The ban on upward only rent review. Key issues

What you need to know

• The ban on upward only rent reviews (UORRs) is now enshrined in the English Devolution and Community Empowerment Act 2026.
• Although the Act has now received Royal Assent, the ban is unlikely to come into force before 2027.
• Although not intended to catch leases granted before the ban comes into force, there are some retrospective aspects of the legislation, which we explain below.
• The government has said that, before the ban is implemented it will consult on introducing rent caps and collars.
• However, we expect that if collars are permitted, they would operate as a safety net rather than a means of avoiding the fundamental policy objective which is to ensure that rents can go up or down.

What you need to do

• Look at long-term investment plans. Although the ban does not apply to existing leases it will apply to renewal leases. Any strategy which relies on a guaranteed minimum income will need to be re-assessed.
• Take into account the retrospective nature of the legislation for renewal arrangements entered into after 17 March 2026 as the ban will apply to the renewal lease. Alternative rent review mechanisms should be considered.
• Revisit leasing structures. Shorter leases without a rent review may be a possibility. However, the landlord will not necessarily be able to control the rent levels on lease renewal. Much will depend on a proactive asset management strategy.
• Be prepared to deal with tenants seeking alternative rent review mechanisms and in particular how to deal with this during the interim period before the ban is implemented.

Introduction

The ban on upward only rent reviews (UORRs) is now enshrined in the English Devolution and Community Empowerment Act 2026. Although the Act has now received Royal Assent the ban is unlikely to come into force before 2027. While not intended to catch leases granted before the ban comes into force there are some retrospective aspects of the legislation, which we explain below.

The Government has said that before the ban is implemented it will consult on introducing rent caps and collars. However, we expect that if collars are permitted, they would operate as a safety net rather than a means of avoiding the fundamental policy objective which is to ensure that rents can go up or down.

What leases are affected by the ban?

The prohibition on upwards only rent review applies to:

• commercial leases granted after the ban comes into force;
• renewal leases where the parties to an existing lease entered into renewal arrangements on or after 17 March 2026 and the renewal lease is granted on or after the ban comes into force.

The prohibition does not generally apply to:

• existing leases granted before the ban comes into force;
• leases granted under "pre-commencement arrangements" such as agreements for lease entered into before the ban begins (but not arrangements to renew an existing lease entered into on or after 17 March 2026). So, the lease granted pursuant to such an agreement for lease entered into before the ban begins can contain an UORR even if it is completed after the ban is in force.

The ban only affects leases that contain "relevant rent review terms" – meaning drafting which allows for an increase of rent to a sum that cannot be calculated at the grant of the lease (which will therefore cover open market, index linked and turnover base rent reviews). Fixed increases and stepped rents are not caught by the ban.

How the ban works

The legislation provides that the ban ignores the upward only element where the rent under the lease is expressed to be payable at the higher of the existing rent and a “reference amount”. The reference amount is the amount that is calculated to be an open market rent, an indexed rent, or a turnover rent. If the reference amount is lower than the existing rent, then the reviewed rent will be the reference amount.

The Act has wide anti-avoidance provisions to prevent circumvention of the ban on upwards-only rent review clauses.

Parties cannot contract out of the ban and any agreement, clause or side mechanism which attempts to reintroduce an upward-only review will be void.

Tenants can trigger the rent review even if the lease reserves this right exclusively for the landlord. This allows tenants to trigger a rent review in a falling market.

Impact on underleases granted out of existing leases

Generally, the ban is not intended to be retrospective, but there are some limited but significant exceptions to this.

Firstly, where the terms of a lease specify that any permitted underleases must have an UORR, the Act disapplies that restriction for underleases granted after the ban comes into force.

So, this leads to a discrepancy between the rent review terms in the superior tenancy and the underlease, which could disadvantage the tenant under the superior tenancy in a falling market. It also means that the landlord under the superior tenancy no longer has control over the rent review provisions of the underlease.

Retrospective application of the ban to renewal leases

Secondly, as mentioned above, the ban will operate retrospectively where the parties to an existing lease have entered into renewal arrangements on or after 17 March 2026 and the renewal lease is granted on or after the ban comes into force. Renewal arrangements include options to renew; landlord put options and any other agreement with an existing tenant for a future renewal lease (but does not include the immediate grant of a reversionary lease). Where these provisions apply, the starting rent on the grant of the renewal lease cannot be calculated on an upwards only basis and any rent review in the renewal lease cannot operate on an upwards only basis.

Therefore, it is important to analyse lease renewal arrangements granted on or after 17 March 2026 and more specifically how the rent is determined on day one and any rent reviews during the term of the renewal lease. This should be addressed up front at heads of terms stage to avoid transaction delays.

Impact

Leases are generally getting shorter and so often do not need to contain rent review provisions. However, a large proportion of leases still have an upward only review (or a collar on an index-linked review) and this will often be a critical part of the commercial and financial arrangements.

Given that inflation is rarely negative, we expect that index-linked rent reviews will become more popular. Historically RPI has been higher than CPI, but the current RPI methodology will be phased out in 2030. To address this the parties may agree to use (for example) CPI + 1% as an alternative to RPI. This type of increase would still be permitted after the ban is in force as it would fall within the prescribed category for this type of review mechanism under the Act because the rent is "determined by reference to the effect of inflation or any other index or multiplier on the rent".

Long-term valuations may need adjusting to take account of the possibility of downwards rent reviews and it may be preferable to adopt fixed rent increases or index linked rent reviews. Underwriting, for both acquisitions and financing, will need to adjust accordingly.

Generally, it will be interesting to see how the market adapts to the two-tier market that develops (because existing leases will be mostly unaffected by the ban).

What should landlords do now?

Landlords should:

• Look at long-term investment plans. Although the ban does not apply to existing leases it will apply to renewal leases. Any strategy which relies on a guaranteed minimum income will need to be re-assessed.
• Take into account the retrospective nature of the legislation for renewal arrangements entered into after 17 March 2026 as the ban will apply to the renewal lease. Alternative rent review mechanisms should be considered.
• Revisit leasing structures. Shorter leases without a rent review may be a possibility. However, the landlord will not necessarily be able to control the rent levels on lease renewal. Much will depend on a proactive asset management strategy.
• Be prepared to deal with tenants seeking alternative rent review mechanisms and in particular how to deal with this during the interim period before the ban is implemented.