The End of Upward-Only Rent Reviews – what it means for the UK commercial property market

The long-standing principle of upward-only rent reviews is set to fundamentally change following the English Devolution and Community Empowerment Act 2026 – given Royal Assent on 29 April 2026, and expected to be implemented in 2027, potentially 2028.

The legislation has been introduced primarily to support retail occupiers, with the Government stating, “upwards only rent review clauses are artificially inflating commercial rents and ultimately pricing out small businesses from town centres.”

What is covered by the ban?

Once implemented, the ban will cover all new business tenancies in England and Wales, whether they are within the 1954 Act or not.

The ban will not be retrospective. Existing leases, or those entered into following an agreement for lease prior to the ban, will not be captured. The exception being agreements completed from 17 March 2026 containing what have been called “tenancy renewal arrangements”, contractual renewal / option agreements, for example.

The ban will cover all rent review mechanisms where the potential increase is not known at commencement of the lease, but which can only travel in an upwards only direction.

The ban will also extend to sub-leases, including over-riding head lease provisions which may require upwards only rent reviews as part of any underletting.

What is allowed?

All rent review mechanisms will remain open for adoption, provided rents can go up and down.

Stepped rents and fixed uplifts are also permitted, provided the amounts are expressly set out at the commencement of the lease.

What isn’t allowed?

The legislation contains a raft of anti-avoidance measures designed to close potential loopholes. You cannot contract out of the ban, side letters and top up rents are not permitted. A tenant will also be able to trigger a rent review, meaning leaving a review in abeyance cannot be used to preserve an above market rent as at the review date.

What might be possible?

Hybrid / ‘greater of’ options, provided the option is between two upwards or downwards reviews. Further guidance is expected from the Government on this point.

The Government is also planning on consulting on the use of rent caps and collars, prior to implementation of the ban.

In the short term, reversionary leases entered into prior to implementation, may also not be subject to the ban, even if the term commencement date falls after the ban has taken effect – further guidance is also expected from the Government on this point, however.

How might the market react?

Impacts are expected to be sector specific. Prime assets in strong markets will likely see the least practical impact, but secondary assets or tertiary markets requiring more creative leasing structures to balance the parties’ interests.

The change however represents a shift in risk profile for landlords, encouraging a continued ‘flight to quality’ for both investors and occupiers. The greater use of indexation, fixed uplifts, shorter lease terms, and more bespoke structuring of incentives can all be expected. Portfolio strategy and leasing structures will not be able to be adopted on a one size fits all approach and need to be adapted to reflect the nuances of each market and asset class.

Whilst designed to support small business, with the ban not being retrospective, incumbent occupiers on existing leases may be at a disadvantage compared to new entrants into the market. This difference is likely to be particularly prevalent in sectors where longer leases have historically been sought.

What next?

There remains potential for change prior to implementation, with secondary legislation required to bring the ban into force. The Government will also consult further as to rental caps and collars and publish guidance in due course.

Landlords and occupiers should review their portfolios, risk profile, consider the timing of transactions, and prepare for a more flexible leasing environment.

Please contact us should you wish to discuss further.