Ban on Upward-Only Rent Reviews

Upward-only rent review provisions have traditionally been a common feature of commercial leases in England and Wales. These clauses generally allow the rent payable under a lease to increase or remain the same following a rent review, even where the market rent for comparable premises has fallen. For many years, these provisions have provided landlords with certainty over future rental income and have formed part of the commercial negotiations between landlords and tenants.

Recent legislative developments mean that this long-established position is set to change. The ban on upward-only rent review clauses is expected to affect the negotiation and drafting of new commercial leases across a wide range of sectors. Whether you are a landlord, tenant, developer or investor, it is important to understand how these changes may affect your commercial arrangements. Obtaining legal advice at an early stage can help identify potential issues, protect your commercial interests and help ensure that lease documentation reflects the changing legal landscape.

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What Is the Ban on Upward-Only Rent Reviews?

The English Devolution and Community Empowerment Act 2026 introduces a ban on upward-only rent review provisions in certain new business tenancies. The relevant provisions will come into force on a future date to be specified by the Government. When they do, lease terms that prevent rent from reducing following a rent review are expected to become unenforceable where the legislation applies.

The changes are intended to provide greater flexibility for commercial tenants where market rental values decrease during the term of a lease. Rather than preventing rent from falling, future rent review provisions may need to allow for both increases and decreases depending on market conditions at the relevant review date.

Although the legislation is primarily aimed at new commercial leases, landlords and tenants negotiating future transactions should consider how the changes may affect the drafting of rent review provisions and wider commercial terms. Existing commercial leases are not affected by the changes. However, existing lease precedents and standard documentation may require review before being used for future transactions once the legislation comes into force.

Key Issues for Landlords and Tenants

The changes may have significant implications for the commercial property sector. Landlords may need to reconsider how rental income is assessed when negotiating new leases, while tenants may benefit from greater flexibility where market rents fall during the lease term.

Parties entering into new leases should carefully consider the structure of any rent review mechanism. This may include open market rent reviews, index-linked reviews, fixed uplift provisions, turnover rent provisions or alternative methods of calculating rent. The drafting of these provisions will become increasingly important to ensure that the lease accurately reflects the parties’ commercial intentions while remaining legally compliant.

The changes may also affect investment decisions, property valuations and financing arrangements. Investors and lenders often take future rental income into account when assessing commercial property transactions and may need to consider how the new legislation could affect those assessments.

Potential Issues Following the Ban

Every commercial lease is different and the impact of the legislation will depend on the circumstances of the transaction.

Questions may arise regarding the application of the legislation to agreements for lease, lease renewals, mixed-use developments, existing lease portfolios and transactions negotiated before the legislation comes into force. Parties may also need to consider whether existing precedent documents remain suitable for future transactions and whether amendments are required to reflect the new legal position.

Parties should also consider whether any heads of terms, agreements for lease or ongoing negotiations may need to be updated before completion if the legislation comes into force before the transaction is finalised.

Delays may also occur where parties have different expectations regarding future rent review provisions or where lenders, investors or other third parties require amendments to lease documentation. Addressing these issues at an early stage can help reduce the risk of disputes and avoid unnecessary delays during negotiations.

Why Legal Advice Is Important

The ban on upward-only rent reviews represents an important development in commercial leasing. It is important to help ensure that lease documentation reflects the current legal position and that rent review provisions continue to meet the commercial objectives of the parties.

Legal advice can assist with drafting and negotiating lease terms, reviewing rent review provisions and advising on the potential impact of the legislation. Careful legal advice can also help identify potential risks, resolve issues before they become obstacles and help protect commercial interests throughout the transaction.

Early legal advice may also assist landlords, tenants and investors reviewing existing leasing strategies or preparing for future acquisitions, disposals or developments that may be affected by the new legislative framework.

How We Can Help

The legal framework governing commercial leases continues to evolve. Obtaining legal advice at an early stage can help identify potential issues, minimise risk and help reduce compliance risk.

Our experienced team provides clear and practical advice on all aspects of commercial leasing. We can assist with drafting and negotiating leases, reviewing rent review provisions, advising on property transactions and helping landlords and tenants prepare for implementation of the legislation and review their standard leasing documentation.

We work closely with landlords, tenants, developers, investors and other professionals to protect their interests and help achieve successful commercial outcomes.

How to Get in Contact

If you require advice on the ban on upward-only rent reviews or any aspect of commercial leasing, contact our experienced team today.

To get in touch, call us on 020 4570 9600 or email hello@birdigroup.com.

We can advise and assist clients throughout England and Wales.