Upwards-Only Rent Reviews: What Commercial Landlords and Tenants Need to Know Following the English Devolution and Community Empowerment Act 2026

The English Devolution and Community Empowerment Act 2026 (the “Act”) containing a ban on upwards-only rent reviews (UORRs) received Royal Assent on 29 April 2026. 

The Act introduces the most significant change to commercial rent review provisions for decades. Although the relevant provisions are not yet in force, the legislation fundamentally changes how rent review clauses can be structured in new business tenancies in England and Wales.  

What is an upwards-only rent review?

An upwards-only rent review (“UORR”) is a clause under which rent can increase (or stay the same) on review, but cannot decrease even if market rents have fallen. Historically, UORR provisions have been standard in commercial leases across virtually all sectors. Typical examples include:

• open market reviews with an upwards-only assumption;
• CPI/RPI-linked reviews with a minimum uplift;
• turnover rent provisions with a guaranteed minimum increase; and
• “collar” provisions preventing rent from falling below the passing rent.

What has changed?

The Act prohibits upwards-only rent review mechanisms in many new commercial leases in England and Wales. In broad terms:

• if the reviewed rent is not fully fixed or ascertainable when the lease is granted; and
• the review mechanism only permits the rent to increase or guarantees a minimum increase,

the upwards-only element will become unenforceable once the Act comes into force.  

Has the law already changed?

Not yet. The Act received Royal Assent on 29 April 2026, but the UORR provisions require secondary legislation before they come into force. Current market expectation is:

implementation is unlikely before 2027; and

• there may first be further consultation on the detailed operation of the regime, including whether caps and collars will be permitted in modified form.  

Until commencement:

• existing lease drafting remains valid including leases granted pursuant to an agreement for lease; and
• landlords and tenants can still agree traditional UORRs

subject to the anti-avoidance provisions discussed below.

However, parties should not assume current transactions are immune from the new regime because the Act contains important transitional and retrospective provisions.

Which leases will be affected?

The ban applies to:

• new business tenancies; and
• renewal business tenancies,

in England and Wales.  

Importantly, the Act applies whether or not the lease is contracted out of the Landlord and Tenant Act 1954; and it applies even where the tenant is not itself in occupation.  

How will the ban work?

Where a review/initial rent calculation is caught by the Act, it will effectively remove the upwards-only element.

Will the Act apply retrospectively?

Partially. A significant late amendment introduced a targeted retrospective element aimed at renewal structures.  Where a “tenancy renewal arrangement” is entered into on or after 17 March 2026, a future renewal lease may still be caught by the ban even if:

• the lease itself is completed before commencement; or
• the original tenancy pre-dates the Act.  

This provision is intended to prevent parties from locking in future upwards-only reviews before the legislation formally takes effect.

What is a “tenancy renewal arrangement”?

The Act defines this concept broadly. In essence, it captures arrangements under which:

• a tenant can require the grant of a future tenancy; or
• a landlord can require the tenant to take a future tenancy.

This is likely to include:

• options to renew;
• extension rights;
• put and call arrangements;
• agreements for lease linked to continuation rights;
• side letter renewal mechanisms; and
• potentially other legally operative renewal arrangements.  

The courts are likely to look at substance over form.

Are existing leases protected?

Generally, yes. The legislation is not intended to reopen or invalidate existing rent review clauses in leases already granted before commencement.  

Accordingly:

• existing upwards-only clauses should remain enforceable; and
• current investment valuations and financing structures should remain intact for those leases.

However, caution is required where:

• existing leases contain renewal options;
• extension rights are being exercised;
• agreements for lease are still conditional; or 
• parties are restructuring occupation arrangements now.

Once the law is in force, it will apply to any renewal lease though, including those renewal leases granted substantially ‘on the same terms’ pursuant to the Landlord and Tenant Act 1954. Any upward only element of rent review clauses contained in such renewal leases will be invalidated and unenforceable. 

What types of rent review are still permitted?

The Act does not prohibit all rent increases. The following are expected to remain lawful:

• fixed stepped rents agreed at the outset;
• genuinely upwards/downwards reviews;
• fixed review formulas ascertainable at grant; and
• potentially certain capped or collared structures, depending on future regulations and consultation outcomes.  

The distinction is likely to be whether the future reviewed rent is:

• objectively ascertainable at the date of grant; or
• capable only of moving upwards.

What about reversionary leases?

Reversionary leases are one of the more technically uncertain areas. A reversionary lease granted after commencement is likely to constitute a “new tenancy” and therefore fall within the regime.

More difficult questions arise where:

• the reversionary lease is agreed before commencement; or
• the arrangement operates as a renewal or continuation mechanism.

Much will depend on:

• whether the arrangement constitutes a “tenancy renewal arrangement”; and
• the eventual wording of commencement regulations and early judicial interpretation.

This is likely to become an area of significant technical analysis in major leasing and development transactions.

Does the Act apply in Scotland?

No. The Act only to England and Wales.  

What should landlords do now?

Landlords should:

• review standard lease precedents;
• identify transactions with future renewal mechanics;
• assess agreements for lease currently being negotiated;
• consider valuation and funding implications;
• review development appraisals; and
• consider whether alternative rent review models are required going forward.

Particular care should be taken in:

• pre-lets;
• institutional portfolio transactions;
• sale and leaseback structures; and
• long income investments.

What should tenants do now?

Tenants should:

• review existing renewal rights;
• reconsider current lease negotiations;
• assess whether future rent flexibility may become available;
• identify leases likely to renew after commencement; and
• consider whether current negotiations should anticipate future downwards review capability.

Tenants negotiating now may also wish to resist new long-term upwards-only structures which could shortly become commercially outdated.

What are the likely next steps?

We understand that the Government will consult on allowing collars (possibly with associated caps), which would potentially be introduced via secondary legislation before the Act comes into force in 2027.

Sarah Skuse is on the UORR Working Group for Real Estate:UK who will share its views on caps and collars consultation so please contact Sarah for more information or to feed your views into the consultation.