The ban on upwards-only rent reviews in commercial leases in England and Wales received Royal Assent on 29 April 2026 but is not yet in force. It is contained in Schedule 36 of the English Devolution and Community Empowerment Act 2026.
The government introduced the ban because upwards-only rent review clauses can keep rents artificially high during downturns, reducing tenant profitability and potentially increasing consumer prices. Although the policy is aimed partly at supporting high streets and economic growth, it will apply broadly to business leases, not just retail leases. Investors, including pension funds, have raised concerns about the uncertainty that upwards-and-downwards reviews may create.
The ban will apply to leases occupied, or capable of being occupied, for business purposes. This includes not-for-profit businesses such as sports clubs, but excludes agricultural and mining leases. It will not affect existing leases granted before the ban comes into force, nor leases granted under a pre-existing “arrangement”. However, new leases granted under the Landlord and Tenant Act 1954 renewal procedure will be caught, as will renewal leases granted under options contained in leases entered into on or after 17 March 2026.
The term “arrangement” is not defined, but appears broader than a contract and is likely to include options and agreements for lease. The ban will also apply to rent review mechanisms contained in side agreements.
The ban is expected to catch traditional open market reviews, index-linked reviews, turnover rents, and other mechanisms where the reviewed rent is not known or ascertainable when the lease is entered into. Fixed stepped rents and fixed percentage increases should remain permissible because the rent can be calculated from the outset.
Several areas remain uncertain. Index-linked reviews, CPI-plus formulas, hybrid reviews such as the higher of open market rent and RPI, and cap-and-collar arrangements may require government guidance or consultation before their treatment is clear. In particular, collars or mechanisms that prevent rents from falling appear difficult to reconcile with the purpose of the Act.
The Act includes anti-avoidance provisions. Landlords will not be able to avoid the ban by giving only themselves the right to trigger a review, using renewal options to preserve the passing rent where market rent has fallen, limiting the amount by which rent can decrease, or requiring tenants to make compensating payments if rent falls.
Landlords may respond by seeking higher initial rents to price in the risk of future reductions, although this will depend on whether tenants are willing to accept those terms. Time will now tell how this will affect the commercial property market.