Briefing note for clients and professional contacts — commercial leases in England & Wales
Correct as of 24 August 2026. This is a general summary of a fast-moving area of law, not legal advice, and should not be relied on without specific advice on your circumstances.
In brief
- A new law bans 'upwards only' rent reviews in most commercial leases in England and Wales — going forward, rent must be capable of falling as well as rising at review.
- The ban is already on the statute book but has not been switched on; it is expected to start sometime in 2027 or 2028, with no firm date yet set.
- A late change means some lease renewal arrangements made from 17 March 2026 onwards are already within scope, even though the ban itself is not yet in force.
Ban on upwards only rent reviews
The English Devolution and Community Empowerment Act 2026 was introduced to Parliament on 10 July 2025 and includes a ban on upward-only rent reviews at section 100 and Schedule 37 (which inserts new Schedules 7A and 7B into the Landlord and Tenant Act 1954). It received Royal Assent on the 29 April 2026. Once this is in force, it will catch all new and renewal leases, other than those granted pursuant to a pre-commencement arrangement, but not existing leases.
When will this happen?
The ban is not expected to take effect until 2027 or 2028 and a commencement date has not yet been set by the Government.
But there is a key change introduced by the Lords that will make the ban partially retrospective. The amendment will mean that any arrangement (a ‘tenancy renewal arrangement’) for the renewal of an existing lease (such as an option to renew, a put or call option, or an agreement for a renewal lease) entered into from 17 March 2026 onwards, will be subject to the upward only rent review ban, for both the rent payable on day one of the renewal lease and any future rent reviews during its term.
To be clear, in general, only leases granted after the ban comes into force will be caught (subject to the retrospective element affecting some renewal arrangements described above).
This will include renewal leases under the Landlord and Tenant Act 1954. So, landlords who currently enjoy an upwards only rent review will lose that benefit once the lease is renewed after the commencement date.
The only leases that can be granted with a fully functioning upwards only rent review are leases granted pursuant to 'pre-commencement arrangements'. So, if an option or agreement for lease is already in place or is put in place between now and the commencement date, the ban will not apply to the lease. But, due to the late amendment made during the Bill's passage by the Lords, unlike other leases granted after the commencement date pursuant to pre-commencement arrangements (which will escape the ban), leases granted after the commencement date but pursuant to a tenancy renewal arrangement entered into on or after 17 March 2026 will be caught by the legislation.
However, the Government has said it will consult before the ban is brought into force, on the implementation details, including the use of caps and collars in rent reviews — early indications favour permitting caps, which limit only the size of an increase, over collars, which would create a rent floor, though nothing is yet confirmed.
Which leases will be affected?
This legislation will affect most commercial leases.
Leases will be caught if they are 'business tenancies' as newly defined for this purpose — broadly, tenancies to which Part 2 of the Landlord and Tenant Act 1954 applies or has the potential to apply.
This means that leases that are outside Part 2 because the tenant is not currently occupying the premises for business purposes (or at all) can still be within the scope of the ban.
By contrast, leases that are outside Part 2 for other reasons (for example, section 28 of the 1954 Act, which excludes leases granted pursuant to an existing agreement for a future tenancy) will not be caught, and upwards-only provisions will continue to have effect.
What will this mean?
There is industry concern that significant market mechanisms for reviewing rent have been banned with little to no industry debate or prior consultation.
Landlords and investors will be looking for alternative options to structure rent reviews to provide security and future value.
Although tenants will benefit from this, they will also likely face trade-offs as the market balances. This could include fewer tenant incentives as rent-free periods for fit outs, break clauses and landlord capital cost contributions could be scaled back. Industry estimates suggest that around 90% of new commercial leases in the UK are granted for terms of five years or less, meaning many are unlikely to include rent review provisions at all; but the vast majority of leases that run over five years have tended to contain upwards only rent reviews clauses, so this is expected to have a significant impact on that part of the market.
How will it operate?
Quite simply, upwards only rent reviews will have no effect. This will apply whether the rent review is linked to inflation, turnover or market value.
This will apply even when the headlease is not subject to the ban and its terms require any underlease to include upwards only provisions. In this case the new legislation will modify the headlease to permit the underlease to include any rent review terms that the head tenant and undertenant might agree.
Anti-Avoidance provision in the Act
Tenants will also be given the right to trigger and progress a scheduled rent review where the lease reserves these rights to the landlord alone. This will prevent landlords seeking to circumvent the ban by denying tenants the ability to take advantage of a rent review where the rent is likely to decrease.
This is a new statutory right for the tenant, which applies irrespective of whether the lease itself gives the tenant that power. The tenant must give written notice of its intention to trigger the review, within any time limit stipulated in the lease for doing so; it appears the tenant cannot rely on a 'time is not of the essence' provision in the lease to escape that time limit, although this point has not yet been tested and specific advice should be taken.
Additionally, the anti-avoidance provisions render invalid side letters providing for rental top-ups if the rent decreases on review.
What Landlords ought to consider going forward
- Fixed or stepped rent increases which will provide landlords with some security over future rental income.
- Greater use of index-linked rents (these remain subject to the ban and can still fall, though indices are typically less volatile than open-market valuations).
- Rents being set at inflated rates at the outset to offset against the possibility of a downwards rent review in the future.
- Shorter leases, for example five years with no rent review.
- Review live transactions and recent completions for upwards only rent review clauses: any arrangement entered into since 17 March 2026 to renew an existing tenant's lease (such as an option to renew, or an agreement for a renewal lease) will be caught by the ban once it takes effect, covering both the initial rent payable on day one of the renewal and all future rent reviews during its term — so revisit rent review provisions in current negotiations to protect income in a falling market.
- Consider re-gearing: some tenants may be willing to re-gear existing leases before the ban comes into force, maintaining, the existing rent review structure for longer (the ban will not affect leases granted before it comes into force).
- Turnover leases with a straightforward turnover based rent remain unaffected, since a turnover figure is simply one form of permitted 'reference amount'. Where a lease reviews rent to the higher of two reference amounts — for example, an index-linked figure and a percentage of the tenant's turnover — the Ministry of Housing, Communities and Local Government (MHCLG) has indicated informally, though formal guidance is still awaited, that this 'higher of' structure remains valid, provided both reference amounts are themselves capable of falling. However, if both reference amounts fall the rent will fall too; but only by reference to the one with the smaller decrease.
What Tenants ought to consider going forward
- Know the new rights for tenants: understand the anti-avoidance provisions in the Act which includes the statutory right for tenants to trigger the rent review even if this is not provided for in the lease.
- Consider landlords' countermeasures: landlords will look for other ways to protect their income security, so it is important to be aware that complex drafting around rent reviews such as index linked mechanisms will likely be used.
- Factor the ban into heads of terms: tenants ought to consider reflecting this in current lease negotiations to weigh up their review options going forward.
- Remember that this will also catch underleases granted once the ban is in force, meaning that provisions in leases obliging underleases to contain upwards only rent reviews will not be enforceable.
Surprising option
Surprisingly, the legislation does not prohibit including upwards only rent review clauses in new leases; it only provides that such clauses will have no effect.
This means that landlords may prefer to continue including upwards only provisions, in case the law is reversed during the term of the lease or if the lease ends up falling outside of the scope of the ban possibly because of section 28 mentioned above. Conversely, tenants ought to resist them for the same reasons.
Quick reference: is my lease caught?
| Transaction | Caught by the ban? |
| New lease granted before the ban is in force | No |
| New lease granted after the ban is in force | Yes |
| Renewal option / agreement for a renewal lease with an existing tenant, entered into before 17 March 2026 | No — even if the renewal lease itself is granted later |
| Renewal option / agreement for a renewal lease with an existing tenant, entered into on or after 17 March 2026 | Yes, once the renewal lease is granted after the ban is in force. If the renewal lease is granted before the ban is in force, whether the day-one rent review is caught is currently unclear |
| Underlease granted after the ban is in force | Yes — even if the headlease was granted before the ban |
Two points to watch: (1) varying an existing agreement for lease after commencement could, if the variation amounts to a new contract, bring the ban into play — Government confirmation is awaited; and (2) the position on day-one rent reviews under renewal leases granted before commencement, pursuant to arrangements entered into on or after 17 March 2026, is genuinely unclear and needs specific advice.