The Upwards-Only Rent Review Ban: Is the Commercial Lease Market Already Adapting?

In recent transactions, I have started to see a practical response: fixed stepped increases replacing a conventional open market rent review. That may offer certainty, but it is not a like-for-like substitute. The question is whether this is the beginning of a wider market shift, and what each party should be looking out for.

What is changing for upwards-only rent reviews? 

An upwards-only rent review clause usually resets the rent by reference to the open market rent at the review date, but prevents the rent from falling below the amount already payable. If market rents rise, the rent can increase. If they fall, the rent stays where it is. 

The English Devolution and Community Empowerment Act 2026 contains provisions intended to prevent that one-way outcome in business tenancies. The enabling legislation has received Royal Assent, but the relevant provisions are not yet in force. A commencement date and further detail are still awaited, so documents being negotiated now need to be considered against both the existing law and the expected new regime. 

The ban is expected to apply to new business leases entered into after commencement, including renewal leases under the Landlord and Tenant Act 1954, unless a specific transitional protection applies. Existing leases completed before commencement are not expected to be rewritten by the new rules. 

The transitional rules require particular care 

The broad protection for a pre-commencement agreement for lease or option is expected to apply where it was entered into with a new tenant before the ban begins, even if the lease completes afterwards. However, renewal arrangements with an existing tenant are treated differently. 

An agreement for lease or option entered into with an existing tenant on or after 17 March 2026, covering all or part of the existing premises, may fall within the special tenancy renewal rules. In that situation, an upwards-only method for setting the initial rent under the renewal arrangement may be caught, as may later rent reviews if the renewal lease itself is entered into after commencement. 

This is a material due diligence point. It is not enough to ask when the final lease will complete. The date and structure of any earlier agreement, option, renewal arrangement or side document may also matter. 

Will stepped rent replace the open market rent review? 

A stepped rent sets out the future rent in advance. For example, a lease might provide for £100,000 a year for the first five years, £110,000 for the next five years and £120,000 thereafter. The same outcome could be expressed through fixed percentage increases, provided the figures are objectively known when the lease is granted.

On the present understanding of the legislation, fixed or stepped increases of that kind should remain permissible. They do not involve a later valuation which can move upwards but not downwards. The parties know the rental path at the outset. 

That certainty is attractive. It removes the time, cost and potential dispute involved in an open market rent review. It also gives both parties a clearer cash-flow model. For a landlord or lender, predictable growth may help with income forecasting. For a tenant, the future liability can be budgeted from day one. 

The trade-off is that certainty cuts both ways. If market rents outperform the agreed steps, the landlord may be left below market. If the market weakens, the tenant remains committed to the fixed increases. A stepped rent also changes the valuation discussion because the headline rent, average rent and investment value may tell different stories. 

What other rent review mechanisms may emerge? 

A genuine upwards and downwards open market rent review should remain possible, because the rent can move in either direction. Index-linked mechanisms, including a CPI-linked rent review, may also remain available, but the drafting will need scrutiny. A collar or minimum increase that prevents a reduction may be ineffective if it recreates the prohibited one-way outcome. A cap may be less problematic, but the final legislation and regulations must be checked before documents are settled. 

Parties may also explore turnover rents, shorter terms, more frequent lease events or reversionary arrangements. None is automatically better. The right mechanism will depend on the asset, sector, covenant strength, funding arrangements and the parties’ appetite for risk. 

The ban on upward-only rent reviews is already affecting negotiations 

The traditional commercial lease rent review model has not disappeared. Until the provisions commence, upwards-only drafting remains legally available for new leases. However, a lease being negotiated now may complete after commencement, and a renewal arrangement entered into now may already be relevant to the transitional rules. That makes it sensible to agree a fall-back position rather than assume today’s drafting will remain enforceable. 

Landlords should consider whether fixed steps provide sufficient protection against inflation and market growth. Tenants should test affordability across the whole term, not simply compare the initial rent. Investors and lenders should examine how the mechanism affects value, interest cover and exit assumptions. Agents and surveyors will have an important role in testing whether the proposed rental path is supported by the market. 

I would be interested to hear what agents and surveyors are seeing. Are stepped rents becoming more common in current heads of terms, or are parties still waiting for the commencement regulations before changing established practice? 

Legal status note 

This draft reflects the legal position described in the source material available on 3 November 2026. Before publication, the commencement date, final scope and any regulations or guidance should be checked against the legislation then in force. 

Upward-only rent reviews: frequently asked questions 

Are upward-only rent reviews being banned? 

Yes, legislation has been enacted to prohibit upwards-only rent review mechanisms in business tenancies within its scope. The relevant provisions are not yet in force, so the commencement date and any supporting regulations must be checked before completion. 

What is an upward-only rent review? 

It is a rent review under which the rent can rise, usually to open market rent, but cannot fall below the rent already payable. If market rent is lower at the review date, the existing rent continues. 

Are stepped rent increases still allowed? 

Fixed stepped increases, or fixed percentage increases, are expected to remain permissible where the future rent figures are known when the lease is granted. The drafting must not operate as a disguised upwards-only valuation mechanism. 

When does the ban on upward-only rent reviews take effect? 

The Act has received Royal Assent, but the relevant provisions are not yet in force. The government must bring them into force, and the commencement position should be checked against the legislation and any regulations before a lease is completed. 

What is a rent review clause? 

It is the part of a lease that explains whether, when and how the rent may change. It may use open market value, fixed steps, an index, turnover or another agreed formula, and should also explain the process for resolving disagreement. 

Why does 17 March 2026 matter? 

Special transitional rules may apply to certain agreements for lease or options made with an existing tenant on or after that date for all or part of the existing premises. The earlier arrangement may therefore matter even if the renewal lease is completed later. 

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Disclaimer 

This article is for general information only and is not legal advice. Laws and guidance change and outcomes depend on facts. If you need advice on your situation, please contact us. Grant Saw Solicitors LLP is authorised and regulated by the Solicitors Regulation Authority. 

Last updated: 5 November 2026