Flexibility at a price? What occupiers really think about rent review reform

Because while the legal position is changing, the commercial reality is far less certain. And early signs suggest the outcome may not be as straightforward — or as tenant-friendly — as many assume.

Irwin Mitchell’s 2026 Office Occupier Survey, based on responses from 500 senior decision-makers responsible for office space across the UK, suggests occupiers remain deeply concerned about rising costs in an unsettled economic climate. Far from being viewed as an unqualified benefit, reform of rent review is prompting clear unease among businesses already navigating financial and operational pressure

The real story here is not the removal of a mechanism, but how the market will respond and reprice the risk left behind.

The legal shift

The proposed ban is broad in scope. It will apply to all business tenancies in England and Wales, regardless of security of tenure status or whether the tenant is actually in occupation.

Leases completed once the ban comes into force (unless granted as a result of a prior agreement completed pre-commencement) must not include rent review mechanisms which prevent the reviewed rent from dropping below the passing rent or (subject to the result of potential future consultation) impose a collar on the reviewed rent.

The legislation has retrospective effect on renewal arrangements (call or put options, agreements for lease etc with existing tenants) entered into on or after 17 March 2026 and where the resulting lease is granted after commencement of the legislation meaning the ban will apply to both day one and later rent reviews under that renewal lease.

What the survey revealed

The pressure on costs taken together with uncertain market conditions means that occupiers are being financially cautious when taking decisions.  This translates to fewer respondents indicating plans to move to new premises in the coming year, with 28% planning to stay in their existing premises and a further 43% indicating they will stay and reconfigure their existing space during the next 12 to 18 months.

Our respondents indicated that they are prioritising making the office a “place to be” offering better amenities and altering the space to make it more attractive to staff as part of continued attempts to encourage more employees to return to the workplace. An interesting development this year, is that it was universally reported that employees are now attending the workplace slightly more than their mandated requirements which represents a meaningful behavioural shift for employees.

Environmental issues remain a key focus with 78% confirming that they are actively considering how to cut levels of embodied carbon and many are currently obtaining (40%) or considering obtaining (47%) ESG/Green financing.

With these demands on occupiers, it is little wonder then that 22% of occupiers fear the ban on UORR and will have a negative effect on their organisation.   A key take away is that 83% of respondents would be willing to accept a longer lease then they currently have on the basis that they would pay the market rate for the duration. 

So occupiers do not just value the opportunity of a more flexible review structure they also value predictability.  This will allow them the space to budget for key strategic business priorities and affords them stable long term occupation strategies.

Central tension – flexibility vs cost certainty

The ban will have a more wide-ranging effect than previously expected and the market will need to adapt. UORRs have been fundamental to how the entire commercial property ecosystem operates, from investment underwriting through to lending and valuation assumptions.

For landlords and investors, they have provided a degree of predictability over income that is difficult to replicate. For tenants, they have represented a clear, if often unpopular, allocation of risk.

Removing that structure will not eliminate risk; it will redistribute it. The reform has been framed as tenant-friendly, but that assumes landlords will absorb the additional uncertainty rather than price it elsewhere. Our survey suggests occupiers are not convinced that will happen.

The ban on UORRs should provide gains in flexibility for tenants, as was clearly the government’s objective.  However, this needs to be set against the potentially negative impacts should the additional risk be passed back to tenants in other ways.

The market rarely absorbs risk, it reallocates and prices it.  Landlords are likely to respond through higher headline rents, shorter (and “contracted out”) terms, indexation and the wider use of turnover or stepped rents.

UORRs historically underpin long income securitisation and lending assumptions for real estate finance. Without them valuation volatility increases which may make lenders act more conservatively and potentially increasing the cost of borrowing.

Why some occupiers may lose out

For some occupiers the ban may simply exchange visible rigidity for less visible pricing risk leaving them liable to pay upfront for the lack of an UORR or reducing the concessions available as part of deals (fit-out, rent-free periods etc).

Occupiers with leases coming to an end in the near future are more exposed to this additional risk, with cyclical occupiers particularly affected.

Those occupiers in the market for “prime” assets are likely to be more at risk as Landlord’s may retain greater pricing power in negotiation.  Conversely other assets in the secondary market may allow occupiers more leverage at negotiation stage but may be subject to greater volatility as an asset class overall.

Strategic responses emerging from occupiers

Whilst our survey reveals that a majority of occupiers want to invest in and retain their current space, the price and structure of that continued long term occupation is now increasingly uncertain for some occupiers.

Occupiers will need to think carefully about lease length, break options and what flexibility they will require across their portfolio but these will all need to be assessed against the changing landscape brought about by the ban, once it is in force.

What happens next

The market will need to adapt to the change once it is in force.

In the short term, the market is likely to experiment with a range of lease structures, rent models and review mechanisms, with different sectors responding in different ways. Some of these approaches may harden into new quasi-standard models, although the longer-term effect may be a more bespoke and fragmented leasing landscape. The market will eventually find a new pricing equilibrium, but its shape is not yet clear.

Many occupiers may yet benefit from the reform. But there is a growing recognition that it is unlikely simply to reduce costs; more likely, it will change where those costs sit and when they are paid.

This article first appeared in Estates Gazette