Upwards only rent review ban for commercial leases

The English Devolution and Community Empowerment Act 2026 (the Act) has made rapid progress through parliament, and it received Royal Assent on 29 April 2026. It is a wide-ranging Act and included within it are provisions which, once in force, will ban upwards only rent reviews in new commercial leases.

The Act, as passed, has not yet been published. The article below is based on the most recent version of the Bill. However, we do not anticipate any changes.

What does the ban do?

For commercial leases which are granted after the provisions are in force, if the lease contains a variable upwards only rent review mechanism, the upwards only element will be of no effect.

Variable reviews, such as open market rent or index linked reviews or reviews based on the tenant's turnover, are still permitted, but the rent must be able to go up or down as a result of the review.  

Stepped rents are not impacted by the ban.

Are there any other measures in the Act which impact rent review provisions?

Yes. The Act will allow tenants to serve notice to initiate a rent review, to prevent landlords from delaying a review in unfavourable conditions. It also enables a tenant to take any action necessary for the rent review to operate effectively. 

There are also measures which mean that if a tenant wishes to sublet their property and their lease requires that the terms of any sublease contain upwards only rent review provisions, that requirement will be disregarded. Instead, the terms of any rent review will be agreed between the tenant and its sub-tenant.

The Act also contains anti-avoidance measures.

What type of leases are caught?

The provisions will be inserted into the Landlord and Tenant Act 1954 (the 1954 Act) and will apply to business tenancies to which Part 2 of the 1954 Act applies or has the potential to apply. 

This will include contracted out tenancies. It will also include tenancies where the tenants are not in occupation, but who under the terms of their lease, are entitled to occupy for business purposes (for example, where a tenant has taken a lease but is not in occupation and has sub-let the whole of the premises).

When will the ban come into force?

There is currently no set timeframe for when the measures in the Act in relation to the ban will come into force. We anticipate the ban may be implemented in 2027-2028. 

Is the ban retrospective?

As originally introduced the measures were not retrospective. However, a recent government amendment introduced a limited retrospective element to the ban.  Once in force, the retrospective element will impact 'tenancy renewal arrangements' which were entered into on or after 17 March 2026. If a tenant under an existing tenancy:

• has a right under an option to renew or other arrangement which is entered into on or after 17 March 2026 to require the landlord or another person to grant them a new lease; or,

• can be required by the landlord or another person to take a new lease under an arrangement entered into on or after 17 March 2026

then any rent review provisions contained in that new lease (including provisions for calculation of the initial rent) cannot be calculated on an upwards only basis. If you are dealing with an agreement for lease with an existing tenant, including any renewal options, careful consideration should be given to the proposals and their impact in the period up to the legislation coming into force.

However, if a lease is granted to a new tenant pursuant to arrangements (such as an agreement for lease) which were entered into before the provisions come into force, that lease will not be subject to the ban.

Are there any exceptions to the ban?

The Act includes provisions which allow for the government, through secondary legislation, to provide exceptions to the ban. In the explanatory notes the government notes that this may include 'exceptions to allow for caps and collars to be used in a commercial lease, and the parameters for their use'. We are expecting the government to issue a consultation on exceptions to the ban ahead of implementation.

Looking ahead...

We predict the ban on upward only rent reviews may lead to:

• Shorter lease terms.

• An increase in stepped, indexed and/or turnover rent leases.

• Longer and more detailed rent review provisions as landlords look to build in a range of mechanisms to provide the best chance of the review resulting in an increase. It may be possible to provide that rent can be reviewed to the higher of, for example, an open market or index linked clause. The key requirement of the ban is that it is not upwards only and that the rent must be able to go down as well as up under the review mechanism. We expect further guidance will be issued on this point.

• The potential for reduced tenant incentives or provision for clawback of those measures should rents decrease during the term.

• An increase in the requirement for the seller to provide rent guarantees when a property is sold.

• An increased litigation risk as tenants may be more willing to challenge rents where there is the possibility of a downward review.