For decades, upwards-only rent reviews (UORRs) have served as the bedrock of commercial leasing in England and Wales, providing landlords and investors with the "rent floor" necessary to underpin valuations and funding models. That era is now coming to an abrupt end. 

On 29 April 2026, the English Devolution and Community Empowerment Act (the Act) received Royal Assent, marking a transformative shift in the balance of power between landlords and tenants.

The Core Mandate: Two-Way Reviews

The Act prohibits upwards-only rent review mechanisms in "business tenancies" where the reviewed rent is not fixed or fully ascertainable at the outset. In practice, this converts the industry’s most common review mechanisms—including open market, index-linked, and turnover-based reviews—into two-way mechanisms. This allows rents to move down as well as up, reflecting true market conditions during economic downturns.

Notably, the scope of the Act is broad. It applies to all business tenancies under the Landlord and Tenant Act 1954, including "contracted-out" leases and superior leases where the tenant is not in physical occupation.

The 17 March "Retrospective" Surprise

While the general ban is not expected to commence until 2027 (subject to secondary legislation), a critical amendment has turned this into an immediate transactional issue.

Any "tenancy renewal arrangement"—which includes options to renew, put/call options, or agreements for lease—entered into on or after 17 March 2026 will be subject to the ban. This means that if a landlord grants a lease today (or has granted one since 17 March) containing an option to renew, that future renewal lease will be legally prohibited from containing an upwards-only review, regardless of when it is eventually granted.

Impact on Subleases and Anti-Avoidance

The Act also targets the traditional "flow-through" requirements in headleases. Any provision in an existing lease that mandates a tenant to include UORR terms in a sublease will become void once the relevant provisions come into force. Furthermore, the Act includes robust anti-avoidance measures to catch "side arrangements" or top-up payments designed to replicate the effect of an upwards-only review.

Strategic Implications for the Market

The real estate sector must now adapt to a landscape where income stream certainty is no longer guaranteed.

• For Landlords and Investors: The loss of the rent floor may impact yield assumptions and debt service coverage. To mitigate risk, landlords may move toward shorter lease terms (3-5 years), demand higher day-one rents, or utilize fixed/stepped rental increases, which remain permitted under the Act.
• For Tenants: The change offers significant protection in a falling market. Tenants will also gain the right to actively trigger rent reviews, preventing landlords from only initiating reviews when market conditions are favorable.
• For Valuers and Lenders: A "two-tier" market is likely to emerge, with some portfolios still benefiting from pre-ban UORR protections while new assets face the uncertainty of two-way reviews.
  

Looking Ahead

The Government has committed to consulting on the use of "caps and collars". While "collars" could provide a minimum level of growth, it is unlikely the Government will allow them to be used as a token gesture to circumvent the fundamental principle that rent must be capable of moving downward.

As we move through 2026, parties involved in live negotiations should review all renewal options and "back-stop" dates carefully to ensure their agreements are future-proofed against the Act’s implementation.