Upwards only rent view ban risks a two-tier leasing landscape in England and Wales

Earlier this year, the real estate sector became aware of a significant shift in commercial leasing for England and Wales that would fundamentally change how rents are set.

Included as part of the English Devolution and Community Empowerment Act 2026, which sought to establish new measures to expand devolution and empower mayors and local people, the legislation introduces a statutory ban on upwards-only rent review provisions in new and renewing commercial leases.

Brought forward without prior consultation on the ban, the Act received Royal Assent on 29 April 2026 and is expected to come into effect within two years.

Applying to business tenancies granted from the date of implementation, alongside exceptions which fall before the start date, these reforms will prevent landlords from relying on traditional review mechanisms that guarantee rent can only ever go up. Instead, rents could move in either direction at review, depending on market conditions.

The only way isn’t up, after all.

For landlords, investors and occupiers, the impact of the ban will be far-reaching. While the policy is framed as a measure to support high street viability, questions are being raised about investment certainty and lease structuring. In practice, the market may see a marked shift towards shorter lease terms, fixed or stepped rents, where rents can increase or decrease at defined periods, and alternative review mechanisms.

While upwards-only rent reviews have already declined in parts of the market, particularly in the retail sector, the formal removal of this type of review could materially reshape commercial negotiations, pricing strategies and incentive packages.

Although the ban will largely be forward looking, meaning it will not invalidate upwards-only rent reviews in commercial leases granted prior to the Act coming into force, this is not the case for certain renewal agreements.

If a tenant holds an option to renew, or any other agreement conferring renewal rights, that was entered on or after 17 March 2026, any renewal lease granted will have to comply with the legislation, even if the renewal itself happens after the implementation date.

A consequence of these conditions is that it could give rise to a two-tier leasing landscape, where leases containing upwards-only provisions sit alongside the new leases with rents that could go up or down.

It remains to be seen how the market will react to the existence of two tiers of lease operating simultaneously, and this will need to be monitored carefully following implementation of the Act.

From a valuation perspective, the coexistence of two lease types presents a genuine challenge. Commercial property is valued in part on the predictability of its income stream, and upwards-only clauses have long underpinned that certainty for landlords and investors. Where a portfolio contains a mix of legacy and new leases, consistent valuation becomes more complex, and lenders or investors may seek to account for the uncertainty that comes with rents that can move in either direction into the price.

Lease assignability, meaning the right of a tenant to transfer their entire interest in a property to a new tenant before a lease expires, adds another layer of complexity. An older lease carrying upwards-only provisions may be perceived very differently by prospective assignees depending on market conditions at the time, appearing attractive when rents are rising, but seen as liability when they are not.

Landlords, meanwhile, may be reluctant to consent to assignments where the incoming tenant's terms sit under the new framework, particularly where that introduces downward rent risks, they had not previously been exposed to. How courts and practitioners navigate those tensions will be an important indicator of how the wider market reacts to the new environment.

While this would not be a permanent state for the commercial property industry, as the upwards-only leases will go on to expire naturally, it could last long enough to meaningfully impact investment decisions, portfolio valuations and how freely commercial property changes hands.

As we approach implementation of the legislation, we must wait and see how it truly affects rent levels and corporate lease structuring, but those who seek advice early will be best positioned to move forward with confidence.