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The Government's Proposed Ban on Upwards Only Rent Reviews – What we know now: July 2026
Under The English Devolution and Community Empowerment Act 2026, the government plan to introduce as legislation, a ban on upwards only rent reviews.
This proposed piece of legislation is not yet in force, however it received Royal Assent on 29 April 2026 and is expected to go through a consultation period before coming into effect, possibly in 2027, though some industry commentators are now suggesting this could be 2028. The proposed ban will affect all commercial property in England & Wales.
Proposed Ban on Upwards-Only Rent Reviews – What Could This Mean for the Commercial Property Market?
For decades, upwards-only rent reviews have been one of the defining features of commercial property leases in England and Wales. They have provided investors with certainty of income, supported asset valuations and formed a fundamental part of lease negotiations across every commercial property sector.
That long-established approach is now set to change.
The English Devolution and Community Empowerment Act 2026 introduces provisions to prohibit upwards-only rent review clauses in new business tenancies. Whilst these provisions are not yet in force, they represent one of the most significant reforms to commercial leasing for a generation and are already prompting landlords, occupiers and professional advisers to consider how future lease structures may evolve.
The Current Position
Traditionally, most commercial leases have provided for rent to be reviewed to the open market rental value at fixed intervals, commonly every five years in leases of 10 years plus, though sometimes at shorter intervals in shorter term leases.
Where market rents have increased, the passing rent increases accordingly. However, if market rents have fallen, an upwards-only rent review prevents the rent from reducing below the passing rent.
Whilst it has broadly been the case that commercial leases have included upwards only rent reviews, tenants have always had the opportunity to seek to negotiate upwards/downwards, inflation linked, stepped or turnover based rent reviews which may or may not have been accepted market conditions dependent.
Supporters of upwards only rent reviews argue that it provides investment certainty, encourages long-term investment and underpins property values.
Critics suggest that it can leave occupiers paying rents above prevailing market levels, particularly following periods of economic change, placing unnecessary pressure on businesses and potentially restricting investment and regeneration.
The Government's reforms seek to address this perceived imbalance.
What is Proposed?
The legislation proposes that future rent review provisions in new business tenancies should allow rents to move both upwards and downwards in line with market conditions.
Importantly, the legislation does not abolish rent reviews altogether.
Instead, it seeks to prohibit review mechanisms that can only ever result in an increase in rent.
The reforms are expected to apply to:
- new business tenancies;
- renewal leases granted under the Landlord and Tenant Act 1954;
- certain agreements for lease and options.
Existing leases containing upwards-only rent review provisions are generally expected to continue unaffected – but only until the ban comes into effect and the lease subsequently expires!
The new legislation will include leases granted inside and outside of the Landlord and Tenant Act 1954.
The legislation also catches any options entered into in existing leases on or after 17th March 2026.
Will It Fundamentally Change Commercial Leasing?
Possibly. But perhaps not in the way many initially expect.
Commercial property markets have always adapted to legislative change. Rather than removing rental growth from leases, the market is likely to develop alternative mechanisms to achieve similar commercial outcomes.
We may see increased use of:
- index-linked rent reviews
- Fixed stepped uplifts
- turnover-based rents
- shorter lease terms
- more frequent lease re-gearing.
Equally, landlords may seek higher initial rents or reduced incentive packages to compensate for increased income uncertainty, i.e. less rent free and therefore higher headline rents.
As a result, whilst occupiers may gain greater flexibility at rent review, the overall financial outcome of lease negotiations may not change as much as the government has perhaps anticipated.
The Investment Perspective
One of the reasons upwards-only rent reviews became so prevalent is that they provide certainty of a base rent in volatile economic market conditions.
Predictable rental income supports investment values, assists lending decisions and provides investors with confidence when acquiring commercial property.
Allowing rents to reduce during the term of a lease inevitably introduces additional risk.
Whether that risks ultimately affects pricing, investment yields or lending appetite remains to be seen, but it is likely to become an important consideration for investors, funders and valuers alike.
The market has successfully adapted to previous legislative reforms, and there is every reason to believe it will do so again. The question is not whether the market will adapt, but how quickly.
A Rent Review / Lease Advisory Surveyor's Perspective
Whilst much of the commentary surrounding the legislation has understandably focused on the legal implications, the practical consequences for the commercial property market may prove even more significant.
From a lease advisory perspective, we expect negotiations to become increasingly focused on the allocation of future rental risk.
Rather than debating whether rents can only increase, negotiations are likely to concentrate on:
- the evidence used to establish market rent;
- the drafting of alternative review mechanisms;
- assumptions and disregards within review clauses;
- lease incentives and headline rents;
- and the overall balance of commercial risk between landlord and tenant.
This may also lead to greater scrutiny of rental evidence and an increased reliance on third party dispute resolution, such as Independent Experts and Arbitration where parties cannot agree the outcome of a review.
In practice, the quality of comparable evidence, market analysis and valuation advice could become as, if not more important than the wording of the lease itself.
Looking Ahead
The proposed ban on upwards-only rent reviews represents one of the most significant changes to commercial leasing for many years.
Whether it ultimately delivers the intended benefits for occupiers without adversely affecting investment and development remains to be seen.
What is certain is that the market will adapt. Lease structures will evolve, negotiation strategies will change, and commercial property professionals will continue to play a vital role in ensuring transactions remain fair, balanced and commercially effective.
As specialists in commercial lease advisory, Glenny will continue to monitor developments as the legislation progresses and advise clients on the practical implications for lease negotiations, rent reviews, lease renewals and commercial property investment.
With combined experience spanning over 100 years across a team of five dedicated lease advisory specialists including two Independent Experts, one of which is also an Arbitrator in commercial property disputes; Glenny’s Lease Advisory team have the expert knowledge and experience to guide our clients through all commercial lease matters and legislative change.
