The only way is down (…or sideways): upwards only rent review ban becomes law

The English Devolution and Community Empowerment Act received Royal Assent on 29 April 2026 (the “Act”). As reported on in our update earlier this year the Act contains a ban on upwards only rent reviews in new commercial leases. Whilst the Act is now law, most of the provisions relating to banning upwards only reviews aren’t expected to take effect until at least 2027 – a decision from the Government regarding timing on that is awaited. However certain provisions relating to renewal leases and options will be retrospective - explained further below.

Which leases will be caught?

New leases

Once the ban comes into force it will catch new business leases in England and Wales and any renewal leases, regardless of whether the tenant is actually in occupation. Parties will not be permitted to contract out of the ban.

Subleases

Any upwards only rent review provisions contained in subleases granted after the ban comes into force will also be void. This is true even where the headlease (regardless of when that headlease was entered into) contains requirements for subleases to include upwards only rent reviews. The effect will be potential disparity between rents payable under headleases and subleases.

Existing leases

Existing leases, or any leases (including reversionary leases), granted before the ban comes into force, will not be caught by the ban.

What does the ban mean in practice?

If a lease which is caught by the Act contains an upwards only rent review provision, the ban will mean that the upwards only provision is void. The practical effect would be that the rent would be deemed to be the lower of the passing rent and the reviewed amount.

By way of example:

A lease is entered into after the ban is implemented for a period of 10 years
That lease contains an upwards only CPI linked rent review on the 5th anniversary of the lease
On the day of review, the passing rent is £100,000 per annum
The CPI index has fallen, and the revised rent is calculated to be £80,000 per annum

The ban would mean that the “upwards only” component is void. The new rent would be £80,000.

The retrospective element

Tenancy renewal arrangements

Introduced as a late stage amendment, the Act now contains a retrospective element. Tenancy renewal arrangements which are entered into on or after 17 March 2026 will be caught by the ban.
“Tenancy renewal arrangements” are arrangements with existing tenants of existing premises and could include the following:

Agreements for leases
Put and call options
Renewal options contained in leases

Reversionary leases

Interestingly, reversionary leases granted before the main provisions come into effect do not appear to be caught by this retrospective element.

Day one rent reviews

Crucially, day one rent reviews contained in leases granted pursuant to any such tenancy renewal arrangements will also be caught by the ban. In practice, this may mean that the rent payable on day one of the new lease may drop from the passing rent.

Any new tenants of new premises will not be subject to this retrospective element.

What rent reviews are caught by the ban?

Any upwards only rent reviews which are linked to a variable measure will be caught by the ban. This will include upwards only:

open market reviews
index linked reviews
turnover rent reviews

It is not yet clear whether or not the ban captures comparative terms between two variable measures, as opposed to between passing rent and one variable measure – for example, if the reviewed rent is expressed to be the higher of open market rent and an index linked rent. Government guidance is expected on that.

What rent reviews can still be included?

The Act does not prohibit all upwards rent increases. The following are still permitted:

Genuine upwards/downwards reviews
Stepped rents which are ascertainable (or expressly set out) at the date the lease is entered into

The Government has also indicated its intention to consult on the use of caps and collars.

What this means for you

The key considerations

Live matters - review any live or upcoming matters particularly where these include renewal arrangements with existing tenants (keeping the key date of 17 March 2026 in mind)
Consider transaction timings - it is of course tricky to predict when the ban will come fully into force, but the rule of thumb should be the longer the transaction will take, the more likely it is that it will be affected by the ban
Look to alternative review methods - is there scope to agree stepped rents or index linked reviews (on the assumption that the index is less likely to fall than on an open market basis)
Consider renewal strategies – are there opportunities to re-gear leases at an earlier stage?

This will all be fact and case specific. Our expert team are on hand to advise you in more detail on your options and to help you navigate the risks. If you have any questions, please get in touch.

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