Upward only rent review ban becomes law
min readThe ban on upward-only rent review provisions in all commercial business leases is now law following The English Devolution and Community Empowerment Act 2026 (the “Act”) receiving Royal Assent on 29th April. Once in force, it will catch all new/renewal leases (unless granted under a pre-commencement agreement) but not existing leases.
Timing? The ban is not expected to take effect until 2027 or 2028 following secondary regulations. In the meantime, we must wait and see if the government goes ahead and consults on the implementation details including the use of caps & collars in rent reviews; a mechanism which sets a limit on how far a reviewed rent can increase or decrease and provides a level of certainty regarding the income a lease is likely to generate.
There continues to be industry concern that such a significant market mechanism for reviewing rent has been banned, with no real industry debate. Landlords, investors, and lenders will now be looking at alternative options to structure rent reviews to continue to provide investment security and value. For tenants this is an important change, they will benefit from a rent review to the market level and potentially a falling rent where the lease contains a standard two- way rent review clause. There will be a trade off as landlords look to structure leases for flexibility around rental levels; this could mean less tenant lease incentives, such as break clauses, landlord capital costs contributions or rent free periods for fit outs. The market will readjust and we may start to see higher headline rents, shorter leases, more frequent reviews, and greater use of indexation or pre-agreed fixed stepped rents as investors look to secure rental income and market confidence.
What should landlords, tenants and investors consider now?
Landlords/Investors
- Review live transactions and recent completions that include renewal options: any lease entered into since 17 March 2026 that includes a renewal option— the renewal lease will be caught by the ban. This applies to both the initial rent payable on day one of the renewal and all future rent reviews during the renewal term so revisit review rent review provisions to ensure operate in a falling market.
- Consider re -gearing: some tenants may be willing to re- gear existing leases before the Act comes into force maintaining the existing rent review structure for longer ( the ban does not affect pre-commencement leases)
- Review asset management strategies: for leases expiring after the Act comes into force, particularly where gearing is high. Consideration of an emerging two-tier market, pre -commencement leases outside the ban and new leases (and those granted under renewal options caught by the 17th March 2026 back date) and the impact on valuations, income models, and lender’s criteria.
Tenants
- Factor the ban into heads of terms now; even though the ban is not yet in force, tenants should be considering reflecting it in current lease negotiations and weigh up their rent review options.
- Understand the new procedural rights: the Act gives tenants the right to trigger a rent review even where the lease allocates that right only to the landlord and this reduces the scope for landlord delay tactics in a falling market.
- Fully consider landlord counter-measures: landlords will look to alternative ways to protect income security which may result in complex drafting around the rent review provisions such as index – linked mechanisms.
For an overview of how the upward only rent review ban will operate and the late introduction of a limited retrospective element, please see here
