Commercial property · 7 min read · 23 October 2026

The ban on upward only rent reviews: what it catches, when it starts, and what to agree now

Upward only rent reviews are being banned in new business leases. The English Devolution and Community Empowerment Act 2026 inserts two new Schedules into the Landlord and Tenant Act 1954, and once they are in force a review clause will be of no effect so far as it would take the rent above the figure its own mechanism produces. Existing leases keep their review clauses. But one date has already passed: options and other renewal arrangements made on or after 17 March 2026 are caught, so heads of terms agreed today need to be written with the new rules in mind.

What the ban actually does

The operative rule is paragraph 9 of the new Schedule 7A to the Landlord and Tenant Act 1954. Where a review clause would produce a new rent larger than the "reference amount", the clause is cut down: "The rent review terms are of no effect to the extent that they would result in the new passing rent being larger than the reference amount." The rent becomes the reference amount instead (paragraph 9(4)).

The reference amount is whatever the clause's own mechanism produces: an inflation or index figure, an actual or hypothetical market rent, or a figure based on turnover (paragraph 8(2)). So the familiar clause, market rent or the passing rent whichever is higher, loses its "whichever is higher". Paragraph 9(2) makes clear the rule applies even where the reviewed rent would still be below the old rent, so long as it is above the reference amount.

An example. The passing rent is £50,000 a year. At the review date the market rent is assessed at £45,000. Under an upward only clause the rent stays at £50,000. Under paragraph 9 the clause has no effect above the reference amount, so the rent becomes £45,000.

Which leases it catches

Part 3 of Schedule 7A applies to a business tenancy whose review terms do not fix the future rent at the outset and use a reference mechanism that could give a different figure (paragraphs 6 to 8). Two limits matter most.

• Timing. It applies only to tenancies granted, or varied to include such review terms, after the Schedule comes into force, and not to a grant or variation made under arrangements entered into before then (paragraph 6(1) and (2)).
• Fixed steps. Review terms "do not specify new passing rent" only where the future rent is not known and cannot be determined when the lease is granted (paragraph 7). A lease that fixes stepped rents at the outset is outside Part 3.

"Business tenancy" is wider than a lease the 1954 Act protects today. It includes a lease where Part 2 of the 1954 Act would apply if the tenant occupied the premises for a business under the permitted use, such as premises not yet occupied (paragraph 1(2)).

When it starts

The English Devolution and Community Empowerment Act 2026 received Royal Assent on 29 April 2026, but the rent review provisions did not start that day. Section 108(6) leaves them to come into force on a day appointed by regulations. The first commencement regulations, SI 2026/656, brought other parts of the Act into force on 18 June 2026 and do not include the rent review Schedules. We check the commencement position on every instruction rather than assume it.

The date that has already passed: 17 March 2026

Schedule 7B deals with renewal arrangements: an arrangement under which the existing tenant can require the landlord to grant a new tenancy, or can be required to take one, such as an option to renew (paragraph 3(2)). Where the arrangement was entered into on or after 17 March 2026 (paragraph 4), the initial rent of the new tenancy is not known when it is made, and the terms for fixing that rent use a reference mechanism, those terms are of no effect so far as they would make the initial rent larger than the reference amount (paragraph 8).

The same date appears in Schedule 7A. A tenancy granted under a renewal arrangement made on or after 17 March 2026 cannot rely on the protection for arrangements made before commencement (paragraph 6(3)). An option agreed this year at "the higher of the passing rent and market rent" is the kind of term these provisions reach.

Existing headleases are affected too

Existing leases keep their own review clauses, with one exception. Part 4 of Schedule 7A applies to a headlease granted before the Schedule comes into force that requires or permits underleases only on review terms that would breach paragraph 9 (paragraph 11). Once the Schedule is in force, the headlease takes effect as permitting compliant review terms in the underlease, and the head landlord cannot insist on particular review terms unless the parties to the underlease agree them (paragraph 12).

What to put in heads of terms now

Heads of terms are usually subject to contract, and Schedule 7A does not define the "arrangements" that protect a lease agreed before commencement. The text does not say whether non binding heads count, so we do not rely on them for protection. Instead:

• Ask whether the lease is likely to complete before or after commencement, and draft the review clause so it works either way.
• Where the landlord needs certainty of income, consider stepped rents fixed at grant, which sit outside Part 3 because the rent is known (paragraph 7).
• Treat floors and minimum increases on index reviews with care. Whenever a floor lifts the rent above the index figure, paragraph 9 strips out the excess.
• For any option to renew or agreement to take a new lease, check the date of the arrangement against 17 March 2026 and the rent mechanism against Schedule 7B paragraph 8.
• Underletting provisions in a new headlease should not require upward only reviews in underleases.

The tenant can trigger the review

Part 2 of Schedule 7A, for tenancies granted or varied after commencement (paragraph 3), lets the tenant start a review by written notice where the lease does not allow it to (paragraph 4), and take any other step needed for the review to work, telling the landlord in writing within seven days (paragraph 5). A landlord can no longer avoid a downward review in a falling market simply by not serving the trigger notice.

What it does not do

It does not stop rent going up: a review to a higher market or index figure still works. It does not rewrite the review clause in an existing lease. And it can be qualified: the Secretary of State may make exceptions by regulations approved by both Houses of Parliament (paragraph 10 of Schedule 7A and paragraph 9 of Schedule 7B).