Questions tenants might have about England’s ban on upwards only rent reviews

The ban received Royal Assent as part of the English Devolution and Community Empowerment Act 2026. Much of the commentary so far has focused on the position of landlords and investors, but occupiers need to consider their own approaches to lease negotiations while the final shape of the regime is still being developed.

The practical question is how to make sound decisions during the gap between enactment and commencement of the new legislation, while some important details remain unresolved.

What the reforms will mean for occupiers

For leases falling within the new regime, variable rent review provisions will no longer be able to operate on an upwards only basis. Open market, index-linked and turnover-based review mechanisms may still be used, but any upwards only review will generally be ineffective where it produces rent exceeding the relevant statutory reference amount.

Genuinely pre-ascertained rent increases, such as fixed uplifts or stepped rents where the future amount is already determinable at the date of the lease, fall outside the prohibition. The distinction matters for occupiers evaluating alternative review structures, because a lease providing for fixed periodic increases without a variable review mechanism is not subject to the new regime in the same way.

The legislation will also provide tenants with matching rights to initiate and progress rent reviews where the lease currently grants those rights only to the landlord.

These changes should give occupiers genuine downside protection in weaker markets and could also reduce the scope for landlords to leave a potentially downward review untriggered to preserve a higher passing rent.

Despite the uncertainty, the reforms offer real opportunities. Rents may align more closely with market conditions or turnover performance where economic conditions weaken, and the new tenant-trigger rights could prove significant where a landlord might otherwise have little reason to initiate a review that could lead to a lower rent.

However, the benefits should not be overstated. The reforms do not guarantee lower rents or reduced overall occupation costs. Landlords may seek to manage the additional income risk through other commercial terms: initial rent levels, incentive packages, fixed or stepped increases, lease length, break rights or alternative review structures. Whether these responses become widespread remains to be seen, but occupiers should be alive to the possibility that costs may simply shift to other parts of the deal.

When occupiers are also landlords

One of the most significant challenges could arise where occupiers sit between landlords and subtenants.

Where a new headlease predates commencement of the new regime, and contains a valid upwards only rent review, that obligation will survive. Any underlease granted after commencement, however, will not be permitted to include an upwards only review. That mismatch creates two related problems for the intermediate tenant. First, a potential income shortfall: if the underlease rent falls in line with market conditions while the headrent is fixed or rising, the difference is unrecoverable. Second, a structural difficulty in the underletting provisions themselves.

Where the headlease restricts underletting by reference to rent review terms that mirror the headlease, those provisions may need to be renegotiated or carefully drafted to accommodate the fact that the underlease will be subject to a different statutory regime. Landlords and intermediate tenants will need to think through what rent review obligations can properly be passed down to undertenants in that context.

The legislation addresses certain conflicts between headlease controls and underlease rent review arrangements, but it does not resolve the income shortfall or the underletting difficulty in full.

For occupiers with substantial property portfolios or active underletting arrangements, this issue could become one of the most substantial practical consequences of the reforms.

Decisions during the transition period

The transition period raises a different kind of difficulty. The commencement date has not been fixed, some details remain subject to consultation, and deals being negotiated now may complete under either the old or the new regime.

Occupiers should assess each transaction as a whole rather than focusing exclusively on the rent review clause. Several questions are likely to be particularly important.

Is there value in completing before the new regime begins?

The answer will depend on the overall shape of the deal.

Where an occupier is asked to accept an upwards only review that could remain effective for many years, the critical question is what it receives in return. That might include a lower initial rent, a more generous incentive package, a landlord contribution towards fit-out costs, greater flexibility or enhanced break rights.

Occupiers should evaluate whether those benefits adequately compensate for forgoing the statutory protection that a post-commencement lease would provide.

Which transitional rules apply?

The legislation does not necessarily treat all lease arrangements in the same way.

New lettings, protected agreements for lease entered into before commencement, contractual renewals, statutory renewals, options, reversionary leases and post-commencement variations may all require separate analysis. Particular care is needed where an existing tenant enters into a renewal arrangement on or after 17 March.

That date does not mean every lease or agreement for lease entered into after it is caught by the new regime. Its effect is narrower: it marks the point from which parliament decided to bring certain renewal arrangements within scope, including tenant renewal options, landlord put options and agreements for a further lease of existing premises.

The policy purpose is to prevent parties from locking in upwards only renewal structures once the direction of the legislation became clear.

For occupiers, the practical distinction is between a genuinely new letting, which may benefit from the protected pre-commencement arrangement provisions, and a renewal exercise involving an existing tenancy, which may not.

Which issues remain unresolved?

The commencement date has not yet been fixed. Regulations may introduce additional exceptions, and further detail is awaited on matters including caps, collars and certain hybrid review arrangements.

Occupiers should distinguish between what the legislation already provides and what remains subject to consultations that have yet to conclude.

What occupiers should do now

Assessing each transaction, without delay, is equally relevant to portfolio management. Occupiers should review upcoming rent reviews, lease expiries, renewals, options and proposed underlettings across their portfolios. There is no need to wait for every implementation detail before starting that exercise.

Any analysis should separately consider payable headrents and receivable under-rents, particularly where different parts of a structure could ultimately become subject to different legislative regimes.

Parties negotiating today should consider whether commencement could occur before completion or before the lease takes effect.

Heads of terms and transaction documents should address that possibility rather than leaving the issue to be revisited shortly before completion.

In practical terms, that means mapping lease pipelines, identifying arrangements likely to complete around commencement, modelling whole-life costs under different lease structures and auditing legacy headleases where underletting is contemplated.

Occupiers should also ensure that they have systems in place to monitor review dates, obtain valuation evidence, authorise decisions and serve notices. A statutory right to trigger a rent review is only valuable if it can be exercised effectively and within the relevant contractual framework.

Occupiers should continue to monitor commencement regulations, consultation developments and future guidance.