⚠ Legal disclaimer
This article is for general information only and does not constitute legal advice. Commercial lease matters are highly fact-specific and the law in this area is actively changing. You should always take independent legal advice before acting on anything in this article.
If you hold a commercial lease in England or Wales, the rent review clause is one of the most consequential provisions in your agreement — and, for decades, upward-only rent review clauses have been one of the most tenant-hostile features of the UK commercial leasing market.
An upward-only rent review means exactly what it sounds like: when your rent is reviewed at the intervals specified in the lease, it can go up, but it can never go down. Even if the market has fallen significantly since your lease was signed, your rent is locked at the current level as a minimum. For tenants, this has historically felt fundamentally unfair. For landlords, it has been a cornerstone of investment security.
That landscape is now changing. The English Devolution and Community Empowerment Act 2026 (EDCEA) has introduced a statutory ban on upward-only rent reviews in business tenancies — a significant reform that will reshape the commercial leasing market once it takes effect. This article explains how upward-only reviews work, why they have been so controversial, and what tenants can do about them, both under existing leases and when negotiating new ones.
What is an upward-only rent review clause?
A rent review clause is a provision in a commercial lease that allows the rent to be adjusted — typically every three or five years — to reflect changing market conditions. An upward-only rent review clause adds a restriction: the reviewed rent cannot fall below the rent payable immediately before the review, regardless of what the open market evidence shows.
In practice, this means that if market rents have risen since your last review, your rent goes up. If market rents have fallen — as happened significantly during periods of economic stress — your rent stays the same. The ratchet only operates in one direction. From the landlord’s perspective, this provides security of income. From the tenant’s perspective, it can result in paying significantly above the current market rate for the remainder of a long lease.
Upward-only rent reviews are most commonly found in commercial leases — offices, retail units, industrial units, and warehouses. They are less common in short-term or heavily negotiated leases, and they have historically been absent from residential tenancies, where the regulatory framework is different.
How is the reviewed rent calculated?
The most common basis for calculating the reviewed rent in commercial leases is the open market rent: what a willing tenant would agree to pay a willing landlord for the premises, on the open market, at the date of review. This hypothetical exercise is usually conducted by a surveyor, and if the parties cannot agree, by an independent expert or arbitrator.
Index-linked reviews are another approach, where rent increases are tied to an inflation index such as RPI or CPI. Turnover rents, common in retail, link part of the rent to the tenant’s trading performance. Each of these mechanisms has historically been applied on an upward-only basis in most commercial leases in England and Wales.
Why are upward-only rent review clauses so controversial?
The upward-only mechanism has been criticised for decades by tenant representative bodies, government committees, and commentators. The criticism is straightforward: it produces results that bear no relationship to market reality, particularly during periods of economic difficulty.
During the retail sector downturns of the 2010s, and again during the disruption caused by the pandemic, significant numbers of commercial tenants found themselves paying rents that were materially above the market rate — because their leases contained upward-only review clauses that prevented any downward adjustment. Businesses that might have survived on a market rent were instead committed to a above-market obligation that contributed to their financial difficulty.
The counterargument from landlords and their lenders has always been that upward-only reviews provide the certainty that underpins investment in commercial property. If rent income cannot fall, lenders can underwrite it more reliably, investors can model returns with greater confidence, and development can be funded more easily. Removing that certainty, the argument goes, would raise the cost of capital and reduce the supply of commercial space.
Both arguments contain truth. The question is where the balance should sit — and the EDCEA represents Parliament’s answer that the existing balance has tilted too far in the landlord’s favour.
The EDCEA 2026: what the ban on upward-only rent reviews actually means
The English Devolution and Community Empowerment Act 2026 (EDCEA) introduces a statutory ban on upward-only rent review mechanisms in business tenancies. The ban is not yet in force — it is not expected to take effect until 2027 at the earliest, with secondary legislation and formal government guidance still to follow — but its enactment is confirmed and its direction is clear.
What the ban covers
Under the EDCEA, where the rent payable following a review is not ascertainable at the date the lease is granted, the rent review mechanism must allow for the revised rent to increase or decrease. The upward-only floor is removed. If the review produces a lower rent than the current passing rent, the tenant will pay the lower amount.
The ban applies to the following types of rent review, which will no longer be calculated on an upward-only basis:
- Open market rent reviews (or reviews using another hypothetical basis)
- Indexation, inflation, or multiplier-linked rent reviews
- Turnover rent reviews
Importantly, stepped rents and other fixed uplifts are not affected by the ban, because the rent in those arrangements is a known figure from the outset rather than a variable mechanism. A lease that provides for fixed annual increases of a set percentage remains valid.
What the ban does not cover: key limitations
The ban will not be retrospective in most cases. Leases granted before the effective date — whenever that is confirmed — will continue to operate under the terms they were granted on. This means that tenants with existing long leases containing upward-only review clauses will not automatically benefit from the new legislation.
There are two significant exceptions to this non-retrospective position, however. First, where a renewal lease is granted after the effective date pursuant to an option or agreement entered into on or after 17 March 2026, the renewal lease will be subject to the new rules — preventing landlords from circumventing the legislation through early renewal agreements. Second, underleases granted after the effective date will be caught by the ban regardless of when the superior lease was entered into.
Anti-avoidance protections
The EDCEA includes anti-avoidance provisions specifically designed to prevent landlords from replicating an upward-only outcome through contractual structures. Arrangements that attempt to produce that effect — such as a landlord put option designed to achieve the same result — will be void. Tenants also have a statutory right to trigger and pursue rent reviews, preventing landlords from delaying reviews in falling markets to avoid downward adjustments.
Unresolved questions: collars, caps, and two reference points
Several important aspects of the new regime remain to be clarified through secondary legislation and government consultation. One key question is whether landlords and tenants will be permitted to agree a ‘collar’ — a limit on how far rent can fall at review — and whether this would require a corresponding cap on upward movement. The government has indicated it is likely to treat collars and caps as a package deal: if a collar is permitted, an equivalent cap should apply. The practical effect would be a band within which rent could move, rather than unconstrained movement in either direction.
The government has also indicated that reviewing to the higher of two reference points — for example, open market rent or an index — may be permissible, provided that both mechanisms could potentially produce a decreased rent. These questions will be resolved through formal consultation and secondary legislation before the ban comes into force.
What can tenants do about upward-only rent review clauses?
If you are a tenant with an existing lease that contains an upward-only review clause, the first thing to understand is that the EDCEA will not automatically help you — at least not unless your lease is up for renewal under a qualifying arrangement. Your existing obligations are governed by your existing lease.
That does not mean there is nothing you can do. There are several practical approaches available, depending on your lease, your market, and your relationship with your landlord.
Review your lease and understand your position
The starting point is always to understand precisely what your rent review clause says. The wording matters significantly. Some clauses that appear to be upward-only contain provisions — about the treatment of vacant possession, tenant’s improvements, or inducements — that can affect the reviewed rent calculation. A specialist commercial lease solicitor can review your lease and identify whether any aspects of the review mechanism work in your favour, or whether there are technical arguments available.
Negotiate with your landlord
Landlords are aware that the legislative environment is changing. Many are more open than they might previously have been to discussing lease variations, rent concessions, or amendments to review provisions — particularly where a tenant’s business is under pressure or where market rents have softened. Lease variation negotiations require careful handling, but they are not uncommon, and a well-advised tenant is better placed to achieve a meaningful result.
The key is to approach the conversation commercially rather than adversarially. A landlord who understands that a tenant with a sustainable rent is more valuable than an empty unit is more likely to engage constructively. Bringing evidence of current market rents and framing the discussion around mutual benefit tends to produce better outcomes than a confrontational approach.
Use break rights strategically
If your lease contains a break right — an option to bring the lease to an end early — its interaction with rent review dates is worth examining carefully. In some circumstances, a break right that falls near a review date gives you the practical ability to reset your rental commitment to market, or to exit if the rent after review is unacceptable. Exercising break rights involves strict procedural requirements and the consequences of getting them wrong can be significant — legal advice before serving any break notice is essential.
Plan your lease renewal carefully
If your lease is coming up for renewal, the changing legislative landscape matters directly to your negotiation. Where your renewal falls within the scope of the EDCEA’s anti-avoidance provisions — specifically, where the renewal agreement is entered into on or after 17 March 2026 — the new rules will apply to the review mechanism in your renewal lease. This gives tenants negotiating renewal leases in 2026 a meaningful lever. Taking specialist advice on lease renewal at the heads of terms stage, before positions have hardened, is the most effective point at which to influence the outcome.
Concerned about a rent review clause in your lease?
Whether you are facing an upcoming review, negotiating a lease renewal, or considering a lease variation, the right legal advice at the right time can make a significant difference to the outcome. Contact Lease Lawyer to discuss your position with a specialist commercial lease solicitor.
What fairer rent review provisions look like
For tenants taking new leases or renewing existing ones, understanding the alternatives to a straightforward upward-only review mechanism is useful context for negotiation. The market is already adjusting in anticipation of the EDCEA, and landlords are increasingly open to structures that provide some protection for both parties.
- Open market review without an upward-only floor — the rent is reviewed to the open market level, which can go up or down. This is the most straightforward alternative and will become the legislative default under the EDCEA.
- Open market review with a cap and collar — the reviewed rent can move within a defined band, protecting the tenant against extreme increases while giving the landlord a floor. The government has indicated that if collars are permitted under the EDCEA, corresponding caps will apply.
- Index-linked reviews with caps and collars — rent increases are tied to an inflation measure, subject to maximum and minimum limits. This provides predictability while allowing for genuine variation over time.
- Stepped rents — fixed uplifts at agreed intervals that are known from the outset. These are not affected by the EDCEA ban because the rent is ascertainable at the date of grant.
- Shorter lease terms — taking a shorter lease, possibly without a rent review, and renegotiating at renewal on current market terms. This suits tenants who need flexibility and markets where landlords are willing to offer shorter commitments.
None of these is universally preferable — the right mechanism depends on the sector, the market, the length of term, and the relative negotiating positions of landlord and tenant. The important point is that tenants entering new leases in 2026 and beyond have genuine options that were not always available in a market dominated by the upward-only assumption.
How the market is responding to the end of upward-only rent reviews
The enactment of the EDCEA has prompted significant activity across the commercial property market. Landlords, lenders, and investors are all revisiting their assumptions about rental income, valuations, and funding structures in light of a future where rents can fall as well as rise at review.
Legal and property commentary since the Bill’s progress through Parliament has highlighted several likely market shifts. Stepped rents — fixed uplifts known from the outset — are expected to become more prevalent, precisely because they are not affected by the ban and continue to provide the predictability that investors and lenders require. Landlords may also seek to mitigate uncertainty by pushing higher initial rents at the outset, offset by longer rent-free periods or fit-out contributions.
The sensible position for tenants to take is that the market is in a period of adjustment, and that adjustment creates negotiating opportunities. Landlords who understand the direction of travel are more likely to be flexible on review mechanisms in new leases and renewals — particularly where the alternative is a void.
For further detail on the legislative framework, the English Devolution and Community Empowerment Act 2026 on legislation.gov.uk provides the primary statutory text, with secondary legislation and government guidance to follow as implementation approaches.
Getting the right advice on your rent review clause
Upward-only rent review clauses have been a persistent source of imbalance in commercial leasing for decades. The EDCEA represents a meaningful legislative correction — but it will not help most tenants with existing long leases, and it leaves significant questions about the precise shape of the new framework to be resolved through secondary legislation and consultation.
What is clear is that the negotiating environment has shifted. Tenants taking new leases or renewing existing ones are in a stronger position than they have been for a long time, and landlords who understand the changing landscape are increasingly willing to engage on review mechanisms that reflect genuine market risk for both sides.
The most important step is to take specialist legal advice before you act — whether that means engaging with an upcoming review, negotiating a lease renewal, varying an existing lease, or signing a new one. The wording of rent review clauses is technical, the consequences of getting it wrong are long-lasting, and the law in this area is actively changing.
Speak to a commercial lease solicitor today
At Lease Lawyer, we advise landlords and tenants on all aspects of commercial lease agreements across England and Wales — including rent review clauses, lease renewals, and lease variations. If you have a rent review approaching, or you are about to sign or renew a commercial lease, we can help you understand your position and protect your interests.
Get in touch for clear, practical legal advice on your lease.