Ban on upward-only rent reviews (UORRs) receives Royal Assent

The Government has passed its draft legislation banning upward only rent reviews (UORRs) in new business leases with the English Devolution and Community Empowerment Act 2026 receiving Royal Assent on 29 April 2026. The legislation is expected to come into force in early 2027 from which point any new lease that contains a rent review clause that prevents rent from falling will be unlawful. It must also be noted that in the case of renewal leases caught by the transitional rules as set out below the trigger date was 17 March 2026. This briefing note explains what will no longer be allowed, what will still be permitted, what rent review clauses will look like going forward and what landlords and tenants should do now.

The following mechanisms will be prohibited in any new lease to which the new law applies:

Clauses stating that the reviewed rent is the greater of the passing rent and the open market rent.

Indexation clauses that allow rent to rise with RPI/CPI but never fall.

Any clause that sets a minimum rent below which the reviewed rent cannot drop. This includes:

• base rents in turnover leases;
• “collars” or “floors” in index linked reviews;
• disguised floors (e.g. “rent shall not be reduced below the initial rent”.

Any drafting that replicates the economic effect of an upward only review, even if not labelled as such.
Examples:

• landlord top ups if rent falls;
• deposits designed to compensate for a rent reduction;
• formulas that always produce a rent equal to or above the passing rent.

If the effect is that rent cannot fall, the clause will be void.

The following mechanisms remain lawful:

Traditional open market reviews where rent can move up or down.

Indexation to CPI/RPI with downward as well as upward movement.

Pure turnover rents where rent fluctuates with trading performance.

Pre agreed fixed increases known at the date of grant. These are outside the ban because the future rent is known and not subject to review.

For example, reviews linked to:

• market based indices;
• construction cost indices;
• sector specific indices provided the formula can produce a lower rent.

Below are examples of compliant drafting approaches.

“The Annual Rent on each Review Date shall be the Open Market Rent on that Review Date, whether higher or lower than the Annual Rent previously payable.”

“On each Review Date the Annual Rent shall be adjusted by applying the percentage change (whether an increase or a decrease) in the CPI since the previous Review Date.”

“The Annual Rent shall be the Turnover Rent calculated in accordance with Schedule [ ], with no minimum or base rent applying.”

“No provision of this lease shall operate to prevent the Annual Rent from decreasing on a Review Date where the applicable rent review mechanism produces a lower figure.”

All new leases granted after commencement must comply.

A renewal lease will be caught if the renewal right is contained in a document entered into on or after 17 March 2026, examples include leases granted now that have renewal rights (the initial rent calculation and the rent review mechanism in the renewal lease are both caught by the ban), options to renew or documents that oblige the parties to grant or take a renewal lease that are entered into on or after 17 March 2026.

The legislation allows UORRs in new first leases granted as a result of agreements for lease entered into before the ban, even if the lease is completed after the commencement date of the ban. Please note the difference in treatment of new leases to renewal leases set out above.

We can advise on whether a particular transaction falls within the transitional provisions and, once the secondary legislation is published we will be able to assess workable strategies for alternative review mechanisms.

• review precedent leases and remove upward only drafting;
• consider whether stepped rents, index linked reviews or a more frequent rent review pattern would better suit your asset strategy and minimise exposure to external market forces, giving landlords the flexibility to recover more quickly when markets rise;
• review renewal rights in existing leases to understand whether future renewals will be caught;
• update heads of terms templates.

• expect greater flexibility in rent review outcomes;
• consider whether symmetrical (upwards/downwards) indexation or open market reviews best suit your business model;
• review existing renewal rights to understand whether future renewals will benefit from the ban.

• ensure rent review assumptions and disregards do not inadvertently create a rent floor;
• avoid drafting that could be interpreted as an anti avoidance device.

We can assist with:

• updating your lease precedents;
• preparing compliant rent review clauses;
• advising on transitional cases;
• reviewing existing portfolios for exposure to the ban;
• drafting heads of terms that reflect the new regime.

If you would like a portfolio impact review, we can prepare this on request.

This article is intended for educational purposes only and does not constitute legal advice.

This article was written by Jane Hamilton, Real Estate PSL.