The upwards-only rent review ban is now law

Upwards-only rent review clauses have long been a standard feature of commercial leasing, but that is set to change.

The English Devolution and Community Empowerment Act 2026 (“the Act”) has recently been passed. It introduces a prohibition on upwards‑only rent review clauses in new commercial leases in England and Wales.

The ban is not generally retrospective, but it does have implications for leases and related documents being negotiated now.

The Act will take effect once statutory guidance has been published. It is not expected to be in force before 2027. The government has also confirmed that it will consult on the use of rent caps and collars before commencement of the Act. In this article, we explain what the ban covers, which leases it affects, and what landlords and tenants should be considering when negotiating lease terms now.

Nature of the ban

The Act bans rent review clauses where their effect is that the review is upwards only and the new rent is not ascertainable when the lease is granted.  Pre-agreed stepped rents providing for increases set out in the lease are permitted and will not be affected. Indexed-linked reviews are also permitted, although the review clause will need to provide for rents to fall in line with the relevant index. This means the rent must be able to move down as well as up, depending on the index.

Which leases are affected? 

The Act will apply to all business leases.  

Point to watch: leases granted on or after 17 March 2026

The ban is not generally retrospective in effect. Existing leases and any new leases granted at any time before the ban is brought into effect will not be affected. Similarly, leases granted after the commencement will also be outside the ban if they are granted pursuant to an “arrangement” (such as an agreement for lease or option) entered into before the Act takes effect. 

This means upwards-only reviews will not disappear overnight. However, any lease granted pursuant to an option to renew entered into on or after 17 March 2026 will be subject to the ban. This includes an option to renew contained in a lease or in a separate agreement, but will not include a new lease granted now with a term that takes effect in the future (a reversionary lease). 

Renewal leases granted pursuant to the statutory process in Part 2 of the Landlord and Tenant Act 1954 will also be caught.

What this means in practice

In practice this means that:

• Until the Act commences, landlords can still grant new leases with upwards-only rent review clauses.
• Where a lease contains an option to renew, the renewal lease cannot have an upwards-only review and will need to contain alternative review provisions.

This removes the opportunity for landlords to put in place leases with options to renew providing for upwards-only rent reviews before the Act comes into force.

The final text of the Act has yet to be published, and there remains uncertainty about some of the finer points of the alternative rent review mechanisms that will be permitted. However, once the ban takes effect, we are likely to see a move towards shorter leases with no rent review as well as increased use of index‑linked reviews and stepped rent provisions.

If you would like to discuss anything raised in this article, please get in touch with Kirsty Morley or Nicky Clemence, or your usual Burness Paull contact. 

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