Friday, 1 May 2026
Legislation prohibiting upwards-only rent reviews in commercial leases has received Royal Assent, marking a significant shift in property law across England and Wales. The reform forms part of the English Devolution and Community Empowerment Act 2026, which was formally approved on 29 April 2026.
Despite the milestone, the new rules are not expected to take effect immediately. Market participants anticipate implementation will follow secondary regulations, with commencement likely in 2027.
The ban will apply to commercial leases, including renewals, but will not affect agreements currently being completed. Leases entered into before the legislation comes into force will remain outside its scope, offering a transitional window for landlords and tenants negotiating terms under the existing framework.
However, the Act introduces a limited retrospective element. Where a lease is granted under an option or agreement concluded on or after 17 March 2026—and involving an existing tenant occupying all or part of the property—the new provisions will apply. In such cases, mechanisms that would otherwise fix rent on an upwards-only basis will be converted into arrangements allowing both upward and downward adjustments.
The reform represents one of the most notable changes to commercial leasing practice since the Landlord and Tenant Act 1954, which has long governed business tenancies in England and Wales. In addition to banning upwards-only rent reviews, the legislation also prohibits the use of rental floors or “collars,” a feature often used to limit downward movement in rent.
For example, if a lease granted after 17 March 2026 includes an option to renew, the initial lease may still contain upwards-only review provisions if completed before the ban takes effect. However, any subsequent lease triggered by that option would fall within the new regime, requiring rent review mechanisms to allow both increases and decreases.
By contrast, agreements entered into with new tenants before the ban comes into force will not be affected, even if the resulting lease is completed at a later date.
Further clarification may follow. Industry participants expect the government to consult on the treatment of rent caps and collars, although the current legislation prohibits such mechanisms. Any adjustment would require additional secondary legislation.
The introduction of the ban is expected to have a material impact on lease structuring, valuation assumptions, and investor expectations, as the market adjusts to a more flexible approach to rent reviews.
