Commercial Property - Insights & Guidance

Upward only rent reviews have been a standard feature ofmany commercial leases for decades.

In simple terms, they mean that when a rent review takesplace, the rent can either increase or stay the same but it cannot go down,even if the market rent has fallen.

That may now be changing.

The English Devolution and Community Empowerment Act 2026received Royal Assent on 29 April 2026 and includes provisions to ban upwards onlyrent review clauses in new and renewal commercial leases in England and Wales.The ban is not yet in force and will require commencement regulations, withimplementation generally expected from 2027 or 2028.

For landlords, tenants, investors and lenders, this couldrepresent one of the most significant changes to commercial lease negotiationsin years.

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What Is an Upwards Only Rent Review?

An upwards only rent review clause prevents the rent fromdecreasing at review.

For example, if a tenant is paying £50,000 per annum and theopen market rent at review is assessed at £45,000 per annum, an upwards onlyclause would usually mean the rent stays at £50,000.

If the market rent is assessed at £60,000 per annum, therent increases to £60,000.

This has historically given landlords predictable income andhelped support investment values. For occupiers, however, it can mean beinglocked into above market rents during weaker trading periods or fallingmarkets.

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What Has Changed?

The legislation will introduce a new regime into theLandlord and Tenant Act 1954. In broad terms, where the ban applies, rentreviews will no longer be able to operate on an upwards only basis.

Instead, if the relevant review mechanism produces a lowerrent, the reviewed rent may be able to go down as well as up.

Importantly, the proposed ban applies to England and Wales,despite being contained within wider English devolution legislation. It is alsoexpected to apply to both protected and contracted out business tenancies underthe 1954 Act.

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Will It Apply to Existing Leases?

No - the ban is not expected to be retrospective.

It is intended to apply to leases granted after the relevantprovisions come into force. Existing leases should not automatically berewritten.

However, it is expected to apply to lease renewals aftercommencement, including statutory renewals. This means the issue could becomevery relevant for occupiers approaching lease renewal over the next few years.

There may also be important questions around surrender andregrant situations, substantial variations, reversionary leases, options torenew and agreements for lease. These details will need careful review once thecommencement regulations and guidance are available.

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What Types of Rent Review Could Be Affected?

The ban is expected to capture rent reviews where thereviewed rent is not fixed or fully known at the start of the lease. That could include:

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• open market rent reviews;
• index-linked reviews, such as CPI or RPI;
• turnover rent provisions;
• other notional or formula based rent review mechanisms.

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Fixed uplifts and stepped rents may fall outside the banbecause the rent is known from the outset. As a result, we may see morelandlords proposing fixed increases or alternative review structures in futurelease negotiations.

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What About Rent Collars?

Rent collars are likely to become a major area of focus.

A collar sets a minimum rent at review. On the face of it, acollar could operate in a similar way to an upwards only review if it preventsthe rent from falling below a certain level.

The Government appears alive to this issue. Furtherregulations may define when, if ever, rent collars are permitted. Possibleexceptions could include collars set at a certain percentage below the passingrent, or collars used alongside corresponding rent caps.

Until further guidance is available, occupiers should treatcollars with caution and seek advice before agreeing to them.

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Why Has the Government Introduced the Ban?

The Government’s stated aim is to support businesses,particularly high street occupiers, by preventing rents from being artificiallyheld above market levels.

The reform has been welcomed by some tenant groups butcriticised by parts of the property industry. The British Property Federationhas argued that upwards only rent reviews are not commonly used in many shorterhigh street leases and that the change may create uncertainty for investors.

Both points matter.

For occupiers, the ban could create more balanced leasenegotiations. For landlords and investors, it may affect income certainty,valuation assumptions and funding.

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What Could This Mean in Practice?

The biggest practical impact may be on lease negotiation strategy. Landlords may respond by seeking:

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• higher initial rents;
• longer fixed rental uplifts;
• shorter lease terms;
• more index linked reviews;
• tighter rent collars;
• reduced rent free periods or incentives.

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Occupiers, meanwhile, may have more scope to negotiateleases where rent can move with the market, rather than being fixed at thehigher of passing rent and market rent.

This does not mean every rent review will fall. It simplymeans the review mechanism may become more balanced where market evidencesupports a lower figure.

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What Should Occupiers Do Now?

The ban is not yet in force, but occupiers should startpreparing.

If you are negotiating a new lease, renewal or regear over the next 12–24 months, consider the following:

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1. Check whether your proposed lease includes an upwards only review.
2. Understand whether the review is open market, index-linked, turnover based or fixed.
3. Consider whether a fixed increase, cap, collar or alternative structure is commercially fair.
4. Take advice before agreeing to a lease renewal or regear.
5. Think about the wider package - rent, incentives, break options, repair obligations and flexibility.

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The key point is this: rent review clauses are no longerjust standard legal wording. They could materially affect your future propertycosts, exit strategy and negotiating position.

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Final Thought

The proposed ban on upwards only rent reviews is a majorshift in the commercial leasing market.

For occupiers, it could create fairer outcomes and reducethe risk of being trapped above market rent. But it may also lead to new leasestructures, new negotiation tactics and different trade-offs from landlords.

The detail will matter.

If your business is taking a new lease, renewing an existinglease or considering a regear, now is the time to review the rent review clausecarefully and understand how the new regime may affect your position.

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Need Advice on a Rent Review, Lease Renewal or Regear?

Paul Mills of Deft Real Estate is a RICS Registered Valuerand lease advisory specialist advising commercial occupiers across GreaterManchester, Cheshire, Lancashire, Merseyside, Yorkshire and the wider North ofEngland.

If you are negotiating a new lease or reviewing your currentlease terms, get in touch for clear, practical advice before you commit.

Keywords: Upwards Only Rent Review Ban, Rent ReviewManchester, Lease Renewal Manchester, RICS Valuer Manchester, Commercial LeaseAdvice Manchester, Commercial Property Advice North West.

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