Ban on Upwards-Only Rent Reviews: What the New Legislation Means for Commercial Leases

The proposed ban on upwards-only rent reviews marks a significant shift in the commercial property landscape in England and Wales. Introduced as part of the English Devolution and Community Empowerment Bill, the measure reflects a broader policy aim to create a more balanced leasing environment between landlords and tenants. Although the Bill received Royal Assent on 29 April 2026, the timing of implementation has not yet been confirmed. The government’s initial impact assessment indicates it is likely to be introduced in sometime in 2027-28.

Key Provisions
At the heart of the reforms is a blanket ban on upwards-only rent reviews in commercial leases. The scope of this prohibition is wide-ranging:

Prohibition of Upwards-Only Rent Reviews
All forms of upwards-only rent reviews will be banned, including:
• open market rent reviews; and
• index-linked rent reviews that include collars (minimum increases)
Caps on rent increases remain permissible but collars fall within the scope of the ban.

Application
The ban will apply to all commercial leases and regardless of whether the lease is protected by the Landlord and Tenant Act 1954. Although not wholly retrospective, during the Act's passage through the House of Lords, a significant and partially retrospective rule was included in relation to option leases. 

Any option lease entered into pursuant to a lease completed on or after 17 March 2026 cannot contain upwards-only rent review provisions even if such provisions were agreed at the outset of the original lease. Day one rent reviews in any option lease would also need to be upwards-downwards meaning the initial passing rent for the option lease may well reduce. 

There remains some uncertainty about whether a final-day rent review under the original lease (to set the rent for the option lease) could still be upwards-only if structured carefully although this is likely to be scrutinised under anti-avoidance rules.

Agreements for Lease - Transitional Protection
Leases granted pursuant to an agreement for lease entered into before the ban comes into force will not be caught by the new rules. Even if the lease itself completes after the legislation is enacted, upwards-only rent review provisions will remain valid in these cases.

Head Leases and Superior Interests
Where a superior lease or headlease requires upwards-only rent reviews, the new legislation will apply “deeming provisions” and underleases granted out of such interests will require rent reviews to operate on an upwards-downwards basis, regardless of the superior lease terms.

Likely Impact
The ban is expected to reshape the commercial property market in several important ways:

Shorter Lease Terms
Landlords may seek to mitigate risk by granting shorter lease terms. However, such a move is not without implications for landlords as shorter lease terms reduce investment value and impact lending appetite.  

Shift in Rent Structuring
Leases are likely to move towards stepped or fixed increases set at lease grant and for longer leases there may well be an increase in index-linked rents without collars. Such mechanisms offer landlords some predictability while staying compliant with the rules. 

Conclusion
The ban on upwards-only rent reviews represents one of the most significant changes to commercial leasing in decades. For landlords, it represents a fundamental shift in risk allocation within commercial leasing. The removal of a traditionally reliable mechanism for securing income growth introduces a greater degree of uncertainty, particularly in volatile or declining markets. As a result, landlords will need to adopt a more nuanced and proactive approach to structuring leases, pricing risk, and managing asset performance. 

For tenants, the ban is likely to be a welcome and long-overdue reform. By removing the structural bias that has historically guaranteed rent increases regardless of market conditions, the legislation introduces a fairer alignment between rent and actual market value. This should provide tenants with greater confidence that their occupational costs will remain responsive to economic realities, particularly during periods of market downturn or uncertainty. However, such benefits are not without trade-offs. Flexibility may introduce new forms of cost pressure with lease renewals occurring more frequently and reduced security of tenure. 

Success in the new landscape will depend on adaptability, early engagement with the evolving legal framework, and a willingness to rethink traditional leasing models.

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