Ban on upwards-only rent reviews: eight key questions answered
The ban on upwards-only rent reviews in commercial leases in England and Wales is now on the statute book. It appears in Schedule 37 of the English Devolution and Community Empowerment Act 2026, which received Royal Assent on 29 April 2026. The government's stated aim in introducing the ban was to support high-street recovery and to make commercial leasing fairer. However, the ban extends well beyond retail premises, and all owners and occupiers of commercial property will need to understand its implications.
21.05.2026
Irwin Mitchell’s recent survey of 500 office occupiers revealed that it is not only landlords who are concerned about the impact of the ban: almost a quarter of occupiers believe that the ban may detrimentally affect them.
1. Are all types of leases affected by the ban?
The Act inserts new provisions into the Landlord and Tenant Act 1954 by way of a new s54A and Schedule 7. The prohibition on upwards-only rent reviews applies to business tenancies within the meaning of the 1954 Act and covers most types of commercial lease, including retail, hospitality, offices, warehouses, data centres, but not agricultural or mining leases. The ban applies whether or not a lease benefits from security of tenure.
A tenant does not need to be in actual occupation for the ban to apply: where there are tiers of headleases and intermediate leases sitting above the occupational lease, all the leases will be within the scope of the ban.
Renewal leases (whether statutory or agreed) and leases granted pursuant to options are also caught.
2. What is banned?
Upwards-only reviews
The Act introduces the concept of a “reference amount”. This is a rent determined by:
the effect of inflation or any other index or multiplier;
the actual rent or a hypothetical market rent; or
the tenant’s turnover.
Any rent review mechanism that requires the new rent to be higher than the reference amount will be ineffective. In other words, a lease cannot require the rent to be the higher of the passing rent and the reference amount. Nor, on the face of it, can the parties agree a collar (i.e. lower limit) on a reference amount, although the government has signalled its intent to consult further on this specific point. If such provisions are included in a lease, the rent will be determined as if the upwards-only element were not there.
Headlease provisions requiring upwards-only reviews in subleases
Once the Act comes into effect, provisions in headleases that require upwards-only rent reviews to be incorporated into subleases will also be unenforceable. This provision of the Act may lead to misalignment and a rental shortfall in circumstances where there is a pre-ban headlease (which can be subject to an upwards-only rent review) and a post-ban sublease (which must be capable of upward and downward rent review).
Attempts to avoid the ban
The legislation contains anti-avoidance measures which will capture any attempts to circumvent the ban. For example, provisions in side letters which attempt to replicate the effect of an upwards-only review, such as a requirement for the tenant to make an equivalent payment to “top up” the rent if it falls upon review, will not be permissible.
3. What is not banned?
Pre-ban leases
Upwards-only rent reviews in existing leases are not banned and will continue to operate as before.
Rent reviews with reference to the open market etc.
Once the Act is in force, parties are still free to agree rent reviews by reference to the open market, indexation or turnover, provided the contractual mechanism does not require the reviewed rent to be greater than the reference amount.
Reviews to the higher of two reference amounts?
Initial guidance from the Ministry of Housing, Communities and Local Government suggests that parties may be able to agree an effective rent review by reference to the higher of market rent and index-linked rent. In principle, this could give rise to a downwards rent review if both measures fall below the passing rent. This point is likely to be subject to clarification in further government guidance and should not yet be relied on for drafting purposes.
Fixed increases
In a world where market rents, inflation and turnover can all potentially go down as well as up, landlords may elect to provide for fixed rental increases at defined intervals – these are permitted by the Act.
4. When will the ban come into effect?
The Act is not yet in force and there is no stated timetable for implementation, which will be via secondary legislation. The government has indicated that it intends to consult on the use of caps and collars in rent reviews prior to implementation. The ban is therefore widely expected to take effect no earlier than 2027.
Even so, the Act is already directly relevant to some current negotiations:
Tenancy renewal arrangements (see below)
Provisions in leases being entered into now which seek to prescribe rent review terms in future underleases (see above)
The wider context of the impending ban is also likely to indirectly impact current negotiations:
Landlords may be keen to commit tenants to longer leases containing upwards-only rent reviews while they still can
Tenants may wish to consider whether they are better off entering into shorter leases for the time being and then renegotiating terms at lease expiry when the ban is in effect. When evaluating this, tenants will need to factor in the fit-out and other costs associated with potentially relocating, if a renewal cannot be negotiated on acceptable terms.
5. Are current transactions affected?
Any lease granted before the Act comes into effect will not be caught by the prohibition on upwards-only rent reviews. This includes reversionary leases (leases granted now to take effect in possession at a future date).
If a lease is granted after the Act comes into effect, it will be caught, unless it was granted pursuant to a “protected pre-commencement arrangement” that is, an arrangement that was entered into before the Act came into effect. For example, in circumstances where an agreement for lease (which is not a tenancy renewal arrangement) is entered into on 31 May 2026 and the Act comes into force on 1 January 2027, the lease may still contain an upwards-only rent review, even if the lease is granted on 1 February 2027.
This will be welcome news for developers who are negotiating pre-lets now for leases that will be granted months or years in the future when a development is complete. They will be able to include effective upwards-only rent reviews, provided the relevant agreement for lease is exchanged before the Act comes into force.
However, that position needs to be considered alongside the retrospective element affecting tenancy renewal arrangements (see below).
6. What is the retrospective element?
As noted above, the ban will apply only to leases granted after the new Act comes into force. Generally, leases granted pursuant to pre-commencement arrangements remain outside the ban even if granted after the Act is implemented.
An important qualification, however, is that tenancy renewal arrangements do not benefit from the protection for pre-commencement arrangements. Tenancy renewal arrangements (such as put and call options and agreements for lease with existing tenants) entered into after 17 March 2026 are caught by the ban, if the resulting lease is granted after the Act comes into effect. In such cases, the ban on upwards-only rent reviews applies both to the rent payable at the start of the new lease and any rent reviews in that new lease.
For more detail on the retrospective element of the ban, see this further analysis by real estate disputes partner, Will Scott.
7. Can tenants take control of rent reviews?
Yes, the Act enables tenants to trigger rent reviews even if the lease only enables the landlord to initiate the process. This prevents landlords from simply sitting on higher rents in a falling market.
8. How will the ban impact the market?
The ban is generally positive news for tenants, who will welcome the prospect of rent reviews which share the benefit and risk of rising and falling market conditions more evenly between landlords and tenants. However, our recent occupier survey revealed that 22% of occupiers believe that the ban may, in fact, be detrimental for tenants. These tenants are probably concerned that landlords’ response to the ban will be to find new ways to manage the inflation risk, such as shorter lease terms, more frequent rent reviews or fixed rental increases. Perhaps they are also concerned about the implications on their ability to sublet without a rental shortfall.
The initial response of investors to the ban has been one of significant alarm – the investment market will not generally favour the uncertainty that upwards and downwards rent reviews bring and there will need to be a period of recalibration. We may well see the emergence of a dual market; leases that contain effective upwards-only rent review provisions and leases that do not. Investors may prefer the former due to the security of the income stream.
Whilst owners and occupiers need to be familiar with the changes now, there is still some uncertainty around the specifics of implementation (e.g. pending the outcome of the consultation on collars and caps). This lack of fine detail makes the job of the draftsperson extremely difficult. There is therefore likely to be a flurry of changes to industry-standard lease drafting once the detail is known, much closer to the implementation date. For decades, upwards-only rent reviews have been standard in the market and have formed the underlying basis for valuation. It is inevitable that the market will be unsettled and will need to readjust once the detail is known and new market norms and drafting emerge.
Pending the emergence of new norms, we may see investors attempting to seek safe harbour in fixed rental increases or index-linked rents (inflation rarely falls, of course). Tenants on the other hand will be reluctant to contract away the stronger position which the new legislation has conferred.
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