Commercial rent review is about to change forever: are you ready?

A statutory ban on upwards-only rent review clauses in commercial leases is now on the statute book. The provision, contained in the English Devolution and Community Empowerment Act 2026, which received Royal Assent on 29 April 2026, will fundamentally reshape the commercial property market.

What is changing?

For decades, upwards only rent review clauses have been a cornerstone of commercial property investment, guaranteeing that rent at review can stay flat or rise, but never fall. That certainty for landlords and lenders is now coming to an end.

Under the Act, any variable rent review mechanism in a new or renewal commercial lease in England and Wales, must be genuinely two way. Where open market value, index linked (RPI/CPI) or turnover linked reviews are used, the mechanism must be capable of producing a downward adjustment, not merely an upward one. Notably, stepped rents and fixed uplifts are unaffected, since the rent level is known at the outset.

The Act also gives tenants the right to initiate rent reviews themselves, even where the lease reserved that right solely to the landlord, which is a meaningful shift in bargaining power in a falling market.

When does it kick in?

Not yet. A separate commencement order is required, and commencement is currently expected no earlier than 2027, with 2028 flagged as a possibility.

The Government has indicated that it will consult on the detail of implementation before commencement, including whether and how caps and collars will be permitted under the new regime. Key questions remain open though, will a 0% floor be acceptable? What about positive collars or defined cap and collar ranges?

While the legislative framework is settled, parties should not assume full certainty until that consultation concludes and guidance is issued.

Who is affected?

The ban will apply to new leases and lease renewals (including leases renewed under the Landlord and Tenant Act 1954) entered into after commencement.

Existing leases are generally unaffected and will keep their upwards only provisions intact.  However, where a headlease contains a clause requiring any sublease also to include an upwards only rent review, from commencement of the Act, that requirement will cease to be enforceable, even if the headlease itself pre-dates the Act. Head tenants should be aware of the potential mismatch this creates. Their own rent could still move upwards under an existing headlease whilst any sublease rent they receive must be capable of falling.

The retrospective sting: why 17^th March 2026 already matters

The ban is not generally retrospective; existing leases keep their upwards only provisions intact. However, an important carve out is already in play. Any lease entered into on or after 17^th March 2026 which includes a contractual renewal option will be caught by the ban when that option is exercised, regardless of when commencement actually occurs. This applies to put and call options to renew, as well as to separate option agreements contained in side letters or separate deeds. The rent on day one of the renewed term, and all subsequent reviews within it, must be capable of moving both up and down.

The practical consequences are significant and immediate. Rent setting mechanics for renewal can no longer be treated as boilerplate. Heads of terms being negotiated right now should specifically address how rent will be determined both at review during the initial term and at the commencement of any renewed term. The 17 March 2026 date has already passed, so if your deal includes a renewal option, you are already in scope.

What should you be doing now?

Landlords and investors:

• Before commencement, there is a strong commercial case for locking in longer leases now (to retain the upwards only rent review provisions for longer, regardless of when the ban takes effect). 
• Once the ban is in force, expect the opposite dynamic: shorter terms, more frequent reviews, and greater use of index linked or fixed stepped rents as landlords seek to preserve flexibility and income security.

Lenders:

• Review your existing loan book to identify assets secured against leases with renewal options entered into on or after 17 March 2026, ie, those are already within scope of the ban.
• For new lending, stress-test income cover ratios against a scenario where rents fall at review, rather than assuming a floor.

Tenants:

• Be alert to landlords pushing for longer lease terms right now – i.e., a landlord locking you into a long upwards only rent review lease today is deliberately extending the period before you benefit from the ban. Resist where you can or insist on adequate break rights if a longer term is unavoidable.
• Post-commencement, use the new two-way review regime as leverage from the outset, and factor the tenant right to initiate reviews into your heads of terms immediately.

The bottom line

The upwards only rent review has been a fixture of commercial property in England and Wales for generations. The ban is not yet in force, but the direction of travel is clear and irreversible. Landlords, tenants, investors and lenders who start adapting their strategies now will be far better placed when commencement arrives.

If you would like to discuss how the ban on upwards only rent reviews may affect your portfolio, lease negotiations or lending arrangements, you can get in touch with Shereen Lloyd here. She advises landlords, tenants, investors and lenders across all sectors on how to prepare..