On 29 April 2026, the English Devolution and Community Empowerment Act received Royal Assent, introducing a ban on upward-only rent reviews in commercial leases.
Whilst the changes are yet to come into effect, they are likely to have a significant impact on how commercial leases are structured in England and Wales, as well as creating short-term uncertainty for landlords and tenants currently negotiating leases.
In this article, Commercial Property Solicitor Roger Clayson explains how upward-only rent reviews currently work, the changes being introduced and the likely implications for landlords and tenants.
What is an upward-only rent review?
An upward-only rent review is a provision that can be included in a commercial lease agreement to prevent rent from decreasing at a scheduled review, even if the open market rent has fallen.
For example, a 15-year lease might include a rent review every five years. At each review, the property is valued based on the rent it could achieve on the open market. If the market rent is higher, the rent increases. If it is lower, the existing rent continues to apply.
Rent reviews are particularly common in longer commercial leases and have traditionally provided landlords and investors with greater certainty over future rental income.
Some commercial leases use index-linked reviews instead, where the rent is adjusted in line with an index such as the Retail Prices Index (RPI) or Consumer Prices Index (CPI). These can be useful where a property is difficult to value or where the cost of an open market rent review would be disproportionate to the rent involved.
What is changing with upward-only rent reviews?
Under the new legislation, upward-only rent reviews have been banned. When the changes come into effect, commercial landlords will no longer be able to include provisions in leases that prevent rent from decreasing in line with open market rents at scheduled reviews.
The changes will also affect some index-linked rent reviews, where rent increases are tied to an inflation measure such as the Retail Prices Index (RPI) or Consumer Prices Index (CPI).
How could the ban change commercial leases?
Whilst the exact impact will not become clear until consultations are completed and the provisions come into effect, the new legislation is likely to affect how landlords structure commercial leases in a few ways.
Shorter lease terms
One potential consequence is a move towards shorter commercial leases. Rather than granting a longer lease with regular rent reviews, landlords may prefer a shorter term that allows them to renegotiate the rent when the lease ends.
This could give landlords more control over rental income but may provide tenants with less long-term security.
Security of tenure
We may also see landlords making greater use of leases contracted out of the Landlord and Tenant Act 1954.
Where a lease has security of tenure under the Act, a business tenant will usually have the right to renew when the term ends. The rent for the new lease is based on the open market and can already move down as well as up.
Tenants negotiating longer leases will therefore need to consider carefully whether they are being asked to give up these renewal rights.
Stepped rents
Stepped rents may also become more common. These allow landlords and tenants to agree future rent increases when the lease is entered into, rather than determining them through a rent review.
For example, I am currently advising on a 10-year lease where the rent is fixed at £32,000 for the first five years and £35,000 for the following five. Because both figures are agreed from the outset, this type of arrangement will not be included in the ban.
How will the changes affect index-linked rent reviews?
The new legislation will also affect index-linked rent reviews, where rent is adjusted in line with an inflation measure such as RPI or CPI.
These reviews are often used where a property is difficult to value on the open market, or where the cost of carrying out a formal open market rent review would be disproportionate to the level of rent involved.
Under the new regime, index-linked review provisions will also need to allow for the possibility of rent decreasing where the relevant index falls.
There is still some uncertainty around how this will interact with caps and collars, which are commonly used to limit the maximum or minimum increase under an index-linked review. This is an area that will need to be clarified as the reforms are implemented.
Caps and collars can provide certainty for both sides. I have previously advised a major national supermarket chain on index-linked leases across its property portfolio, where caps helped limit exposure to particularly high increases. If these protections are restricted under the new rules, index-linked leases may become less attractive for both landlords and tenants.
What will the changes mean for landlords?
For landlords, the main concern will be reduced certainty over future rental income. Upward-only reviews have historically helped protect income by ensuring rent cannot fall at scheduled reviews.
The changes may therefore encourage landlords to consider shorter lease terms, stepped rents or different approaches to security of tenure when negotiating new leases.
For property investors, reduced certainty over future income could also make some commercial property investments less attractive.
What will the changes mean for tenants?
The ban on upward-only rent reviews is viewed as a tenant-friendly legislative change as it will help protect tenants from paying above-market rates on their commercial lease.
However, the wider impact may be more mixed. If landlords respond by offering shorter leases or seeking to contract leases out of the Landlord and Tenant Act 1954, tenants could have less long-term security.
Tenants negotiating new leases should therefore consider the rent review provisions alongside the length of the lease, any break clauses and whether they have security of tenure.
Will the changes affect existing lease agreements?
Existing commercial leases will continue to operate under their current terms, including any upward-only rent review provisions already in place. The ban will apply to new leases and lease renewals once the relevant provisions come into effect.
In the meantime, the uncertainty around timing may make some tenants more reluctant to commit to new leases, whilst landlords may be keener to complete transactions before the new rules take effect.
When will the ban on upward-only rent reviews come into effect?
The English Devolution and Community Empowerment Act received Royal Assent on 29 April 2026. In practical terms, this means the legislation has been formally approved and the ban on upward-only rent reviews will happen. However, a commencement date has not yet been confirmed.
Before the new rules take effect, there will be a consultation, giving representatives of commercial landlords and tenants an opportunity to raise concerns and identify potential solutions.
Based on the current position, I expect the ban to come into effect no earlier than mid-2027, although the timetable could change as the consultation progresses.
Until a commencement date is set, upward-only rent review provisions can still be included in new commercial leases under the existing rules.
What should landlords and tenants negotiating leases do now?
Until the new rules come into effect, landlords and tenants should continue to negotiate leases under the current law whilst keeping the forthcoming changes in mind.
For landlords, that may mean considering whether shorter lease terms, stepped rents or different rent review structures are more appropriate. Tenants should look carefully at the overall balance of the lease, including rent reviews, break clauses, lease length and security of tenure.
The key is not to focus on the rent review clause in isolation. The wider terms of the lease will determine how much flexibility, certainty and protection each party has.
Looking forward
The ban on upward-only rent reviews is a significant change in principle, but its direct impact may be more limited than the headlines suggest. Commercial rents do not commonly fall over longer periods, meaning many tenants may never experience a downward rent review in practice.
The bigger impact may come from how landlords respond. Shorter lease terms, greater use of stepped rents and changes to security of tenure could all become more common as landlords look for other ways to protect the value and predictability of their rental income.
For landlords and tenants alike, the important thing will be to look at the lease as a whole rather than focusing on the rent review clause in isolation. As the detail of the reforms becomes clearer, taking advice early will help ensure new lease arrangements remain commercially workable and properly protect your position. We will continue to update this article as the implementation of the ban develops.
Our commercial property solicitors advise both landlords and tenants on commercial leases, including rent reviews, lease renewals, break clauses and security of tenure. If you are unsure how these changes could affect you and would like some advice, get in touch and our team will be happy to help.
