Ban on upwards-only rent reviews: what does this mean for you? 

The English Devolution and Community Empowerment Act 2026 received Royal Assent on 29 April 2026. Although the ban on upwards-only rent reviews in commercial leases is not yet in force, with implementation expected through regulations likely in 2027, the fact that the legislation has been passed is already influencing behaviour in the commercial letting market. 

Leases granted before the commencement date will continue to operate in accordance with their terms, and upwards-only rent review provisions in those leases will remain enforceable for the duration of their term. As a result, there is already some evidence of landlords seeking to secure longer-term leases ahead of the new regime coming into force. 

The ban will apply to the principal forms of variable rent review, including open market, index-linked and turnover-based mechanisms, to the extent that they prevent the rent from decreasing. Fixed or stepped rents, where the rent is ascertainable at the outset, are not affected and are likely to be considered more frequently as an alternative structure. 

While landlords may look to progress renewals ahead of commencement, a late amendment to the legislation introduces a limited retrospective effect in relation to “tenancy renewal arrangements”. Where an option or agreement to renew is entered into on or after 17 March 2026, the resulting renewal lease will be subject to the ban, even if it is granted after commencement pursuant to that earlier arrangement. In practice, renewal arrangements entered into now should be approached on the basis that the ban will apply. 

When the legislation comes into force, tenants will also have the ability to trigger and progress a rent review where such rights are not included in their lease. Although the detailed mechanics will be set out in regulations, the intention is to prevent rent reviews being delayed in circumstances where market conditions may result in a reduction. 

For landlords, the removal of upwards-only protection in new and renewal leases introduces an element of uncertainty into rental income. This has implications for valuation, lending and portfolio management, particularly where income assumptions have historically relied on the operation of upwards-only reviews. 

Subletting structures also require careful consideration. Where a headlease predates the ban and remains subject to an upwards-only mechanism, but an underlease granted after commencement is caught by the new regime, there is potential for a mismatch in rental obligations. This may expose the head tenant to a shortfall and should be considered when reviewing existing portfolios and future letting strategies. 

Market commentary has focused on the potential impact on income certainty and pricing. Investor bodies have raised concerns as to how the removal of an upwards-only floor may affect valuation and lending assumptions. At the same time, there is an expectation that landlords will respond through pricing and lease structure, with increased use of stepped rents, index-linked mechanisms and, in some cases, higher initial rents to reflect the change in risk profile. 

Need expert legal advice? Contact Claire-Elaine Arthurs here.