Upwards-Only Rent Reviews Ban: What the New Legislation Means for Commercial Leases

On 29 April 2026, the English Devolution and Community Empowerment Act 2026 received Royal Assent, confirming that upwards-only rent reviews in commercial leases will be banned. But while the legislation is now in place, the ban is not yet in force. Many are waiting for the government to confirm when it will start to apply, but it is anticipated to be in late 2027 or 2028.

So, nothing changes immediately, but the direction of travel is clear, and the market will need to prepare.

What’s actually been decided, and why?

Once the new rules take effect, upwards-only rent review clauses will no longer be allowed in qualifying commercial leases. This means rent reviews will no longer be able to operate on an “upwards only” basis. Instead, rent will need to move in line with market conditions (both up and down).

This represents a significant change from the current position in England and Wales, where upwards-only rent reviews have long been the norm in commercial leasing, providing landlords and investors with certainty of income.

Traditionally, landlords have relied on upwards-only rent reviews, meaning rent could either stay the same or increase at review dates, but never decrease. This approach has long influenced how commercial properties are valued and financed. The proposed ban changes that position by giving tenants greater protection against paying above-market rent during periods when market rents are falling.

Another significant change that may be introduced is that tenants will now be able to start the rent review process themselves, rather than leaving this solely in the landlord’s control. In the past, landlords could delay rent reviews for long periods because strict time limits usually did not apply. This sometimes resulted in tenants facing large backdated rent payments once the new rent was agreed, often with interest added as well. Allowing tenants to initiate the review process means they may be able to secure a rent reduction much sooner, where market conditions justify it.

It’s law—but not yet in force

Even though the Act is now law, the ban itself only becomes effective once the government brings it into force through secondary legislation.

At the moment, there is no confirmed start date. However, it is widely expected that there will be a transition period to give landlords, tenants and lenders time to update their lease documentation, valuation assumptions and pricing models.

There is also a possibility of further detail being added through regulations, particularly around how the rules apply in practice and whether any limited exceptions will exist.

Does this affect existing leases?

At present, existing leases are not affected.

However, the impact is not quite that simple. The new rules are expected to apply to leases entered into on or after the 17th of March 2026, where there is a contractual or statutory right to renew. Once the ban comes into force, any renewal lease could also fall within the new regime. This may affect both the starting rent payable under the renewed lease and any future rent reviews during its term.

As a result, timing will be critical in determining whether a particular arrangement will be affected.

What this means in practice

This reform will have a material impact on how commercial property is let, valued and financed.

In particular:

• Lease drafting will need to be updated, as upwards-only rent review provisions will no longer be enforceable in qualifying leases.
   
• Valuation assumptions may shift, particularly where long-term income certainty has historically underpinned pricing models.
   
• Transaction structuring will require closer attention, especially regarding timing and conditional agreements.
   
• Renewal strategy may change, given the likely application of the regime to renewal leases.
   
• Tenants will be given the power to initiate rent reviews, allowing them to plan and budget without the previous levels of uncertainty associated with open-market reviews.
   
• Parties will be unable to contract out of the ban, meaning landlords cannot negotiate it out of the contract.
   
• Landlords will look to other methods of protecting their investment, namely using index-linked reviews (such as CPI) rather than open-market rates.

We expect this to lead to a period of market adjustment as landlords, tenants, and funders adapt to a different approach to risk and rent-setting.

What happens next?

For now, the key is awareness and planning rather than immediate action. The legal framework is in place, but the practical impact is still ahead.

That said, anyone involved in granting, taking, or investing in commercial leases should already be thinking about how this may affect future income and portfolio strategy.

We will continue to monitor the details as they emerge and provide updates as the commencement date and regulations become clearer.

Get in touch

If you would like to discuss how this may affect your leases, portfolio, or upcoming transactions, please get in touch with our commercial property team on 023 9275 3575 or email enquiries@warnergoodman.co.uk.