For decades, upwards‑only rent reviews (UORRs) have been a defining feature of commercial leasing in England and Wales. That position is now set to change fundamentally. The English Devolution and Community Empowerment Act 2026 (the Act) has received Royal Assent and includes provisions that will prohibit upwards‑only rent review mechanisms in commercial leases once brought into force.

Current status

Although the Act received Royal Assent on 29 April 2026, the ban is not yet in force. The relevant provisions will be commenced by secondary legislation and are widely expected to take effect no earlier than 2027. Accordingly, existing leases remain unaffected for the time being, subject to the limited retrospective provisions discussed below.

Leases within scope

The ban applies to business leases in England and Wales, broadly defined by reference to Part II of the Landlord and Tenant Act 1954, granted on or after the Effective Date (to be confirmed). This includes leases that are “contracted out” of the 1954 Act and superior leases where the tenant does not occupy but could do so for business purposes.   This will affect all commercial landlords, irrespective of sector.  

Specifically, the following will be caught by the ban:

  • New leases including renewal leases granted on or after the Effective Date;
  • Put and call options, where a tenant is contractually obliged to enter into a lease or a landlord is contractually obliged to grant a lease at a future date, where that arrangement was entered into on or after 17 March 2026; and
  • Underleases that are granted on or after the Effective Date even where the head lease provides that the underlease must contain UORRs and in this instance, control of rent review terms in sub-leases will fall to the parties.

The ban will not cover the following:

  • Existing leases currently in place (unless varied to include UORR provisions);
  • Agreements for lease entered into before the Effective Date where the lease was granted pursuant to that agreement;
  • New leases granted before the Effective Date; and
  • Put and call options where the arrangement was made prior to 17 March 2026.

Once in force, the Act will render ineffective any upwards‑only provision in a rent review clause where the reviewed rent is not fixed or fully ascertainable at the date of grant. In practice, this captures the most commonly used review mechanisms, including:

  • open market rent reviews;
  • index‑linked reviews; and
  • turnover‑based rents,

where these are coupled with an upwards‑only restriction.

The effect is not to remove rent reviews altogether, but to convert them into two‑way reviews, permitting rent to move downwards as well as upwards.

What is not prohibited?

The ban does not apply to rent mechanisms where the rent is known in advance. As a result, the following will remain permissible:

  • stepped rents or fixed uplifts;
  • fully predetermined increases; and
  • rent reviews that already operate on an upwards‑or‑downwards basis.

The Act also contains anti‑avoidance provisions, preventing parties from achieving the economic effect of an upwards‑only review through alternative drafting techniques.

Limited retrospective effect

As referenced above, while the ban is not generally retrospective, a significant amendment introduces a targeted retrospective element relating to renewal arrangements.

Where a tenancy renewal arrangement (such as an option or agreement for renewal) is entered into on or after 17 March 2026, any lease granted pursuant to that arrangement will be caught by the ban, even if the original lease predates commencement.

This point is particularly important for landlords and tenants currently negotiating renewal options, agreements for lease, or reversionary arrangements, as the rent on renewal (and any subsequent reviews) may be required to operate on a two‑way basis.

Practical implications

The ban represents one of the most significant changes to commercial leasing since the 1954 Act. Landlords, investors, and lenders will need to reassess:

  • valuation and funding assumptions;
  • portfolio risk in a falling market; and
  • the drafting of renewal options and agreements entered into now.

Tenants may welcome the potential for rent to reflect market conditions more accurately, but the change may result in exiting leases with UORR provisions commanding a greater premium.

Conclusion

The prohibition on upwards‑only rent reviews marks a decisive shift in English and Welsh commercial property law. While the ban is not yet in force, its future impact is clear, and parties entering into leasing arrangements now must consider carefully how the Act may affect renewals, subletting strategies, and long‑term asset value once the legislation comes into force.