The Government’s proposals, which were introduced in the Schedule to the English Devolution and Community Empowerment Bill, are now law following the English Devolution and Community Empowerment Act 2026 (the “Act”) receiving Royal Assent on 29 April 2026.
The proposed ban is not yet in force but is expected to take effect in 2027, although it is possible that this may be as late as 2028 following the introduction of secondary regulations.
The ban on upwards-only rent reviews is wide-ranging and will mark a fundamental shift in UK commercial leasing.
Once the ban is in force, leases completed after the commencement date - unless granted pursuant to a pre-commencement agreement - must not include rent review mechanisms that prevent the reviewed rent from falling below the passing rent or, subject to the outcome of any future consultation, impose a collar on the reviewed rent. Any such provisions included in a lease will be void.
The legislation has a retrospective effect on renewal arrangements entered into on or after 17 March 2026, including call or put options and agreements for lease with existing tenants, where the resulting lease is granted after the legislation commences. In those cases, the ban will apply to both the initial and later rent reviews under the renewal lease. However, where an agreement for lease is entered into with a new tenant (rather than the existing tenant), before the ban comes into force, any resulting lease will fall outside the scope of the ban, whether granted before or after commencement of the ban. As this is not a tenancy renewal arrangement, the 17 March 2026 date will not apply.
The reforms will remove a long-standing mechanism underpinning income certainty and valuation. As a result, significant changes will be required to lease structuring, valuation assumptions, and financing.
What is the background and policy rationale behind the ban?
Upwards-only rent reviews have been market standard for decades and have had the effect of insulating landlords from falling rents. Tenants have traditionally borne the full downside risk, often paying above-market rents in downturns.
It is the Government’s view that upwards-only rent reviews contribute to unaffordable rents, which in turn leads to a reduction in tenant occupancy, producing unacceptable levels of vacancy on the high street.
The reform forms part of the Government’s broader high street regeneration strategy, alongside rental auctions, and is therefore a policy-driven intervention rather than market-led.
The key elements of the ban under the Act
What is the scope of the Act?
The Act applies to business tenancies capable of falling within Part II of the Landlord and Tenant Act 1954, capturing the vast majority of commercial leases, including retail, hospitality, office spaces, warehouses, and data centres, but not agricultural or mining leases. The ban applies regardless of whether the lease has been contracted out of the security of tenure provisions of the 1954 Act.
Will the ban apply to existing leases?
The ban will be prospective in effect. Rent review clauses in leases granted before the ban comes into effect will not be affected. The ban applies to all new leases and renewal leases granted after the ban comes into effect, with limited exceptions for pre-existing contractual commitments.
Will there be any retrospective element to the ban?
Yes, there is limited retrospective effect. While existing leases are generally unaffected, some renewal arrangements may be caught. Any renewal lease entered into since 17 March 2026 that includes a renewal option will be caught by the ban.
What about subletting provisions in pre-existing leases?
Where a lease requires an authorised sublease to contain an upwards-only rent review, any such requirement will be ineffective after the ban comes into force. The head landlord will not be able to mandate that the sublease contains a specific rent review provision. Any rent review terms in the sublease will need to be agreed between the parties to the sublease. This may reduce the head landlord’s control over the sublease rent review and create an income shortfall for a tenant where the rent under a post-ban sublease falls below the rent payable under its pre-ban headlease.
Which rent mechanisms will the ban prevent?
Any rent review where the reviewed rent cannot fall, including open market, index-linked or turnover-linked reviews with an upwards-only element, will be prohibited.
Are there any rent structures which will be permitted?
Stepped rents and fixed uplifts remain possible where the rent is ascertainable at the outset. Upwards and downwards index-linked reviews and upwards and downwards turnover-linked reviews will also be permitted.
At the time of writing, we are still awaiting the Government’s consultation on caps and collars. A cap and collar is a mechanism that sets a limit on how far a reviewed rent can increase or decrease, providing a level of certainty regarding the income a lease is likely to generate. We do not yet know whether these will be permitted. However, the most likely outcome is that, if a collar is permitted, a corresponding cap would need to be imposed on any rent increase.
Can the landlord simply decide not to trigger a review?
No. Where a review can only take place if triggered, tenants will have equivalent rights to trigger reviews. This will be the case even where the lease previously contained a provision stating that only the landlord could do so.
Are there any anti-avoidance measures?
Yes. Parties cannot contract out of the ban, and specific anti-avoidance provisions are in place to prevent parties from trying to circumvent it. For example, side arrangements providing for the rent to be topped up in the event of a decrease on review will not be permitted.
The initial market response
The proposals have raised real concern across the market, particularly because they were introduced with limited industry debate. That concern is compounded by continuing uncertainty around both the timing of the ban and how the legislation will work in practice once implemented. A key point to watch will be the Government’s promised consultation on whether “caps and collars” will be permitted to cushion risk for the landlord, and if they are, what restrictions might apply.
The potential market effect
The practical effect is likely to be felt across valuation, financing, lease negotiation, and portfolio strategy well before the ban is formally in force, in particular:
Income and valuation uncertainty
A loss of a guaranteed rental floor is likely to affect asset values, investment underwriting, and pricing.
Financing implications
Lenders may respond to less predictable income streams by tightening terms, restructuring covenants, or reducing leverage.
Lease structuring shifts
Emerging alternatives are likely to include shorter lease terms, pre-agreed fixed stepped rents, more frequent reviews, more landlord break options, and greater use of indexation.
Behavioural change
Landlords may resist long protected leases or price risk through higher initial rents. They may also consider offering fewer tenant incentives, such as break clauses, rent-free periods, and fit-out contributions.
Tenants are likely to think carefully about lease length, break options and the general level of flexibility within the portfolio of properties they occupy. They may also want to explore alternative rent review mechanisms in advance of the ban.
More disputes
The ban may encourage tenants to scrutinise and challenge proposed rent increases more closely, and they will be incentivised to do so in a downturn.
Potential upside effects
One possible counterpoint to the view that the legislation will increase disputes is that the ban could result in parties selecting mechanisms with fixed or ascertainable rent increases which will increase certainty and reduce the likelihood of disputes.
Lessons from other jurisdictions
It is worth looking to other jurisdictions to assess the potential implications and effects of a ban on upwards-only rent reviews. Ireland introduced a similar, although not identical, ban in 2010. The Irish market adapted to that change, including through the adoption of caps and collars, and the Government in England and Wales has committed to consulting on caps and collars before introducing the ban. Despite initial concerns about material market disruption, Ireland’s move to open market rent reviews appears to have become broadly accepted across the property sector over the last 15 years.
What are the recommended practical responses and actions?
Although the ban has not yet come into effect, for planning purposes both landlords and tenants should treat it as an immediate issue, while keeping in mind that implementation details and timing remain subject to change.
Landlords and investors may wish to consider:
- Review existing portfolios to identify any exposure to upwards-only rent review provisions on renewals and assess the sensitivity of valuations to potential downward rent movements.
- Re-gear existing leases before the ban takes effect where this could preserve the current rent review structure for longer, as pre-commencement leases will not be affected.
- Future proof new leases which will permit subletting by including drafting which protects the landlord in the event the ban is in force before a sublease is granted.
- Revisit heads of terms for new lettings and prepare alternative rent structures that are capable of operating within the new legislative framework. This will require early consideration of how new leases affected by the ban can be structured, including whether fixed stepped rents, index-linked reviews or other compliant mechanisms are appropriate.
- More broadly, reassess leasing strategy, including whether shorter lease terms, unprotected leases, higher headline rents, landlord break options or other structures may be more appropriate in light of the income uncertainty.
Conclusion
The proposed ban marks a structural rebalancing of landlord–tenant risk in the commercial market.
While implementation details remain uncertain, the strategic implications are immediate: landlords and investors may wish to begin adapting leasing models, valuation assumptions, and financing strategies now. Tenants should consider raising the implications of the ban in lease negotiations and reviewing the implications of long-term lease occupation in light of price uncertainty.
There is still a possibility that cap and collar rent reviews may offer an alternative methodology and some security for lenders and investors. We await the Government consultation on caps and collars, together with further guidance on issues that remain unclear - we will update further as that information becomes available.
Key Contacts
If you would like any further information on anything you have read, please contact Clare Strachan or Stephanie Newton
