Upwards-Only Rent Review Ban Legislation Receives Royal Assent

The Government has announced today that the English Devolution and Community Empowerment Bill has received Royal Assent and has become the English Devolution and Community Empowerment Act 2026. The Act includes the mechanism which will introduce the ban on upwards-only rent reviews in commercial leases in England & Wales. However, the ban is not currently in force and will not take effect until the relevant parts of the Act are “switched on” by Government through secondary legislation.

Here are the main points you need to know:

• Once it takes effect, the ban will prevent parties from agreeing upwards-only rent review mechanisms in commercial leases.
  
  
• If a lease provides for rent to be reviewed by reference to either an index (such as CPI), to open market rents or to the tenant’s turnover (the reference amount), but allows for the reviewed rent to be higher than the reference amount (e.g. where rent is stated to be the higher of the passing rent or the open market rent), the rent on review will be the reference amount.
  
  
• A Government Minister has confirmed that the ban will not prevent a rent review clause which provides for the revised rent to be the higher of two different “reference amounts” (for example, the higher of open market rent and an index-linked rent), as it’s possible that both could go down and result in a lower rent than the passing rent. Guidance should follow which clarifies this, although there is no certainty that the Courts will interpret the legislation in this way.
  
  
• The Government has said that it will consult on whether collars to upwards-downwards mechanisms should be introduced before bringing the ban into force. It is not yet known what any such collar arrangements might look like.
  
  
• The changes will affect all new (i.e. non-renewal) leases entered into after the ban comes into force, unless they were entered into pursuant to an arrangement entered into prior to the ban coming into force.
  
  
• The changes will also impact renewals of existing tenancies where the renewal is entered into after the ban comes into effect and either (i) it is not granted pursuant to an arrangement entered into before the ban; or (ii) it is entered into pursuant to a “tenancy renewal arrangement” that was made on or after 17 March 2026.
  
  
• Leases entered into with existing tenants pursuant to “tenancy renewal arrangements” made before 17 March 2026 will not be affected by the ban.
  
  
• Reversionary leases entered into prior to the ban coming into force also look to be excluded, even if they are entered into after 17 March 2026, although again, there is no certainty that the Courts will interpret the legislation in this way.
  
  
• The ban will also affect “tenancy renewal arrangements” where the initial rent in the renewal lease is calculated by reference to an upwards-only mechanism. In these cases, any leases which are granted pursuant to “tenancy renewal arrangements” entered into on or after 17 March 2026 appear to be caught by the ban, possibly even those where the renewal lease is granted before the ban comes into force, although this is, at present, uncertain.
  
  
• The ban also affects subletting provisions in pre-existing leases. Where a lease requires an authorised sublease to contain an upwards only rent review, such requirement will be ineffective after the ban comes into force. The head landlord will not be able to require the sublease to contain specific rent review provisions. Instead, the rent review terms will be a matter for agreement between the parties to the sublease.
  
  
• Where a rent review can only be triggered/initiated by the landlord, once the ban is in force, tenants will have equivalent rights to trigger/initiate the process. Tenants will also be given the power to take any operational action necessary to enable the rent review to operate effectively (even if the lease terms do not provide for this).
  
  
• Parties cannot contract out of the ban, and there will be anti-avoidance provisions in place to prevent parties from trying to circumvent the ban.

If you are concerned about how the proposed ban could impact your business or future transactions, do get in touch.