For anyone involved in commercial property in England, this is a moment to pay close attention to. The government’s gone after one of the most entrenched features of UK leasing practice: the upward-only rent review clause. And the fallout is going to shake up the way every landlord, tenant & adviser approaches commercial leases for years to come.
I’ve spent over 20 years advising on commercial property deals, and I can tell you without any exaggeration – this is the single biggest change to the way we structure rent in business premises since the Landlord and Tenant Act 1954 itself. Let me walk you through what’s happened, what’s next, and what you should do right now.
What You Need to Know
- The English Devolution and Community Empowerment Act 2026 (which got Royal Assent on 29 April 2026) bans upward-only rent review clauses in new commercial leases in England. The ban is due to come into force sometime between 2027 and 2028, once the secondary legislation gets passed.
- Landlords will have to choose between fixed rents, pre-agreed rent increases, or genuinely open-market rent review mechanisms where rent can actually go down as well as up. One thing’s for sure – rent can never go down during an upward-only rent review under the old regime – that era is well and truly over.
- The ban amends the Landlord and Tenant Act 1954 by adding new Section 54A and Schedules 7A and 7B, and applies to virtually all business tenants – including some that aren’t actually using the premises but still have a contractual right to occupy for business purposes.
- Landlords should be reviewing all their lease documents & financial models ASAP. Tenants should be getting ready to negotiate & deciding which rent review mechanism is best for their business needs.
- This article’s written by a UK solicitor with vast experience, but every situation is unique. Before you change your strategy, you should get some tailored advice from business solicitors or a Property acquisition solicitor or a Commercial disputes solicitor.
What’s Been Going On: How Upward-Only Rent Reviews Work Today
An upward-only rent review clause is a provision in a commercial property lease that basically says that when the rent is reviewed, it can go up or stay the same, but it can never go down. Upward-only rent review clauses have prevented rent decreases, no matter what’s been going on in the wider market. This mechanism has dominated UK commercial leases for decades – particularly from the 1980s onwards across office, retail, and industrial sectors.
Here’s how it normally works in practice:
- Rent reviews usually happen every 3 to 5 years
- At each review date, the market rental value gets assessed – usually by comparing similar commercial space lettings
- If the open market rent is higher than the existing rent, the rent goes up
- If the market value drops, the existing rent stays the same under upward-only clauses
- Some common rent review methods include market rent and RPI adjustments
Upward-only rent reviews have given landlords long-term income certainty. Landlords love upward-only rent reviews for their income stability, and lenders like them because they underwrite consistent cash flows. High property values have historically relied on this certainty.
But for tenants? It’s a very different story. Upward-only clauses can put a real strain on tenants during economic downturns. Tenants can face risks of paying above-market rent under upward-only agreements, and upward-only rent reviews can lead to increased default risk for tenants who just can’t afford their rent anymore.
The debate about banning upward-only reviews has been going on for years. Governments have consulted on the issue periodically since the 1990s. The pandemic, the cost-of-living crisis, and the ongoing shift in retail have all accelerated calls for reform. UKHospitality told the Bill Committee that in some high street cases, rents represent 10% of turnover, rising to over 12% in prime locations – showing exactly how exposed tenants are to rigid review terms.
The English Devolution and Community Empowerment Bill 2025: What It Actually Does
The English Devolution and Community Empowerment Bill was introduced to Parliament on 10 July 2025 and contains some detailed provisions aimed at banning upward-only rent review clauses in new commercial leases in England.
The English Devolution and Community Empowerment Act 2026 introduces a ban on upward-only rent reviews. Here’s the basic idea:
- Any rent review provision that prevents rent from falling is no longer allowed in new business tenancies
- Market-linked review clauses have to be genuinely “up or down”
- Landlords can still use fixed rents or pre-agreed fixed uplifts where the future rent is objectively clear at lease grant
- Index-linked reviews (e.g. CPI or RPI) are allowed as long as they let the rent move both ways
- “Collars”-minimum rent floors that prevent downward movement-are out
The Bill Tinkers with the Landlord and Tenant Act 1954 – What You Need to Know
The proposed Bill introduces significant changes to the Landlord and Tenant Act 1954, with new provisions to insert into the Act, specifically Section 54A and Schedules 7A and 7B. This will essentially create a new framework for security of tenure in England, targeting commercial property – think offices, shops, and warehouses. Residential leases are safe for now, but Wales, Scotland and Northern Ireland will have to follow suit later on.
As of April 2026 the Bill has got the Royal Assent, while the actual ban will only be effective from sometime between 2027 and 2028, once the necessary regulations start coming into play. Even so, landlords are already getting cold feet about their current lease structures, which are not going to be good enough soon.
Redefining the “Business Tenant”
The aim is to give a new definition to a “business tenant” under The Landlord and Tenant Act 1954. The current rule only allows a tenant to benefit from security of tenure if they’re physically occupying the premises for business purposes. This was seen as a major gap in the law.
The Bill will change this to make it so that even if a tenant isn’t in the building but has a contractual right to be, they’re still considered a business tenant. It looks like a pretty big expansion.
Why is this change important? It means that landlords can no longer game the system by letting a subsidiary hold the lease, or by saying the building is temporarily empty at the time the lease is reviewed – that way the previous upward-only ban won’t apply.
Here are some examples that you might find interesting:
- A property SPV has a whole head lease, but the real users of the offices are a group of companies within the same group that are operating the business from the premises
- A company has a fitted out but currently unfilled office space, which they’re holding onto with the intention of expanding into in the future
The new definition will stop landlords from trying to circumvent the ban. Business solicitors – that’s you – will need to go back and review the way your clients have structured their leases and group arrangements, to ensure that they’re not inadvertently shooting themselves in the foot with regards to the definition of a “business tenant”.
Which Leases Will Be Caught – and Which Won’t?
The ban will be on new commercial leases from now on – new high street shop leases, new office leases in office blocks, new industrial unit lets. However, there’s no retrospective effect to the Act, so existing leases are going to be untouched.
Leases likely to get caught in the net:
- Fresh fixed term high street shop leases
- Office floor lets in multi-occupancy buildings
- Industrial unit or logistics warehouse leases
- New leases for hotels, restaurants or gyms
- Renewal leases under the 1954 Act, once the ban starts coming into force
Likely exclusions or edge cases:
- Short-term pop-up lettings under 6 months that don’t have rent review provisions
- Agricultural tenancies – these are separately governed anyway
- Residential leases – as we’ve already said they’re safe from all this
- Specialist leases like infrastructure ones that might be carved out by secondary legislation
When it comes to Statutory Lease Renewals, courts will have to redraft contract wording which currently contains upward-only rent review clauses. On top of that, contracted out leases are still in scope. Ie – even if the lease between you and your tenant has been engineered to remove their right to renewal, you’re still subject to the new rules.
Another key point is – if you and your tenant agreed to lease or renew a lease from 17 March 2026 onwards, even if the lease itself predates the Act, the renewal lease can still be caught.
What will Replace Upward-Only Rent Reviews?
Landlords are still going to be free to structure rent reviews – it’s just no longer going to be possible for them to stop the rent from going down. Here are a few of the alternatives that’s already starting to be talked about:
| Review Structure | How It Works | Suitability |
|---|---|---|
| Fixed rent (no review) | Single rent for entire lease duration | Short leases, stable markets |
| Fixed uplifts | Pre-agreed increases (e.g. 10% every 5 years) | Medium terms, negotiable |
| Index-linked (CPI/RPI) | Rent moves with inflation index, up or down | Longer leases, both parties share inflation risk |
| Open market (upward/downward) | Rent reset to comparable market rents | All sectors, requires valuation |
| Turnover rent | Rent linked to tenant’s trading revenue | Retail, hospitality |
Lenders and valuers are going to want rental increases to be predictable, things like index-linked increases or a fixed uplift, rather than the usual open market reviews that can go either way. This is going to make a difference in how much you can borrow against an investment, and drafting the rent review clause in a new lease is going to be even more important than it already was. Even if you’re not new to this you should probably look into getting some help from a property acquisition solicitor or a leasing specialist when you’re negotiating new lease terms.
Timeline and Transitional Issues (2025–2028)
Here’s where things currently stand:
- 10 July 2025 – Bill is introduced to Parliament
- Late 2025 to early 2026: It goes through the committee, gets a report and then is looked at by the House of Lords
- 17 March 2026: This is a key date – if you enter into a renewal arrangement from this point onwards you might find that it gets caught out by new rules retrospectively
- 29 April 2026: Royal Assent – the Act becomes law, but the ban on upward only rent reviews hasnt yet come into effect
- 2027-2028 (expected): It should come into effect via secondary legislation
The transitional rules will likely work like this:
- leases already in place before the ban comes in won’t be affected
- agreements for lease that were signed before the ban but the lease itself hasn’t yet been signed after the ban – might still get caught out
- ongoing statutory lease renewals – will likely get caught if they happen post ban
- variations or extensions of existing leases – might trigger the ban if they introduce non-compliant terms
If you’re a landlord who’s planning some big lets or renewals in 2026-2027 you might want to think about bringing forward the completion date to keep existing upward-only structures intact for the fixed term – but only if you test the water with some proper legal scrutiny. But be warned – trying to get round the new law is fraught with danger and could get snagged by anti-avoidance provisions
Tenants who are negotiating now should probably assume that any lease that runs beyond 2027 will be affected on renewal. Do not rely on being able to keep upward-only rent review wording in future
Transitional detail may still get adjusted via secondary legislation later, so do keep an eye on government guidance and get some updated advice before you commit to a deal.
Impact on Landlords: Rethinking Your Commercial Lease Strategy
Think of this bit as your survival guide. The end of upward-only rent reviews wont mean the end of profitable commercial property ownership- but it will mean you need to rethink how you price and manage risk
Key strategic adaptations:
- set a higher headline rent right from the start to try and offset potential future reductions at review
- go for shorter leases with more frequent break clauses to limit your exposure
- opt for fixed uplifts or index linked increases rather than pure open market reviews
- consider turnover rents for retail and hospitality where you and the tenant share the trading risk
Landlords are usually responsible for doing the structural repairs in most leases and ensuring the building complies with health and safety regulations like electrical safety and other safety requirements. Nothing changes there
Service charges cover the additional costs beyond base rent – things like maintenance, insurance and common area expenses – and will continue to be a standard feature
For investment grade assets (prime London offices, dominant retail centres) open market upward and downward reviews might still work – but for secondary properties you might have to rely on fixed or indexed rent profiles to keep the income stable
Operational changes matter too – getting tighter covenant checks on tenants, being more proactive with asset management, and keeping a closer eye on what happens at each review date. You’ll need to work closely with your valuers, lenders and your business solicitors to ensure your revised rent structures remain bankable.
Opportunities for Tenants: Using the Ban to Negotiate Better Deals
If you are a business owner, then this is your moment. The new regime gives you a level of leverage you havent previously enjoyed when negotiating lease agreements for commercial purposes.
Here’s how to use it:
- Press for rent review clauses that genuinely share risk – things like open market reviews with symmetrical wording, CPI linked increases with caps or fixed uplifts that you can budget around
- Don’t just focus on the rent level – think about the integrated package: break clauses, rent-free periods, contributions to fit-out and flexibility to expand or contract within a building as your business objectives evolve
- Compare offers across multiple commercial properties in the same area – and ask landlords explicitly how the proposed review mechanism reflects the impending ban
Tenants typically cover interior maintenance in Internal Repairing Leases. Commercial leases often require tenants to pay service charges on top of rent payments. And tenants must return premises to original condition at the end of the tenancy so factor dilapidations costs into your overall assessment of any deal.
You should always get some legal advice from a business solicitor or a Property acquisition solicitor before committing to a long fixed term commercial lease – especially if you’re in a volatile sector like retail and hospitality. The difference between a well negotiated and a poorly negotiated lease can be tens of thousands of pounds over the lease duration.
Break Clauses and Flexibility in the New Landscape
As well as considering your overall strategy and negotiating the terms of a lease you also need to think about break clauses and flexibility and how you can use them to your advantageA break clause is basically a contractual right that lets either the landlord, the tenant, or both of them get out of a commercial lease ahead of schedule on specific dates, with some conditions usually applied. And Break clauses are going to become even more important.
Now that Upward-only rent reviews have been abolished people are likely to rely more heavily on break clauses to help them deal with market risk. Rather than the rent review doing all the heavy lifting on price adjustment – the ability to walk away (or renegotiate) at a break date is going to be a key safety valve.
Keep an eye out for these interactions:
- Tenants might try to get break rights sorted out just after the first rent review, in case market rents start plummeting
- Landlords on the other hand may try to resist or attach conditions – full compliance with all lease obligations, vacant possession, and full payment of all rent upfront
Key pitfalls to watch out for when drafting:
- Conditions that are too strict and almost make breaks impossible
- Ambiguous wording about what “vacant possession” actually means
- Break notice periods that are out of sync with review dates
Leases can include break clauses but they need to be negotiated with the same care as the rent review clause itself. I’d strongly advise both landlords and tenants to get specialist advice from a Commercial disputes solicitor when negotiating or making use of break clauses – it really is one of the most bitterly disputed areas of commercial property law.
Renewal of Business Leases and Statutory Lease Renewals After the Ban
The Landlord and Tenant Act 1954 gives many business tenants some protection – giving them the right to a Renewal of Business Leases unless the landlord can find grounds to oppose it. This tenancy framework is not going anywhere – but the terms available on renewal are changing.
After this ban is in place Statutory Lease Renewals are going to require rent review clauses that meet the new rules. The Courts and parties are going to have to write renewal terms using either fixed rent, fixed uplifts, or an upward-and-downward open market mechanism.
Example: A business lease that’s coming up for renewal in 2028 – the landlord’s had 5-year upward-only reviews up to now. On renewal both parties have got to adopt compliant wording – the landlord can’t just carry over the old structure.
Some landlords might try to get by with shorter new fixed term periods on renewal to limit their exposure to falling markets. Tenants on the other hand may see this as a good chance to renegotiate rent and renewal terms more often.
If you’ve got a protected lease coming up for its contractual end during the transition period, make sure to get some early advice from a Commercial disputes solicitor or expert on Renewal of Business Leases. Timing is everything – especially with that 17 March 2026 retrospective capture date for renewal arrangements.
Drafting and Negotiation Tips for Commercial Leases Under the New Rules
Think of this as your practical checklist. Whether you are a landlord or a tenant, the way you approach the lease document is going to have to change.
Rent Review Clauses: Drafting:
- Use plain English to say the reviewed rent might be higher, the same, or lower than the passing rent
- Avoid using old language like “shall not be less than what was paid previously”
- If you’re using index-linked provisions – define the index clearly – and cover what happens if it gets rebased or abolished
- Commercial leases set out tenant and landlord obligations – make sure they’re coherent with the review mechanism
Alignment with other Provisions:
- Make sure the rent review mechanism works alongside break clauses, alienation clauses (covering assignment and the right to sublet), repair obligations, and service charge structures
- The typical lease components are rent, and payment schedule – make sure the review clause doesn’t create uncertainty about what is actually payable and when
Practical Tips for Tenants:
- Ask for worked examples in heads of terms to illustrate how a CPI-linked uplift would work over a 10-year fixed term with 2% inflation
- Don’t wait for a fully drafted lease to raise concerns about review wording
Both parties should instruct experienced business solicitors or a Property acquisition solicitor early in the process – ideally at heads of terms stage. A legally binding contract should reflect what you actually agreed on – not what a precedent from 2019 assumed.
Risk Management and Dispute Avoidance
The new rules are going to inevitably lead to some early test cases and disputes – clear drafting and careful advice are more important than ever. The provisions that protect tenants will also create new areas of contention.
Key areas of risk:
- Ambiguous rent review formulas that could be interpreted as either compliant or non-compliant
- Disputes over whether a particular lease or tenancy is within the new regime
- Disagreements about valuation assumptions where open market reviews allow for downward movement
- Arguments over whether rent has been correctly indexed
Dispute-Avoidance tools:
- Clearly documented heads of terms signed by both the landlord and tenant
- Early involvement of valuers when structuring rent review clauses
- Agreed valuation assumptions and dispute-resolution mechanisms (independent expert vs arbitrator) written into the lease
- Regular lease audits for portfolios – checking older lease agreements for problem clausesWhen do you need to involve a commercial disputes solicitor ? When there’s a threat of forfeiture for not paying the rent thats been reviewed ; or when a break clause is contested ; or when you start arguing over the rent review structure in a statutory lease renewal and can’t agree on which one should apply; or when a notice gets served that you don’t think is in line with the rules.
Strategic Considerations for different sectors and business needs
Figuring out the best rent review structure for your business is a bit of an art. The right one will depend on what your company does , how stable the market is in your sector and how long your typical lease lasts. There is no one-size-fits-all solution here. You shouldnt just copy and paste whatever the standard clauses are in older commercial leases – that wont cut it.
Retail and hospitality:
When you’re a tenant in this sector you might want to aim for leases that are a bit shorter , rent that goes up with sales and break clauses that can be changed more easily. Landlords on the other hand will likely be looking for higher rents upfront and higher service charges in return for some stability. Make sure the “permitted use” clause is broad enough that you can adapt if things change in the market.
Offices:
Stable companies might be able to agree to higher rents over longer terms in a good office building – provided they can link it to inflation. Flexible workspace operators will be pushing for shorter commitments with more frequent reviews and break opportunities. You might also want to consider whether access to shared facilities should be part of the rent or covered by service charges.
Industrial and logistics:
The market has been pretty strong in the early 2020s but it is starting to cool down a bit. If you’re a landlord it might be worth focusing more on the strength of the tenant and what they can offer rather than just the rent.
Understanding the different kinds of leases is also key:
Here are some of the main ones – and what they mean:
- Full Repairing and Insuring leases (FRI leases) leave repair obligations with the tenant – as long as you’re occupying a single space that is fine\
- Internal Repairing Leases limit repair duties to the inside of the building – the landlord is responsible for the outside\
- Gross Leases mean you only pay a single rent – the landlord is responsible for everything else
Each of these comes with its own set of implications and responsibilities – and they interact with the new rules on rent reviews. Make sure your lease mirrors your business plans, cash flow and risk appetite rather than just copying what you’ve done before.
When You Should Seek Legal Advice
It’s a good idea to get some professional advice when the rules on rent reviews change , especially when the market is volatile and leases are long term deals. Generic templates will just not cut it from now on – particularly if you have a complex portfolio or a high value transaction.
Speak to your business solicitors or property acquisition solicitors when:
- You are about to sign a new lease after 2027
- You want to vary or extend an existing lease
- You’re trying to negotiate a statutory lease renewal
- You are considering using a break clause or negotiating it
- You are deciding whether to use a licence or lease on the property
Speak to a Commercial disputes solicitor when:
- There is a live dispute over rent review
- A landlord or tenant is saying the rent review clauses arent compliant
- There are disputes over which rent review structure to use in a renewal
- You need to end the lease or respond to someone asking to end it
Before you meet with your solicitor have a clear idea of what key documents you will bring along – that will make the conversation far more productive and keep the costs down.
FAQs
Will my existing lease with those nasty upward-only rent reviews become illegal?
No it wont. The ban on upward-only rent reviews is not meant to go back in time – it only applies to new leases and in most cases to new leases granted after the law comes in. If you’ve got an old lease thats unaffected and you renew or vary it after the law comes in , the new lease will need to comply. It might be worth reviewing older leases to make sure they comply before that.
Can landlords still link rent reviews to inflation (CPI or RPI)?
Yes they can still link to inflation – but they need to do it in the right way. If you link to inflation – and the inflation rate goes down – the rent has to be able to go down too. Landlords need to avoid legacy wording that means the rent cant go below a previous level. Get some valuers and business solicitors who are experts in this area to stress test the formula you use before you sign anything.
How will the ban on upward-only rent reviews affect very short-term lettings , licences and pop-up shops?
Short term arrangements often do not contain rent review clauses – so the ban may have a limited direct impact. The key question is whether the arrangement is actually a lease or a licence – and whether it counts as a “business tenancy” under the 1954 Act. Misclassifying a lease as a licence can have serious consequences – so it’s always worth getting some advice to make sure you’re protected.### What if your landlord is trying to sneak an upward-only clause into a new lease after the ban starts?
Once the ban finally comes into effect, any new commercial lease that tries to stick with only upward rent reviews is likely to be totally unenforceable. Don’t just assume the clause is okay just because it’s there in the draft – get the landlord’s lawyer to explain exactly how it fits with the new rules. If you don’t get a convincing answer, then you’d be daft to sign anything without taking advice from a commercial disputes lawyer. The clause could be completely invalid or heavily changed by the courts.
Do you hang around or make a push to get that new lease signed before the rules change?
There’s no one-size-fits-all answer to this one. Landlords may be keen to get long-term leases signed and sealed before the ban kicks in so they can still control rent rises. You, on the other hand, might be better off hanging back until the new system is in place so you can take advantage of greater flexibility. You need to weigh up the local demand for commercial property, the length of any fixed term, how hard it will be to find another place, and whether you’re likely to need to renew your lease through the courts before 2027 comes around. Getting some experienced UK business solicitors to have a chat and give you their take on what’s best for your business is probably the way to go.