The English Devolution and Community Empowerment Act 2026 (“Act”) received Royal Assent on 29 April 2026. Among its most significant commercial property reforms is the proposed prohibition on upwards-only rent reviews (“UORRs”) in business leases.

Although the relevant provisions are not yet in force, the direction of travel is now clear.

The legislation represents a substantial shift in business tenancies practice and may rapidly begin to influence negotiations, valuation assumptions and asset management decisions.

One immediate consequence is that landlords with pending rent reviews under existing leases are likely to rush their conclusion before the ban crystallises.

When Will the Ban Take Effect?

The ban is not yet operative – secondary legislation is required to be passed for this.

The government has not yet announced an official commencement date as it is still consulting on some of the finer details (like how capped and collared reviews will be treated and how hybrid mechanisms might work).

It is currently expected that implementation may occur in 2027 or 2028.

What Types of Rent Review Are Caught?

When the ban does take effect, it will target rent review mechanisms in leases where:

· the rent can only increase; and

· the amount of the increase is not fixed or ascertainable at the date the lease is granted.

So many traditional open market upwards-only rent reviews are expected to be caught - including index-linked reviews and turnover rents where the review mechanism only operates upwards.

By contrast, the legislation permits:

· fixed stepped rents;

· predetermined uplifts;

· genuine upwards/downwards reviews; and

· other mechanisms where the future rent is objectively ascertainable at the outset.

Where a review provision is caught, the upwards-only element will become unenforceable. If the remainder of the review machinery would otherwise produce a lower rent, the reviewed rent will reduce accordingly.

Existing Leases Remain Protected – But Timing Matters

Importantly, the legislation is not generally retrospective.

Once the provisions come into force existing leases will ordinarily remain unaffected; and new leases granted after commencement will generally be caught.

That distinction is already becoming commercially important.

Landlords with rent reviews currently underway under existing leases may understandably wish to ensure that those reviews are concluded before commencement of the new regime, particularly where:

· the lease contains detailed landlord-favourable review machinery;

· the market currently supports an increase;

· there are time limits or notice mechanisms which still permit the review to be implemented; or

· delay could create evidential or tactical difficulties later.

In many leases, once the review has been validly triggered and determined before commencement, the resulting reviewed rent should continue to apply under the existing lease notwithstanding the later legislative changes.

This is likely to create increased pressure over the next 12-24 months to progress outstanding reviews, expert determinations and negotiations that might otherwise historically have drifted.

Tenants, conversely, may have an incentive to scrutinise review machinery carefully and consider whether procedural failures or timing issues affect the landlord’s ability to complete the review before the new regime takes effect.

The Retrospective Element – Renewal Arrangements

Once the ban is in force, where a new tenancy is granted to an existing tenant pursuant to a qualifying renewal arrangement entered into on or after 17 March 2026, the ban may apply to:

· the initial rent under the renewal lease; and

· future reviews during the renewal term.

The legislation defines tenancy renewal arrangements broadly and this can include put and call options or arrangements obliging either party to enter into a future renewal lease.

This means parties negotiating renewal options now cannot assume they will automatically preserve traditional upwards-only review structures merely because the renewal lease itself will complete before or shortly after commencement.

Subleases and Rent Mismatch Risk

The legislation also creates potential issues for intermediate landlords.

Once the ban is in force, provisions in superior leases requiring subleases to contain upwards-only review provisions will cease to have effect.

This creates the possibility of a superior lease continuing to contain an upwards-only review while a post-commencement underlease does not.

The result may be an income mismatch where the intermediate landlord remains liable for increasing head-rent liabilities while the occupational sublease rent can move downwards.

Procedural Changes Favouring Tenants

The Act also alters the procedural balance in rent review clauses.

Once in force, tenants will gain the ability to trigger rent review procedures themselves even where the lease originally reserved those rights solely to the landlord.

This reduces landlords’ ability to defer reviews tactically during falling markets and is another indication of the broader legislative trend towards greater tenant protection.

No Contracting Out

The parties cannot contract out of the new regime.

The legislation also contains anti-avoidance provisions intended to prevent parties from recreating the economic effect of upwards-only reviews through side agreements or indirect payment mechanisms.

What Should Parties Be Doing Now?

Although the reforms are not yet in force, they are already affecting commercial decision-making.

Landlords should now be reviewing:

· outstanding rent reviews;

· review notice deadlines;

· unresolved expert determinations;

· renewal options and put/call arrangements;

· underlease structures; and

· wider asset management strategy.

In particular, landlords with reviews that can still validly be progressed under existing lease machinery are likely to be keen to conclude those reviews before commencement of the new regime.

For tenants, the reforms may present opportunities to negotiate different review structures, particularly where landlords are seeking certainty before implementation.

More broadly, the market may see increased use of:

· shorter lease terms;

· fixed uplifts;

· stepped rents;

· true upwards/downwards indexation; and

· alternative incentive structures.

The traditional upwards-only open market review clause has long been a defining feature of the English commercial lease market.

While the final shape of the new regime remains subject to consultation and commencement regulations, the direction of reform is now firmly established.