Could the upwards only rent review ban be implemented retrospectively? What this means for landlords and tenants
You may be aware of the English Devolution and Community Empowerment Bill which proposes banning upwards only rent reviews (UORRs) in new commercial leases in England and Wales. As advisers to landlords, tenants and investors, we have been tracking its progress. The Bill is now at the House of Lords reporting stage, making this a timely moment to assess its likely impact.
Originally, the Bill contained no retrospective elements. However, recent Lords amendments now extend the UORR ban to the initial rent payable under any new lease granted following the exercise of a call option (renewal option) in leases entered into on or after 17 March 2026.
The Bill as originally drafted had very limited retrospective elements and would apply only to leases granted after the Act comes into force. Existing leases containing UORRs would remain valid, creating a clear pre and post EDCEA distinction. Rent reviews under pre EDCEA leases could still be upwards only; for post EDCEA leases, any upwards only element would be void.
The one retrospective element in the original Bill concerned superior leases requiring sub leases to include UORRs. The Bill means such provisions will no longer be acceptable, potentially creating a mismatch between superior and sub lease rent review mechanisms and reducing superior landlords’ control over sub lease rent.
The Lords amendment extends the upward only ban to renewal leases granted under renewal options in leases entered into on or after 17 March 2026.
Implications for current negotiations - 17 March 2026 and onwards
Where leases now being negotiated include renewal rights, rent review clauses should be revisited to ensure they operate clearly in both upward and downward markets. Index linked reviews may become more common, though market practice remains to be seen.
The changes to UORR are likely to influence lease structures. We may see a shift away from short leases with renewal rights—often used to avoid ’54 Act protection—towards longer stepped rent leases, longer unprotected leases, or the removal of renewal rights altogether while the market adjusts.
What is clear is that leases granted on or after 17 March 2026 containing renewal rights may be caught retrospectively. Parties negotiating now should assume the ban will apply to any renewal lease. The UORR ban was always likely to prompt a recalibration of market norms and the recent amendment accelerates the need for both landlords and tenants to reassess their portfolios.
Landlords - it is worth taking the following actions:
- Review rent review clauses in leases entered into since 17 March 2026 (or currently being negotiated) to ensure they function in both rising and falling markets.
- For new lettings at heads of terms stage, consider carefully how rent will be reviewed during the term and on renewal.
- Review asset management strategies for leases expiring after the Act comes into force, particularly where gearing is high.
Tenants – it is worth taking the following actions:
- While the end of UORRs is attractive it introduces uncertainty for budgeting when known rental floors no longer exist. It is important to review alternative rent review drafting, ensuring it’s clear, workable and avoids unnecessary delay or cost.
If you are currently negotiating new leases, considering renewal rights, or reviewing your property portfolio in light of the likely changes to rent review, get in touch with us to discuss how the proposed legislation may affect your position and what steps you should be taking now.
