Legislation banning upward only rent review clauses has become law, but no implementation date has yet been announced. However, commercial landlords should be considering how the impending ban will affect new leases, as well as the potential impact on existing lease agreements.
The specialist commercial property team at mfg Solicitors are available to advise landlords and commercial tenants on rent review matters and other lease terms. Existing commercial leases will not be impacted by the ban (subject to some very limited exceptions).
What’s the background?
Where a lease contains an upward only rent review (UORR) clause, the rent can remain the same or be increased – but not decreased - on the date of the rent review. UORR clauses essentially prevent businesses’ rents from decreasing after review - even if the market rate goes down.
The government first announced the proposed ban last year, absent any consultative process or industry input. It said at the time that self-regulation within the sector is not working, leading to unfairness for business tenants.
Most commercial leases typically contain UORR clauses, providing important financial security for landlords. But they are also considered potentially unfair to tenants – particularly if market conditions become less favourable. Striking a fair balance for both parties will be a challenge.
What’s changing?
UORR clauses will be prohibited under the English Devolution and Community Empowerment Act 2026, which received Royal Assent on 29 April. The Act amends the Landlord and Tenant Act 1954.
The reforms will impact the majority of commercial property leases (though note that agricultural leases will be exempt). We do not yet know when the ban will be implemented, but it is expected to be in force by 2028 (possibly 2027). Once in force:
- any UORR in a new or renewed commercial lease will be unenforceable, and any new rent will be determined by the methodology set out in the lease. It means the new rent could be increased or decreased
- The ban will extend to new put options under which a tenant can be required to take a new lease
What does this mean?
Any UORR clause contained in new and renewal leases post-implementation of the ban will be void. It is important to note that leases containing a renewal option, that have been entered into from 17 March 2026, will be caught by the ban.
Without careful planning, landlords and investors could find themselves adversely impacted; whereas tenants could benefit substantially if the rent falls on the date of the rent review.
Landlords and investors will need to reconsider how they are prepared to negotiate new commercial leases, and how they may be able to readdress the balance between the parties. Tenants could, for instance, be required to pay higher initial rents and incentives under the lease terms could be less generous than before.
The parties will need to consider fixed rents or eg stepped rents, turnover rents, index‑linked reviews, or open‑market reviews allowing for a rent decrease. Negotiations with tenants will need to be both sensitive and pragmatic.
On the ground, the issues are more complex than may first appear and it is vital to seek bespoke legal advice and support ahead of the ban coming into force.
How we can help
It is important to plan for the impending ban on UORR as early as possible. Get in touch with the experienced commercial property team at mfg Solicitors for specialist advice.
Please call Phil Hutsby-Hunt on 0121 236 7388 or email phil.hutsby-hunt@mfgsolicitors.com.