Upwards-only rent reviews: The impact of legislative change

Upwards-only rent reviews (UORRs) have long been a defining feature of commercial leasing in England and Wales, particularly beloved by institutional landlords. Under such clauses, almost universally adopted in commercial leases, rent is reviewed at agreed intervals but may only increase or remain static, even where open market rental values have fallen. While this mechanism has historically underpinned investment confidence, it has also attracted criticism from occupiers and policymakers.

In April 2026, the legal landscape shifted materially with the enactment of the English Devolution and Community Empowerment Act 2026, which introduces a statutory ban on upwards-only rent review mechanisms in most new and renewed business tenancies, subject to commencement regulations and consultation on details such as caps and collars.  

The rationale for upwards-only rent reviews

Income certainty and investment value

From a landlord and investor perspective, the primary advantage of UORRs has been certainty of income. By preventing downward rent movements, UORRs stabilise cash flows and reduce exposure to cyclical market volatility, which in turn supports capital valuations and loan security. This certainty has been particularly significant in an inflationary environment, where real-term erosion of income is a material concern for long-term holders.

Financing and development

Lenders have traditionally favoured leasing structures incorporating UORRs, as predictable rental uplifts assist in underwriting debt and stress-testing returns. Many commentators have noted that the prevalence of upwards-only reviews has reduced the cost of capital for commercial schemes and facilitated speculative and regeneration-led development.

Potential tenant upside at lease grant

Although often portrayed as tenant-unfriendly, UORRs can, at least at the outset, work in an occupier’s favour. Greater certainty on future income can encourage landlords to agree lower headline rents, longer incentive packages, or more generous capital contributions at the start of the term.

The criticisms of upwards-only rent reviews

Misalignment with market reality

The principal criticism is that UORRs distort market pricing by preventing rents from adjusting downward in response to falling demand. This can leave tenants paying rents materially above market levels, particularly in structurally challenged sectors such as retail and secondary office space.

Reduced flexibility and occupier risk

By locking in rent floors, UORRs increase occupational risk for tenants and can undermine business resilience during downturns. Critics argue that such rigidity contributes to tenant failures, vacancy, and wider high street decline, outcomes the Government has explicitly cited in support of reform

Barriers to reletting and regeneration

Where passing rents are artificially high, assignment of the lease can become difficult without landlord intervention. This may delay repurposing or regeneration of underperforming assets, conflicting with public policy objectives around town centre renewal and economic growth.

The legislative shift: What has changed?

The English Devolution and Community Empowerment Act 2026 amends the Landlord and Tenant Act 1954 to render unenforceable rent review provisions in most new and renewal business tenancies where:

• The reviewed rent is not fixed or ascertainable at the date of grant
• The mechanism permits only upward movement or guarantees a minimum increase

In practice, this captures traditional open-market, index-linked and turnover-based UORRs, converting them into upwards-and-downwards reviews. In addition, rent review clauses which rely on the landlord triggering the rent review process or expert determination will also enable tenants to start the review process.

Scope and timing

The legislation isn't yet in force and is expected to commence no earlier than 2027, following further consultation on implementation and the possible introduction of caps and collars to moderate volatility.  Existing leases are carved out, although there is a targeted retrospective element affecting certain renewal arrangements entered into on or after 17 March 2026. 

Likely market consequences

Structural change in lease design

Landlords are expected to respond through alternative mechanisms, including:

• Higher commencement rents
• Shorter lease terms
• Stepped or fixed rent increases
• Upward / downward index-linked reviews
• Increased use of caps and collars on reviews

There is concern that some of these responses could increase tenant cost or reduce security, potentially offsetting the intended benefits of reform.

Investment and lending considerations

While investors may face greater income volatility, proponents argue that two-way reviews better reflect economic reality and improve long-term occupational sustainability. Much will hinge on the detail of secondary legislation and whether collars are permitted in a form acceptable to funders. Known limited reductions in the rent may well help in de-risking funding for lenders. It is likely however that the legislation will require that any collar on rent reductions must be matched by a corresponding cap on the increase in rent. Providing greater certainty for both parties.

Other considerations

• There are likely to be more contested rent reviews following the implementation of the ban as tenants try and achieve lower rents.
• The ban will also apply to new sub-leases even where the headlease requires the head tenant to include UORRs in any subleases. Any such term in the headlease will be ineffective. 

Conclusion

Upwards-only rent reviews have played a central role in shaping the commercial property market in England and Wales, offering stability and supporting investment but at the cost of flexibility and market responsiveness. The 2026 reforms represent one of the most significant interventions in commercial leasing for decades. Whether they achieve a better balance between investor confidence and occupier affordability will depend less on the headline ban, and more on how the new regime is calibrated and absorbed by market practice in the years ahead.

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