Upwards‑Only Rent Reviews: What the 2026 Reforms mean for Commercial Leasing in England and Wales

The end of upward-only rent reviews

The Governments English Devolution and Community Empowerment Bill (“Bill”) proposes one of the most significant shifts in the commercial property market in recent decades – a ban on upward-only rent reviews.

Whilst the Bill is broadly focused on devolution and strengthening local governance, this specific reform has garnered a lot of interest and has far reaching implications for landlord, investors, SME’s, pension funds, and the wider commercial property market.

Why has the Government proposed this?

The Governments rationale for banning upwards-only rent reviews is rooted in concerns around business resilience, the decline of the high street and the perceived inflammatory effect these clauses have on commercial rents.

Historically, upwards-only rent reviews have prevented rents from falling even when market rents have declined. This meant that some tenants were trapped in leases with above-market liabilities. This was identified by the Government as a barrier to the survival of small businesses and a potential contributor to the vacancy rates of commercial properties.

How will the ban work?

Upwards-Only Rent Review’s would be prohibited in all new commercial leases and all lease renewals, regardless of whether the lease is inside or outside the security-of-tenure provisions of the Landlord and Tenant Act 1954.

The Bill also includes robust anti‑avoidance provisions. These would prevent landlords from introducing alternative mechanisms that would, in effect, replicate an upward‑only result. Tenants may also gain the ability to trigger rent reviews in circumstances where leases currently confer that right solely on landlords.

Is it retrospective?

A highly significant development emerged at the Report Stage in the House of Lords, where Baroness Taylor of Stevenage tabled an amendment that would materially expand the scope of the Upwards-Only Rent Review ban.

Under the proposed amendment, the ban would apply not only to new leases, but also to the starting rent of any new lease granted under a contractual renewal right where the original lease containing that renewal clause was dated on or after 17 March 2026.

This introduces a degree of retrospective reach into the legislation, a notable departure from the Bill’s original structure. Parties negotiating leases now must therefore proceed with caution, particularly in transactions involving renewal rights. The amendment may result in leases granted today falling within the scope of the ban, bringing increased uncertainty into current transactions.

When will it become law?

The Bill is currently progressing through its final stages in the House of Lords.

Following the completion of Report Stage and Third Reading in the Lords, the Bill will enter the usual inter‑House “consideration of amendments” process during which the Commons and Lords reconcile any outstanding differences. Once an agreed text is reached, the Bill will be presented for Royal Assent, at which point it will become law.

Based on the current parliamentary timetable, and assuming no substantive delays arising from further proposed amendments, the Bill is expected to achieve Royal Assent later in 2026.

What does this mean for landlords?

For landlords, the reforms particularly the proposed ban on upward‑only rent reviews and the potential extension introduced by Baroness Taylor’s amendment, represent a significant shift.

If enacted, the new regime will remove the long‑established rent floor, meaning rental income may now fluctuate in line with market conditions rather than only increasing or remaining static. This is likely to affect valuation assumptions, portfolio strategies and covenant strength assessments, particularly in locations where market rents tend to be more volatile.

This heightens the importance of reviewing heads of terms, renewal clauses, and rent review mechanisms to ensure they remain commercially viable in a market where downward rent movement may become a realistic prospect.

What does this mean for tenants?

For tenants, particularly SMEs operating in sectors vulnerable to economic fluctuations, the reforms are broadly advantageous.

The removal of Upward‑Only Rent Reviews means that rent levels will more closely track real‑time market conditions, offering the possibility of genuine downward adjustment where local rental values fall. This provides tenants with greater resilience during economic downturns and reduces the risk of being locked into above‑market liabilities that can undermine long‑term viability.

In practice, this could also make premises more affordable and may encourage greater mobility in the market, supporting tenant growth and investment.

Conclusion

The ban on upward‑only rent reviews marks a substantial change in the commercial leasing landscape, one driven by the Government’s desire to create a more market‑responsive approach to commercial rent. While tenants are likely to benefit from increased flexibility, investors and pension funds may need to adjust their valuation strategies and risk models to accommodate more variable income streams.

As the Bill progresses through Parliament, all stakeholders should review their portfolios and prepare for the practical implications of this significant legislative reform.

If you require any assistance with a commercial lease, then please get in contact with our leading team of experts here at Redkite Solicitors.

Our friendly team of experts in our Commercial Property Department are here to help and support you at every step of the way.