On 29 April 2026, the English Devolution and Community Empowerment Act 2026 (the Act) received Royal Assent. When the relevant provisions are brought into force, the Act will introduce a ban on upwards only rent reviews (UORRs) in commercial leases.

For decades, UORRs have been a standard feature in commercial leases, providing landlords with certainty that rent would never decrease during the term of a lease.

The Government’s reforms are intended to create a fairer balance between landlords and tenants, particularly during periods of economic uncertainty where market rents may fall. Whilst the outright ban is not yet in force, there are some immediate implications for renewal rights in particular.

What is an UORR?

An UORR allows the rent under a commercial lease to increase at review dates if market rents have risen, but prevents the rent from falling if the market has weakened (for example). It is also common to see index-linked UORRs (for example, by reference to RPI or CPI), accompanied by wording that stops the rent falling below the level it is at immediately before the review (if the index had fallen).

These clauses have been attractive to landlords because they provide predictable rental income and support investment opportunities. However, UORR have often been criticised as they lock tenants into rents that may no longer reflect market conditions.

Under the legislation, and when the ban comes into force, landlords will no longer be able to rely on lease provisions that prevent rent from decreasing on review where the rent is intended to reflect current market levels or movement in the relevant index.

Which leases could be affected?

The ban will apply primarily to new commercial leases entered into after the ban comes into force. Existing leases are generally expected to remain unaffected.

However, the Act also captures renewal leases granted pursuant to options or agreements entered into after 17 March 2026. This means that even where the initial lease predates the ban, a future renewal lease entered into pursuant to an option to renew contained in that initial lease could still be caught by the new rules.

Example. A landlord grants a new lease on 9 July 2026. The lease contains an option to renew in 2031. The new lease can contain UORRs as the ban is not yet in force. However, when the renewal lease is granted in 2031, it will not be able to contain UORRs (assuming the ban has come into force by then) because it was entered into pursuant to an option to renew, and the option to renew was granted on 9 July 2026 (which is after 17 March 2026).

Parties entering into renewal arrangements now may need to consider carefully whether future renewals could be subject to downward rent review mechanisms.

Practical implications for landlords and tenants

For landlords, the changes may affect investment valuations, lending arrangements and long-term income assumptions. Some landlords may seek alternative rent review structures, such as fixed stepped uplifts (which will not be banned) or shorter lease terms to maintain greater certainty over future income streams.

Tenants may come under pressure to accept such alternative rent review mechanisms and face greater uncertainty around their ongoing occupation if shorter lease terms become more normal. However, the intention of the legislation is that tenants are offered greater flexibility and the possibility of rents reducing where market conditions deteriorate.

Capsticks’ view

Both landlords and tenants should begin reviewing their leases now, particularly where renewal rights or long-term arrangements are being negotiated.

Early legal advice will be important in assessing whether existing agreements could give rise to renewal leases caught by the incoming ban. Parties may also wish to revisit standard lease precedents and consider whether alternative rent review mechanisms are appropriate going forward.

In addition, there will be implications for underletting provisions in leases where the standard has been to require any underlease to also include an UORR – but the legislation has provided guidance on how this will be dealt with.

While the reforms are intended to modernise the commercial leasing market, they also introduce a degree of uncertainty during the transition period. Careful drafting and forward planning will therefore be essential for both landlords and tenants.

How Capsticks can help

If you have any queries around the discussion in this article, and the impact that the ban on UORRs may have on your organisation, please speak to Associate Adam Mohammed to find out more about how Capsticks can help.