The ban on upwards-only rent reviews represents one of the most significant changes to commercial leasing in recent years. Whilst the provisions are not yet in force, landlords, investors, developers and occupiers should start considering how the reforms could affect lease negotiations, investment strategies and asset values.
What is changing?
The ban is contained within the English Devolution and Community Empowerment Act 2026, which received Royal Assent on 29 April 2026. Somewhat unexpectedly, the provisions were introduced during the passage of legislation primarily concerned with devolution and local government, rather than through dedicated property legislation or following a formal consultation process.
The Act will introduce restrictions on upwards-only rent review provisions in business tenancies falling within the scope of the Landlord and Tenant Act 1954, including contracted-out leases. The provisions are not yet in force and require secondary legislation before commencement. Current indications suggest implementation may occur during 2027, although no commencement date has yet been confirmed.
Which leases will be affected?
The Act is intended to apply to business tenancies generally, whether or not they benefit from security of tenure under the Landlord and Tenant Act 1954, and includes both headleases and subleases. It is not limited to traditional retail premises and could affect a wide range of commercial property sectors.
Importantly, the legislation is not generally retrospective. Existing leases should remain unaffected. However, lease renewals granted after the provisions come into force are expected to be caught by the new regime. In addition, certain renewal options created on or after 17 March 2026 may be affected even where the original lease was granted before implementation.
This creates a potentially important distinction between existing leases, lease renewals and agreements currently being negotiated.
What rent review mechanisms are caught?
The legislation is directed at rent review provisions where the reviewed rent cannot be determined at the date the lease is granted and where the review is linked to:
Open market rental value;
Hypothetical market rent provisions;
Turnover-based rents; or
Index-based reviews such as RPI or CPI.
Where the reviewed amount would otherwise be lower than the current passing rent, the tenant will be entitled to benefit from that reduction. In effect, traditional upwards-only mechanisms will become upwards-and-downwards reviews.
By contrast, fixed rental increases and stepped rents are not currently intended to be caught by the legislation because the future rent can be determined when the lease is granted.
What does this mean for landlords?
For decades, upwards-only rent reviews have provided certainty of income and formed a key assumption underpinning investment valuations and financing arrangements.
The removal of that certainty could have several consequences:
Rental income may become less predictable.
Asset valuations may become more sensitive to market fluctuations.
Lenders may take a closer look at future income projections.
Investors may need to reassess assumptions when acquiring or refinancing assets.
Landlords may seek alternative methods of preserving value within lease structures.
The British Property Federation has previously argued that upwards-only rent reviews provide a stable and predictable income stream and support investment decisions. The industry will therefore be watching closely to see whether the reforms produce any material change in occupier behaviour or rental values.
How might the market respond?
Whilst the full market impact remains uncertain, several trends may emerge. Landlords may increasingly favour:
Shorter lease terms;
Fixed rental uplifts;
Index-linked reviews;
Higher initial rents to compensate for future uncertainty; and
Alternative rent review structures designed to preserve value.
Tenants, on the other hand, may seek to negotiate longer lease terms, increased flexibility and mechanisms allowing them to benefit from softer market conditions.
The Government has also indicated that a review to the higher of multiple review methods may remain permissible, although further guidance is anticipated. For example, a lease might provide for rent to be reviewed to the higher of an index-linked figure and open market rent. The extent to which such structures survive scrutiny in practice remains to be seen.
What about rent collars?
A common question is whether landlords will simply introduce rent "collars" or minimum rent protections.
The legislation appears designed to prevent landlords circumventing the reforms through minimum rent provisions. Current indications are that minimum rent protections or rent collars will not be permitted, although the Government has indicated that the position remains subject to further consultation.
What should landlords do now?
Although there is no immediate change, landlords should already be considering the implications when negotiating new leases, renewal rights and future asset management strategies.
In particular, landlords should:
Review leases currently under negotiation;
Consider the impact on future rental growth assumptions;
Assess the effect on investment valuations and financing arrangements;
Monitor developments regarding commencement dates and guidance; and
Take advice on proposed renewal structures where options are being negotiated.
Looking Ahead
The abolition of upwards-only rent reviews marks a potentially significant shift in the balance between landlords and occupiers. Whether the reforms ultimately achieve the Government's stated objective of supporting business occupiers remains to be seen, but there is little doubt they have the potential to influence lease structures, investment decisions and valuation assumptions across the commercial property market.
For landlords and investors, the key message is clear: whilst the reforms are not yet in force, now is the time to understand how they may affect your portfolio and future leasing strategy.
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Disclaimer: This publication is provided by Laytons LLP for informational purposes only. The information contained in this publication should not be construed as legal advice. Any questions or further information regarding the matters discussed in this publication can be directed to your regular contact at Laytons LLP or Laytons’ Real Estate Investment & Finance team.