This article was last updated on Monday 13 April 2026.
On 10 July 2025 the Government published the English Devolution and Community Empowerment Bill. This Bill includes a ban on upwards only rent review clauses in commercial leases.
The ban is not retrospective, except in respect of options for renewal leases (see below). It does not affect existing leases entered into before the Bill comes into force (commencement). Nor will it apply to leases entered into after commencement pursuant to pre-commencement agreements for lease. There is no indication yet on timing.
If an existing (pre-commencement) lease is renewed in the future, the ban will apply to the renewal lease.
The rent review provisions are tucked away at the back of a nearly 400-page Bill that deals mostly with local government issues. In summary:
In March 2026, an important amendment was proposed to the Bill which introduces an element of retrospective effect for certain options. If this becomes law, the ban will affect a renewal lease granted pursuant to an option agreement entered into on or after 17 March 2026. This ban will apply to both (a) the rent payable on day 1 of the renewal lease; and (2) any rent reviews under the renewal lease. This will be the case whether the option is granted in the original lease or in a side document.
This amendment has not yet been debated, let alone voted on, but as it has been proposed by the Labour peer who is sponsoring the Bill, it is expected to remain. Landlords entering into options for renewal leases now may want to consider switching to an index-linked rent instead of a market rent.
An option granted to a new tenant now (i.e not for a renewal lease) before the Act comes into force will not be affected by the ban.
FAQs
- Inflation rarely goes negative. So, if a lease provides for an index-linked review every five years, in practice that means there will probably be an increase. Is that still allowed?
Yes, this is valid. The ban applies only to clauses which say the rent absolutely cannot go down. If in practice the index doesn’t go down, that is fine.
- A lease has an initial rent of £100,000. At year five, there is an index-linked review subject to a cap of £110,000. The actual indexed rent is £115,000. What's the outcome?
The new rent is £110,000. The cap is valid. The Bill is only concerned with a minimum rent, not a maximum.
- A lease has an initial rent of £100,000. At year five, there is a review to the higher of market rent and index-linked rent, whether or not higher than the passing rent. The market rent is determined to be £90,000 but the indexed rent is £110,000. What's the outcome?
There is no express provision in the Bill which would prohibit this and it appears the new rent would be £110,000. This means a review to the higher of market rent and indexed rent would effectively guarantee an upwards only rent, unless inflation is negative over the review period (which would be very unusual). However, there is also a potential argument that this is against the spirit of the Bill and would not survive a challenge in the courts.
- A lease has an initial rent of £100,000. At year five, there is a review to the higher of market rent and £95,000. The market rent is determined to be £90,000. What's the outcome?
The new rent is £90,000. The £95,000 "floor" or "collar" is ignored.
- The rent is fixed in the lease at £70,000 in year one, £80,000 in year two and £90,000 in years three to five. Is that OK?
Yes. The ban doesn’t apply to rent increases fixed in advance, i.e. stepped rents.
- A lease has an initial rent of £100,000. At year five, the review clause says the rent will increase by 15%. Is that allowed?
Yes, it's just another version of a "stepped" rent. The new figure can be determined at the outset so it's not covered by the ban.
- A lease is granted for five years at a rent of £100,000. At year five, the landlord has a put option by which it can require the tenant to take a renewal lease at the higher of market rent and £100,000. Is that allowed?
No, the Government has thought of that workaround and included it in the ban.
The Mishcon de Reya view
A ban on upwards-only rent reviews was mooted 25 years ago, but the Blair Government settled for non-mandatory provisions in the RICS code. The present Government seems to have concluded that these are insufficient.
The ministerial press announcements accompanying the Bill suggest that the proposed ban will help invigorate high street retail and food & beverage providers. In our experience, many such tenants are on shorter leases without rent reviews, and therefore this legislation won't directly help them.
The British Property Federation has criticised what it calls "interference in long-established commercial leasing arrangements without prior consultation or warning”. However, the Government is pressing ahead with the ban.
Upwards-only rents underpin property valuations for investment and lending decisions. A ban on upwards-only reviews may undermine some of the basis of these valuations, leading to reduced investment in the areas which the Government is trying to help.
In practical terms, we may see increased reliance on index-linked rents. While it won't be valid to have a lease clause saying that the review is upwards only, in practice it is rare for the RPI or CPI to decrease over an extended period.