The ban on upwards-only rent reviews: what commercial landlords and tenants need to know following Royal Assent

The English Devolution and Community Empowerment Act 2026 received Royal Assent on 29 April 2026. Under Schedule 31 of the Act, a ban on upwards-only rent review provisions in commercial leases is set to come into force.

The Act, which is not expected to come into force until 2027 at the earliest, will make material changes to commercial tenancies, bringing increased uncertainty about the future of rent reviews and commercial leases.

The ban applies to premises that are, or may be, occupied for business purposes. The rationale is to reflect the economic downturn affecting high streets and is an attempt to future-proof commercial leases, given that upwards-only rent reviews often lead to disproportionately high rents for tenants of commercial units, leading to lower profits and, consequently, higher prices for everyday commercial consumers. It’s important to note that the ban applies to all commercial leases, regardless of sector or industry.

Fixed percentage increases and fixed stepped rents will be outside the scope of the ban, as the future rent is ascertainable at the time the lease is entered into. Rents within the scope of the ban include inflation-based rents and open market rents, both of which are common in the commercial property sphere. The government plans to consult on caps and collars. It’s widely anticipated that caps will be permitted but collars will likely not be valid, as these prevent the rent from falling below a minimum level.

The ban is not set to apply retrospectively to existing commercial leases. However, it will catch a renewal lease granted pursuant to an option agreement entered into on or after 17 March 2026.

Landlords must comply with stringent anti-avoidance provisions within the Act, including the new requirement for tenants to be entitled to trigger rent reviews to avoid circumvention of a possible downward review. Lease clauses that limit how far a rent review could cause the rent payable to fall are prohibited.

The ban represents a significant structural shift in commercial leasing in England and Wales. Possible consequences include shorter lease terms, higher initial rents and more stepped rents. It is, however, difficult for landlords to decide on the best course of action until government guidance is issued.