective drafting in alienation provisions so that, if legislation prevents an upwards only review in the lease being mirrored in an underlease, the review mechanism in the underlease automatically converts to an agreed alternative (for example upwards/downwards or index‑linked).

If negotiating a contractual agreement to renew a lease, be aware that the retrospective effect of the proposed tenancy renewal exception means that upwards only rent review provisions will not take effect on renewal. This also applies to options to renew contained in leases which have completed since 17 March 2026.

Tenants may seek the inclusion of a protective provision in leases granted prior to the commencement of the ban, providing that, if the proposed legislation comes into force, the upwards only aspect of the rent review is disapplied. This would address tenant concerns about committing to a lease which could become less marketable or more difficult to assign when the legal position changes.

What might happen in practice?

Tenants

Commercial tenants will no longer be subject to artificially inflated rents in a market downturn because rents will be aligned with market conditions, allowing them to go down, as well as up.

There will be a period when there is a two-tier market of lettings, as existing leases will remain upwards only but new leases will not.  Until the market levels out, it seems likely that assignments of existing leases will be unattractive to tenants who will prefer a new lease with no upwards only rent review. 

Tenants who want to dispose of their interest may want to negotiate variations to their existing leases to remove upwards only rent review drafting, insert break options or consider underletting. The provisions relating to underleases mean tenants of existing leases will be able to underlet with rent reviews matching arrangements being agreed in new leases. However, the tenant will potentially be left with a shortfall against the rent paid to their landlord, which they will need to make up.

Landlords

Landlords may look for other ways to ensure their income stream is not impacted by the ban. Index linked rent reviews, higher initial rents, stepped rents or short lease terms with no rent review may become the norm. We may see the market shift, so that capital contributions and rent-free periods on entry are increasingly less common.

Caps (which put a maximum ceiling on the rent payable following review) and collars (which impose a minimum floor on the rent payable following review) are not expressly dealt with in the statute but the suggestion is that the government will consult on this issue before it comes into force. The legislation allows for exceptions to be made by regulations. Depending on the outcome, this may help landlords.

Landlords will be concerned about the two-tier market and the impact this will have on their investments and rental income. The proposals were aimed at encouraging business back to high streets and to overcome a lack of self-regulation by the sector. It is too early to say whether this will come to fruition.