Parliament has banned upwards-only rent review clauses in new and renewal commercial leases in England and Wales. This article explains what the law does, what remains unclear, and why it matters for London businesses that rent their premises.
The change sits inside the English Devolution and Community Empowerment Act 2026, a wide-ranging statute whose commercial property provisions have drawn less attention than its devolution headlines.
What is an upwards-only rent review clause?
Most commercial leases run for several years, and the rent is not fixed for the whole term. Instead the lease says when the rent will be reviewed, commonly about every five years, according to the government’s guidance on the legislation. The clause then sets out how the new rent is worked out, for example by reference to open market rent or to an index such as the retail price index.
An upwards-only clause adds a one-way rule. The rent after review can stay the same or rise, but it cannot fall, even if market rents have dropped since the last review. The government’s guidance describes exactly this effect: such clauses can keep rents high in a downturn, squeeze tenant profits and risk higher consumer prices.
What has Parliament actually changed?
The government announced on 29 April 2026 that the English Devolution Bill had received Royal Assent, and said that upwards-only rent review clauses “in new and renewal commercial leases will also be banned”. The guidance on the bill gives the following picture of the new rules:
- The ban applies to new commercial leases in England and Wales, including high street, office and manufacturing leases.
- It also applies to renewal leases where the tenant has security of tenure under Part II of the Landlord and Tenant Act 1954.
- “Some very limited areas such as agricultural leases will be exempt.”
- If a new or renewal lease contains an upwards-only clause, the requirement that rent must not decrease becomes unenforceable.
- The rent is then set by whatever method the lease specifies, so the outcome may be higher, lower or the same as the previous rent.
The government’s stated aims are to make commercial leasing fairer for tenants, to help high street rents adjust more efficiently and to support economic growth. The guidance adds that industry codes of practice have historically been relied on to address the issue, and that multiple research studies found that approach was not working well.
How does the legislation do it?
The text of the 1954 Act, as updated on legislation.gov.uk, shows the mechanism. The Act inserts new Schedules 7A and 7B into the 1954 Act (under section 54A). The legislation does not use the phrase “upwards-only”. Instead, it works through two elements.
The first element is that the reference amount for the review is set by an inflation or other index, a multiplier, an actual or hypothetical rent, or the tenant’s turnover. The second is that the new passing rent will, or could, differ from that reference amount. Where both are present and the lease does not name the new rent outright, any term that would make the new rent larger than the reference amount has no effect, and the new rent simply becomes the reference amount.
Three other features are worth noting:
- Tenant-triggered reviews. Where a lease does not allow it, the tenant may start a rent review by written notice, and may take the steps needed for the review to operate, provided the landlord is told in writing within seven days.
- Anti-avoidance. Any agreement requiring the tenant to pay the difference caused by the prohibition is void.
- Subleases. Where a head lease requires or permits subleases with such terms, it is treated as requiring only terms that do not breach the prohibition, and the head landlord cannot impose particular rent review terms on a sub-tenancy.
Which leases are caught, and when?
The statute’s scope provision covers tenancies granted, or varied to include rent review terms, after the relevant schedule comes into force. Arrangements made before commencement are generally excluded.
There is one notable exception to that exclusion. Schedule 7B deals with tenancy renewal arrangements, meaning arrangements under which a tenant can require, or be required to take, a new tenancy. It applies where the arrangement was entered into on or after 17 March 2026, the initial rent cannot be known when the arrangement is made, and the terms for setting it include the two elements above. In that case the initial rent is capped at the reference amount.
In other words, most existing leases with upwards-only clauses appear to be untouched, but certain renewal arrangements agreed since mid-March 2026 may not be protected. Anyone with such an arrangement should read the schedule closely or take professional advice.
Is the ban in force yet?
Not fully, on the evidence available. According to legislation.gov.uk, the schedules were inserted on 29 April 2026 only “for specified purposes”, and the page, which states it is up to date with changes known to be in force on or before 15 October 2026, does not make clear which purposes are covered. The government’s guidance on the bill gives no commencement date or transition arrangements.
The legislation also allows the Secretary of State to make exceptions by regulations, which must be approved in draft by both Houses of Parliament. No exceptions are listed in the text reviewed, so the detail may still change. Until the commencement position is settled, nobody should assume that a lease signed today is, or is not, covered. The next government statements and regulations are the ones to watch.
What does the ban change in pounds?
A simple illustration shows the mechanism. The figures are invented and do not describe any real lease.
Suppose a London shop lease sets a rent of £100,000 a year, with a review after five years. At the review date, the open market rent for similar premises has fallen 10 per cent, to £90,000.
| Old upwards-only clause | Clause after the ban | |
|---|---|---|
| Market rent at review | £90,000 | £90,000 |
| Rent payable after review | £100,000 | £90,000 |
| Annual difference | none | £10,000 lower |
If the next review is five years away, the gap over that period is £10,000 × 5 = £50,000. Had market rents risen 10 per cent instead, to £110,000, both versions would produce £110,000, because the ban removes the floor rather than the upside. That asymmetry is the whole point: the tenant no longer carries the downside alone.
Will landlords simply find another way?
That is the open question. The legislation anticipates some of it. Index-linked reviews are not exempted; the use of an index is part of the first element that triggers the prohibition, and the anti-avoidance paragraph voids side agreements to repay the difference. A lease that fixes the rent at the outset, or sets stepped increases that can be worked out in advance, does not leave the new rent undetermined in the way the schedules describe, though the text reviewed does not discuss those arrangements in detail.
How landlords and agents redraft leases in practice, and how far tenants use their new review rights, cannot be known from the statute alone. Any claim about market behaviour before commencement is a forecast, not a finding, and this article does not have verified data on London lease terms or on how many London leases contain upwards-only clauses.
Why does this matter in London specifically?
London is a city of many small occupiers: independent shops, restaurants, studios and professional firms taking space on leases measured in years, not decades. For that kind of business, a rent that cannot fall can turn a quiet period into a threat to survival, while a review that reflects the market can help it stay open. The government itself frames the reform around high street and town-centre businesses, and the capital’s high streets are already being reinvented as shopping habits change.
For landlords and investors, the impact is on how income is valued. A rent with a built-in floor is more predictable, and removing the floor changes the risk that a lender or buyer sees. How much, and whether it shows up in pricing, is a matter for the market, and no verified evidence on it was reviewed here.
The ban also lands alongside other cost pressures on occupiers. Rent is only one line, and the 2026 business rates changes and the wider state of the commercial market all feed into whether a unit is viable. For many firms, choosing a location now includes asking what the review clause says.
What should tenants and landlords check now?
Without giving legal advice, the questions that follow from the statute are practical ones:
- Does the lease contain a rent review clause, and when is the next review date?
- How is the new rent worked out: open market, an index, turnover or something else?
- Was any option or renewal arrangement agreed on or after 17 March 2026?
- Is the lease being newly granted, renewed or varied, so that the new rules may apply?
- Has commencement happened for the relevant provisions?
Landlords should also ask what the change means for how they value leases, and tenants should ask whether a lease being negotiated now takes account of it.
A modest rule with a long reach
The headline is simple: for covered leases, the rent can no longer be forced upward regardless of the market. The detail is less simple. Commencement is still unclear on the sources reviewed, existing leases are largely outside the rule, certain renewal arrangements since 17 March 2026 are inside it, and the government can still carve out exceptions through regulations.
For London occupiers, the practical value will come in the next lease negotiation or renewal. It will be worth watching how leases are redrafted and how commencement is set out.
This article is general information, not legal, tax or financial advice. Rules and commencement dates can change, so check current legislation and take professional advice on any lease.
Sources: GOV.UK; legislation.gov.uk
