The imposed ban of upwards only rent reviews

The Government has proposed legislation to prohibit upwards only rent review clauses (UORR) in new commercial leases in England and Wales. The proposal was initially introduced on 10 July 2025 tucked away in a 338-page Bill dealing addressing devolution to mayors and strategic authorities called English Devolution and Community Empowerment Bill. 

This has now received Royal Assent on 29 April 2026. 

The statute proposes to amend the Landlord and Tenant Act 1954 by inserting new provisions (sections 54A and Schedules 7A and 7B) that ban UORR in qualifying commercial leases. 

What are upwards only rent reviews?

UORR clauses are provisions frequently found in commercial leases which restrict any reviewed rent to the higher of the open market rent or the annual rent previously payable. In some cases, such clauses are expressed by a minimum variation threshold, expressed as a percentage increase, commonly referred to as a collar, which guarantees a pre‑agreed uplift irrespective of market conditions.

The implication of such provisions is that the reviewed rent, even where the market rent has gone down, will stay the same and never decrease.

For landlords, such mechanisms have served as a cornerstone of income certainty.  It underpins property valuations, supports borrowing, and has historically made UK commercial property attractive to institutional investors and overseas capital.

For tenants, however, the clause can lock them into paying above-market rents during economic downturns, contributing to business failures and high-street vacancies.

Why has it been introduced?

It was framed as part of a wider strategy to revitalise town centres and high streets. The Government argues that allowing rents to adjust downwards in weaker markets will:

• reduce business failure rates;
• encourage occupation of vacant units;
• support small businesses;
• mitigate the social effects of empty high streets.

What do I need to know?

The ban’s implementation would:

• Only apply to new leases, not retrospectively.
• Apply to all commercial leases to which Part II of the Landlord and Tenant Act 1954 apply or has “potential to apply”.  It is not confined to just high street or retail premises.
• Not apply to licences.
• Apply to lease renewals, whether agreed between the parties or ordered by the court as wells as put options.

In addition, the proposed ban includes anti-avoidance provisions to stop landlords from easily working around the ban. The provisions prohibit side arrangements outside the tenancy that require the tenant to pay increased rent. These provisions will also allow the legislation to override the lease if it only allows the landlord to trigger a rent review, meaning it would allow the tenant a right to trigger the review.

What happened in Ireland?

The proposition of the ban on UORR was likely inspired by the Irish governments decision to impose this ban for new leases from 1 March 2010. In Ireland, the market reaction to the ban involved a high level of uncertainty and fear of major disruption, which was later proved overstated.  However, Ireland did see a two-tier market with disadvantaged tenants locked into older leases with above market rents.  Shorter lease durations also became more common, often five to ten years with break options. Nevertheless, the extent to which the ban was responsible for these reactions may be hard to determine, due to its introduction closely following the 2008 Global Financial Crisis.

How could my landlord react?

The most significant concern for landlords relates to their ability to meet their financing obligations. Under the new regime, landlords face new exposure to negative market conditions which can impact loan repayments on debt-financed properties due to its direct impact on their cash flow.

This is going to lead to landlord’s exploring alternative rental structures such as:

• stepped arrangements, in which the lease provides for pre-agreed rental increases throughout the term of the lease, as opposed to open market to maintain some predictability over income;
• Inflationary reviews to match the Consumer Prices Index or the Retail Price Index as these are less likely to decrease than rents;
• Turnover rent review provisions obligating the tenant to pay a percentage of their revenue as rent.

Landlords may also offer shorter tenancies contracted out of the security tenure provisions of the Landlord and Tenant Act 1954 with more break clauses and no rent review may become the norm.

What could I see as a tenant?

When the proposed ban is implemented, tenants are likely to see greater downward rent flexibility during downturns. In turn, this could improve business sustainability and resilience for small and mid-sized business tenants. The ban could help work towards rebalancing the negotiating power between landlords and tenants and lead to more transparent and risk aligned leasing arrangements, with incentives for landlords to maintain competitive rent levels. 

However, there is also the risk for tenants with little negotiating power of rents being set by landlords at artificially inflated rates to address the risk of a falling market.  This risks harming tenants and negates the policy’s intended effect.  Tenants are also likely to see greater use of fixed or stepped rents; increased reliance on index‑linked rent reviews and shorter lease terms with more break options.

Next steps and our thoughts

Whilst there has been Royal Assent, we are currently awaiting the implementation of regulations which will bring the ban into effect.  As of now, the prohibition on upwards only rent reviews is not yet in force.  The government has indicated it will consult on the use of caps and collars alongside the prohibition set out in the Act

Whilst some in the industry have warmly welcomed the proposal others see it as the Government interfering in freely negotiated commercial arrangements. 

The Federation of Small Businesses has hailed it as a potential lifeline for small businesses grappling with rising costs, whilst UK Hospitality (the trade body for the hospitality industry) commented that “unjust upward-only rent review clauses have been hitting hospitality businesses for decades” and describe the proposed ban as “the right move”.

However, a nuanced approach to protect the high street could have been considered by the Government.  Limiting the ban to high street retail leases, defined by specific geographic criteria, could have addressed the Government’s main policy concern whilst preserving upwards only rent review.  UORRs have underpinned predictable income streams relied upon by institutional investors and pension funds.  There is a risk that removal of UORRs could depress property values and deter inward investment as it applies to all commercial property, including offices and logistics, despite the stated focus on high streets.

Whether this policy will achieve the vibrant, resilient high streets the Government aspires to, or instead introduce uncertainty and disruption into a well‑established commercial framework, remains to be seen.

From our discussions with independent high street retailers, one of their most pressing expressed concerns is the crippling burden of business rates liability. The current Government entered office on a clear promise to replace the business rates system in England, yet this has not materialised.  This failure has left retailers grappling with an outdated and punitive tax regime that actively undermines the viability of bricks‑and‑mortar trading.  If the Government is serious about supporting and revitalising the high street, addressing business rates would have delivered meaningful and immediate relief, rather than imposing an outright ban that ignores the sector’s most acute financial pressures.

While any reassurance is necessarily tentative, experience from the Irish market suggests that the impact may be more muted—though this offers no certainty as to outcomes in England.

If you have any questions or require further assistance, please reach out Janani Puvi and Malcolm Headley.

The material in this article is provided for guidance and general information only and is not intended to constitute legal or other professional advice upon which you should rely. In particular, the information should not be used as a substitute for a full and proper consultation with a suitably qualified professional.