Proposed ban on upwards only rent reviews: What you need to know

Proposed ban on upwards only rent reviews

The English Devolution and Community Empowerment Act 2026 (the “Act”) received Royal Assent on 29 April 2026. Part 5 of the Act proposes a significant overhaul of the way rent reviews are conducted in commercial lettings, effectively placing a ban on upwards only rent reviews. While the ban is not yet in force, it is already impacting negotiations across the board. We consider the implications for those operating across the sector generally, and with a specific focus on the telecoms sector.

How will the ban apply?

Part 5 will render ineffective any provision in a commercial lease, completed after the ban comes into force, that seeks to implement an upwards only rent review. The whole clause will not be void – rather, the terms are of no effect to the extent that they would prevent the rent from falling, with the reviewed rent instead being capped at the relevant index-linked, market or turnover figure.

Provisions in a headlease requiring subleases to contain an upwards only rent review will also be of no effect. While including wording to the contrary has not been prohibited, any such clause will simply be ineffective when the ban comes into play.

Clauses likely to be caught by the ban

While the obvious “higher of” or “equal to” clauses which expressly prevent the reviewed rent from falling below the current passing rent will be void under the proposed ban, index-linked review provisions which seek to limit any decrease are also likely to be caught. In effect, any provisions or arrangements which produce a rent review structure that prevents downward movement should be considered high risk.

Although the ban will not be welcome news to landlords, it is important to remember that it is not intended to prevent rent increases generally. The government explains in its Delegated Powers Memorandum that the ban “will ensure that the rent reviews result in the rent being able to move up or down”. Utilising mechanisms such as an index-linked rent review will ensure that a landlord can still benefit from inflation-linked uplifts.

When will the ban apply?

While the ban is not retrospective, the Act applies the ban to leases granted pursuant to a “tenancy renewal arrangement” entered into on or after 17 March 2026. For example, an agreement for lease is completed on 18 March 2026. The subsequent lease is granted in December 2026 and contains an upwards only rent review. That clause will be caught and the upwards only review will be of no effect.

Given the application of the ban to current transactions, it is no surprise that this is already at the forefront of negotiations.

Who will the ban apply to?

The provisions of the Act are aimed at business tenancies, specifically those tenancies falling within Part 2 of the Landlord and Tenant Act 1954 (the “1954 Act”) or with the potential to fall within that part. This will include leases that are ‘contracted out’, as while the parties have excluded sections 24-28 of the 1954 Act, the tenancy is still one which falls within Part 2.

How will the ban impact Code agreements?

Section 43(4) of the 1954 Act confirms that Part 2 does not apply to any tenancy whose main purpose is to grant rights under the Electronic Communications Code set out at Schedule 3A of the Communications Act 2003 (the “Code”). Therefore, it appears that typical agreements to grant rights under the Code will fall outside of the ban.

Some agreements entered into pre-Code, whose primary purpose is to grant Code rights, remain protected under the 1954 Act. In those cases, Compton Beauchamp confirmed that the first renewal proceeds under the 1954 Act regime but becomes a Code agreement upon completion of the renewal lease. Even in those circumstances, upon renewal, the new lease will be a Code agreement and will therefore be subject to the exception at section 43(4) of the 1954 Act.

Summary

The underlying aim of the ban is to protect commercial tenants from perceived overinflated rents in periods of economic downturn, and to help protect our already fragile high streets. Whether it will achieve this aim is another debate, and many have suggested that there are better solutions (for example, the current business rates regime).

It seems that operators under the Code are not intended to receive the benefit of the ban on upwards only rent reviews. This will be of some reassurance for site providers, who have already seen rents decrease, in many cases, following the introduction of the Code. Those site providers may continue to utilise upwards only reviews and have the certainty of a minimum rent throughout the term.

Need advice on a commercial property dispute?

Our Real Estate Litigation team advises landlords, tenants, and businesses on a wide range of commercial property matters. If you have questions about rent reviews, lease terms, or a potential dispute, get in touch with our team to discuss how we can help.

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