Commercial landlords and tenants are preparing themselves for a significant change in how rent reviews are managed, with impending legislation expected to alter the long-term strategies of both parties. The English Devolution and Community Empowerment Act 2026 is now law, but the provisions within this which will bring a major shift in upwards-only rent reviews (UORR) are not expected to happen until sometime in 2027. Until then, commercial landlords and tenants are contemplating the impact of the ban on UORRs in England and Wales.
UORRs have long-been established as an important feature of the commercial property leasing market and this upcoming ban is expected to have far-reaching impacts. Until the ban is enforced in 2027, existing practices remain in place, but in this article we will explain what the UORR ban means, how it will work and what the impacts will be.
Which rent reviews will be banned by the new legislation and which will remain in place?
Once the UORR provisions in the 2026 Act are implemented, commercial landlords won’t be able to enforce any variable rent reviews which prevents rent falling below a minimum level. This will include upwards-only open market rent reviews, upwards-only index-linked rent reviews and upwards-only turnover-linked rent reviews. This effectively means that the new legislation will catch any rent review clauses which include a minimum level below which the rent cannot fall.
However, this doesn’t mean that the new legislation is prohibiting all rent reviews. It is still possible for commercial landlords to have rent review provisions involving fixed or stepped rents (where the rent increases are set out in the lease at the outset) and open market rent reviews, index-linked rent reviews and turnover-linked rent reviews but which are all drafted to permit the rent to go down as well as up. The Government felt that these provisions fairly offer both parties some flexibility in line with the current market conditions, rather than having a system in which rents would never fall regardless of market conditions.
Which lease types are impacted by the UORR ban?
Once the provisions are implemented the effect will be:
- All commercial leases granted after the date of implementation will have the ban enforced – irrespective of whether the lease is contracted out of the Landlord and Tenant Act 1954, or whether the property is occupied by the tenant.
- For leases which existed on or after 17th March 2026 and which are subsequently renewed after implementation, the ban will apply to those renewed leases. This includes contractual options to renew and put and call options with the existing tenants. It should be noted that the scope of this definition may yet change as the 2026 Act provisions are not clear about lease renewals which complete before they are implemented.
- If a lease is granted after the commencement of the ban but is pursuant to a contract entered into before its commencement, this will be exempt from the UORR ban.
Another significant inclusion in the 2026 Act is a statutory right allowing tenants to trigger a rent review – the current position is that only a landlord can trigger a rent review. This change allows the tenant to potentially benefit from falling rents as a result of the prevailing market conditions where their lease includes a mechanism for upwards and downwards reviews.
What are the expected impacts of the UORR ban?
In simple terms, commercial landlords will lose the ability to insist on UORRs in their leases. Of course, tenants will welcome the opportunity to negotiate a downwards rent review, but inevitably the ban will change how leases are negotiated, with landlords potentially seeking price-in fixed uplifts and tenants countering an offer with other benefits to offset this. In the longer term, it is also possible that landlords will simply offer a higher starting rent to protect themselves and to mitigate risk. However, any uplift would still need to be realistic in terms of open market conditions, which is likely to be welcomed by tenants as it improves alignment with prevailing market rates.
What happens next?
There are still some areas of uncertainty within the current provisions of the 2026 Act which will need to be addressed by the Government before the UORR ban is implemented. Some of the unanswered questions surround whether it will be permitted to include caps and collars within rent reviews. These are pre-agreed minimum and maximum parameters within which a rent can change during a review, and are usually applied when rent is linked to inflationary indexes. There is also no confirmation that clauses allowing the higher of two different upwards/downwards review methodologies will be permitted.
Before the UORR ban is implemented commercial landlords have a lot to consider. They should seek professional legal advice from specialist commercial property solicitors and consult with a surveyor about prevailing rent levels. Landlords need to review their current portfolio of properties and consider how this ban can affect them in the future, and particularly where there is an impending renewal to be discussed.
They should also consider whether any renewal arrangements entered into since 17th March 2026 may be affected by the ban. Certainly it is the case that commercial landlords need to think about how rent review provisions are to be structured in future leases and how these will be received by commercial tenants.
Commercial landlords are encouraged to plan ahead for the upcoming UORR ban and to be proactive in preparing for the various impacts, and at Bridge McFarland we have specialist experts available to discuss these with you.
