The End of Upwards-Only Rent Reviews: What It Means for London Commercial Leases

Upwards-only rent reviews have long been a familiar feature of commercial leases in England and Wales, particularly longer leases of offices, shops, warehouses and investment property. At each review, the rent could increase or remain unchanged, but it could not fall below the rent already being paid, even if the open market had weakened.

That position is set to change. The English Devolution and Community Empowerment Act 2026 received Royal Assent on 29 April 2026 and contains provisions banning upwards-only rent review mechanisms in certain new and renewal business tenancies in England and Wales. However, as of June 2026, the ban is not yet in force. Its commencement date must still be set by regulations.

For London landlords and commercial tenants negotiating leases now, the important issue is not simply whether the ban exists. It is understanding which leases will be covered, how the transitional rules work and which rent structures may remain available.

What Is an Upwards-Only Rent Review?

An upwards-only rent review clause usually provides that the rent payable after a review will be the higher of:

The rent being paid immediately before the review.
The open market rent, indexed figure or other amount produced by the review formula.

If the market rent has fallen, the passing rent continues unchanged. If the market has risen, the rent increases.

Such clauses provide landlords and lenders with predictable minimum rental income. For tenants, however, they can result in rent remaining above current market value during a downturn.

Rent reviews commonly take place every 5 years in longer institutional leases, although their timing and method depend entirely on the agreement. Shorter commercial leases may have no review, while others use fixed increases, indexation or turnover-related rent.

What the 2026 Act Changes

Section 100 and Schedule 37 of the Act introduce new provisions into the Landlord and Tenant Act 1954.

Where the new rules apply, a lease provision will be ineffective to the extent that it requires the reviewed rent to exceed a defined “reference amount”. The reference amount may be calculated by reference to:

Open market rental value.
An index such as the Consumer Prices Index.
The tenant’s turnover.
Another variable amount identified in the lease.

For example, a covered lease might state that the new rent is the higher of the current rent and open market rent. If open market rent is lower, the requirement to keep the rent at its existing level would be ineffective. The reviewed rent would instead be determined by the open market formula and could therefore rise, fall or remain unchanged.

The Act does not impose a general rent reduction or freeze. A properly drafted market review can still produce a substantial increase where the market supports it.

Tenants Will Be Able to Trigger Reviews

The legislation also addresses clauses that allow only the landlord to initiate or progress a rent review.

For covered leases, the tenant will be able to serve the necessary notice or take other procedural steps where the lease does not already permit them to do so. This prevents a landlord from avoiding a downward review simply by declining to activate the mechanism.

The right is subject to the wording and timing rules in the legislation. It does not allow a tenant to demand a review whenever it chooses. The relevant contractual review date and procedure will still matter.

Early advice from commercial lease solicitors in London can help both parties understand whether a review can be triggered and what evidence will be required.

When Will the Ban Take Effect?

Although the Act has received Royal Assent, the rent review provisions do not automatically take effect 2 months later.

Part 5, which contains the commercial rent review reforms, will come into force on a date appointed by the Secretary of State through commencement regulations. As of June 2026, no official commencement date for the ban has been confirmed.

It is therefore inaccurate to assume that every commercial lease signed after 29 April 2026 is already subject to the ban. Until the relevant provisions commence, the existing law continues to apply.

The Act also gives the Secretary of State power to create exceptions through further regulations. Landlords and tenants should therefore check the position again before exchanging or completing a lease.

Will Existing Commercial Leases Be Affected?

Existing leases will generally continue under their current rent review provisions. The legislation is not designed to rewrite every upwards-only review already agreed.

However, the transitional rules are more detailed than a simple distinction between “old” and “new” leases.

The ban is principally aimed at relevant business tenancies granted after commencement and certain post-commencement variations that introduce or alter a rent review mechanism. A lease granted after commencement under a binding arrangement made before commencement may be protected, subject to the rules concerning renewal arrangements.

This means the date of the lease alone may not decide the issue. The following could all be relevant:

When the agreement for lease was entered into.
Whether the parties were already legally bound.
Whether the document is a new lease, variation or renewal.
When any renewal option or arrangement was agreed.
Whether the tenancy has protection under Part II of the Landlord and Tenant Act 1954.

Anyone negotiating a lease, agreement for lease or option should obtain advice from commercial lease agreement solicitors before assuming that an existing arrangement is outside the new regime.

The 17 March 2026 Renewal Rule

One of the most important transitional provisions concerns contractual renewal arrangements entered into on or after 17 March 2026.

The rule does not simply apply to every lease granted after that date. It applies where specific statutory conditions are met, including where an arrangement gives the existing tenant a right or obligation to take a new tenancy and the initial rent under that renewal is not known or fully determinable when the arrangement is made.

This may include a put option, call option or other contractual renewal arrangement. If the renewal rent contains an upwards-only variable element, that part of the mechanism may be ineffective when the new regime applies.

The relevant date is therefore the date of the renewal arrangement, not necessarily the date on which the original lease itself was granted.

The provisions also need to be distinguished from statutory renewals under the Landlord and Tenant Act 1954. Government guidance confirms that qualifying renewal leases where the tenant has security of tenure are intended to fall within the wider ban, but the precise legal route and transitional treatment should be assessed in each case.

What Rent Review Mechanisms May Still Be Used?

The Act does not prohibit rent reviews themselves. It targets provisions that prevent the result from falling below a protected amount.

The following mechanisms may continue to be used, provided they comply with the legislation:

Open market rent reviews

A review can still assess the rent that the premises would command on the open market. Under a covered lease, the result may be higher, lower or the same as the current rent.

Index-linked reviews

A lease may continue to link rent to an index. However, a provision stating that rent can rise with the index but can never fall below the passing rent is likely to be affected where the statutory conditions are met.

A cap that limits how far rent can increase may remain commercially useful. By contrast, a collar that prevents rent falling below the existing rent could operate as an upwards-only protection and may be disapplied.

Turnover rents

Retail, leisure and hospitality leases may continue to calculate rent by reference to turnover. A clause that genuinely follows turnover in both directions is different from one requiring the tenant to pay no less than the previous rent regardless of performance.

Fixed stepped rents

A lease that states fixed rent amounts from the outset may fall outside the core variable review rules because the future rent is already specified or determinable when the lease is granted. However, attempts to use artificial steps or side payments to reproduce an upwards-only review could be challenged under the Act’s anti-avoidance provisions.

Specialist drafting will be important. Simply renaming an upwards-only review as a “minimum rent”, “supplement” or other payment will not necessarily make it effective.

What the Reforms Mean for London Commercial Tenants

For tenants, the reform creates the possibility of rent reflecting a weakened market rather than remaining permanently tied to an earlier peak.

Tenants negotiating new leases should consider:

Requesting reviews that can move both upwards and downwards.
Checking whether the lease gives them an express right to initiate the review.
Reviewing all assumptions used to calculate open market rent.
Negotiating suitable caps on increases.
Avoiding unclear minimum-rent or collar provisions.
Keeping complete records of heads of terms, valuation evidence and correspondence.
Checking whether a renewal option entered into on or after 17 March 2026 is affected.

Our guide to record-keeping for compliance explains the importance of maintaining dated and accessible records. Although written for property compliance more broadly, the same principle is valuable in commercial lease negotiations and rent review disputes.

Tenants should not assume the new law guarantees a reduction. A review may still increase the rent where market evidence supports a higher figure. The wording of the hypothetical lease, assumptions, disregards, comparable evidence and review procedure will remain critical.

What the Reforms Mean for Commercial Landlords

Landlords should review how future rental income is modelled and how leases are presented to lenders and investors.

Potential responses may include:

Greater attention to the initial rent.
Shorter lease terms.
Fixed stepped rents.
Index-linked structures with carefully drafted caps.
More frequent reviews.
Turnover or hybrid rent models.
Reconsideration of renewal options.
Stronger evidence supporting open market valuations.

The reforms do not automatically reduce property values. However, where a valuation previously relied on rent never falling at review, the new rules may affect assumptions about income growth and risk.

Landlords with borrowing secured against commercial property should review whether lease changes could affect interest cover, loan-to-value covenants or refinancing forecasts. These are commercial possibilities rather than automatic legal consequences, so advice should be based on the actual lease and finance documents.

Where landlord and tenant disagree about a review, landlord tenant dispute solicitors can advise on the lease procedure, valuation evidence and dispute resolution mechanism.

Rent Review Disputes Under the New Regime

Many commercial leases refer disputed reviews to an independent expert or arbitrator. The new legislation will not remove those procedures.

Disputes may arise over:

Whether the lease is within the new regime.
Whether a pre-commencement arrangement protects the clause.
Whether a renewal arrangement satisfies the statutory conditions.
The correct reference amount.
Whether a cap, collar or minimum rent is enforceable.
Whether a tenant validly initiated the review.
The comparable evidence used by the valuer.
Whether an additional payment is an unlawful avoidance mechanism.

Clear and timely correspondence will remain important. Our article on communication duties to residents and occupiers discusses wider principles of written property communication, while experienced civil litigation solicitors in London can advise where a commercial dispute cannot be resolved through negotiation.

Recovering Rent and Enforcing Commercial Leases

The ban does not prevent landlords from recovering rent that is lawfully due. Once the correct reviewed rent has been determined, a tenant remains responsible for paying it in accordance with the lease.

Our debt recovery solicitors in London can advise on unpaid commercial rent and other sums. Where forfeiture or possession is being considered, eviction solicitors in London can explain the correct commercial procedure and the risks of taking action without legal advice.

Commercial landlords with residential property interests may also find our articles on tenancy types and what a move toward periodic structures means for landlords and evidence landlords will need for possession useful. Those residential reforms are legally distinct from the commercial rent review ban and should not be applied interchangeably.

What Should Parties Negotiating Leases Now Do?

Until commencement, upwards-only clauses can still be agreed under the existing law. However, both parties should consider whether the clause will remain effective throughout the intended term or after renewal.

Before signing:

Identify whether the document is a new lease, variation, agreement for lease or renewal arrangement.
Record when any binding arrangement was entered into.
Review the proposed commencement and review dates.
Test the clause against rising, static and falling markets.
Check who can trigger and progress the review.
Examine caps, collars, minimum rents and side payments.
Consider the effect on break rights, guarantees and lender requirements.
Obtain updated advice immediately before completion.

A law firm in London with commercial property experience can help ensure that heads of terms and lease drafting reflect both the current law and the enacted reforms.

Frequently Asked Questions

Has the ban already taken effect?

No. The Act received Royal Assent on 29 April 2026, but the commercial rent review provisions require commencement regulations. No official start date had been confirmed by June 2026.

Does the Act automatically invalidate my existing upwards-only clause?

Generally, no. Existing leases are not automatically rewritten. However, later variations, renewals and certain arrangements entered into from 17 March 2026 require careful review.

Can commercial rent still rise?

Yes. Open market, indexed and turnover reviews can still increase rent. The reform prevents a covered clause from forcing the rent to remain above the amount produced by the agreed review method.

Are caps and collars still allowed?

A cap limiting an increase may be possible. A collar preventing rent from falling below the passing rent may amount to an upwards-only protection and could be ineffective in a covered lease.

Are fixed stepped rents banned?

The legislation principally targets variable rent review mechanisms. Genuine fixed steps specified or determinable when the lease is granted may be treated differently, although anti-avoidance provisions can apply to artificial structures.

Will statutory renewals under the Landlord and Tenant Act 1954 be covered?

Government guidance says the ban will apply to renewal leases where the tenant has security of tenure under Part II of the 1954 Act. The commencement and transitional provisions should still be checked in each case.

Should I agree an upwards-only clause before commencement?

That decision depends on your commercial position and the transitional provisions. Signing quickly does not necessarily guarantee that every future renewal or variation will escape the new regime.

Navigate the New Commercial Lease Landscape With Confidence

The prohibition on upwards-only rent reviews represents a major change in the structure of future commercial leases, but it is not yet in force and it does not simply cancel every existing clause.

Landlords and tenants need to examine commencement, transitional arrangements, renewal rights and the precise rent formula before deciding how the Act affects them.

Atalaw Solicitors advises London businesses and property owners on commercial lease negotiations, rent reviews, renewals, disputes and enforcement. We provide practical advice on both the current law and the changes ahead.