A new direction for rent review clauses

Upwards-only rent reviews (UORRs) have been a staple in commercial leases in England and Wales since the 1960s. By ensuring that rents will only ever increase or remain static, investors have had decades of considerable income certainty, regardless of any depressive impact market conditions might have on rent.

However, on 29 April 2026, the English Devolution and Community Act 2026 received royal assent, thus marking the end of the era of UORRs.

What does the ban cover?

The act applies to all business tenancies in England and Wales including:

• leases with or without security of tenure;
• where the tenant does not occupy or has sublet; and/or
• where the tenant is in occupation for non-business purposes (provided business use is permitted under the lease).

The act’s main aim is to ban provisions in commercial leases which place an artificial floor on rent where the future level of rent is not known at the outset. This is achieved through Schedule 37 of the act, which introduces a new Schedule 7A and 7B into the Landlord and Tenant Act 1954.

How does the ban operate?

Where a lease provides for the rent to be reviewed by reference to an uncertain figure, the so-called ‘reference amount’ (for example open market value, an inflation index or turnover rent), the revised rent can never be higher than the reference amount. Any element of the provision requiring the revised rent to be higher than the ‘reference amount’ will be disapplied. Instead, the new passing rent will be the same as the reference amount.

To illustrate, in the case of a traditional upwards only open market rent provision, where the revised rent is stated to be the greater of the passing rent or the open market rent, the act would automatically vary the provision such that any new rent would simply be the open market rent, regardless of whether it goes up or down. Thus, at the point of review, the existing passing rent becomes irrelevant.

Although the act draws on similar legislation introduced in Ireland in 2009, its later adoption has enabled the government to close some identified loopholes by incorporating wide anti-avoidance measures in the act. These include:

• landlord-only rent review trigger provisions will not be permitted;
• side letters or top-up mechanisms will be ineffective;
• put options requiring a tenant to take a renewal lease at the higher of the market and passing rents are prohibited.

What does the ban not cover?

The act only concerns itself with rent review provisions where the revised rent is not known and cannot be determined at the time the tenancy is granted. It does not prohibit pre-agreed increases, such as:

• fixed and stepped rents;
• pure index-linked rent reviews or turnover rents provided there is no collar;
• rent review multipliers (eg CPI + 3%).

Permitting rent review multipliers does appear counter-intuitive but the focus is on prevention of artificial floors and a re-balancing of risk rather than distortion.

Timings and transitional provisions

The operative provisions of the act are not yet in force and are not expected to come into effect until late 2027 or even 2028. This gives the government time to complete a promised consultation exploring the possibility of permitting balanced caps and collars in rent review provisions. In practice, this could allow a downwards collar of, say, 3% and a corresponding cap of 3%. However, there is no guarantee that this will be the outcome.

For the most part, the ban will not be retrospective. Therefore, existing leases and leases entered into before the date the act comes into force (the effective date) will not be subject to the ban. Only leases entered into after the effective date will be subject to the ban.

There is an exception for leases entered into after the effective date, pursuant to arrangements entered into before the effective date, which are not tenancy renewal arrangements with existing tenants entered into on or after 17 March 2026.

The term ‘arrangement’ will catch contractual arrangements (such as an agreement for lease) and options (including a tenant’s options to renew and a landlord’s put option).

Next steps

Prior to the act coming into force, market practice on UORRs is not necessarily expected to change. However, it seems likely that tenants will be emboldened to resist UORRs in new leases.

Landlords should be aware that any new ‘tenancy renewal arrangements’ will be caught by the act (as will any such arrangements completed since 17 March 2026).

In the long term, landlords will need to consider how they wish to structure their lease portfolios. In the shorter term, longer leases with upwards only rent review provisions entered into before the ban comes into force are likely to have more value than those entered into after it takes effect. Shorter leases are likely to result in the next lease of the premises being subject to the ban.

The act represents a significant change in the commercial lease market. The ban will undoubtedly reshape market norms in respect of lease structures and re-balance risk between landlords and tenants.