Upwards only rent reviews: 2026 changes and what to do now

The English Devolution and Community Empowerment Bill includes proposals to ban upwards only rent reviews in commercial leases.  As of March 2026, the Bill continues to progress through the House of Lords with exact details still to be determined.  The direction of travel, however, points to a ban on upwards-only rent reviews taking effect during 2026, so landlords, tenants and lenders should plan now for rents that may move up or down, and for the knock on effects on valuations and funding. 

What is changing and why it matters

Upwards-only rent reviews have been a longstanding feature of open market rent reviews in commercial leases.  Moving away from this would be a significant shift, affecting valuations, lender appetite and deal viability.  Legal commentary since late 2025 indicates that parties are already modelling upwards and downwards reviews and considering alternatives such as open market valuations with caps/collars, index-linked reviews with caps/collars, and leaning more towards turnover-linked structures in certain sectors.  

This sits within a wider policy picture for 2026.  Residential lettings will shift to assured periodic tenancies and Section 21 will be abolished from 1 May 2026 (see our outlook article here), reflecting a broader push towards more balanced risk sharing between owners and occupiers.   commercial real estate is not immune to this approach. 

The status of the Bill

• The upwards-only rent review ban forms part of the English Devolution and Community Empowerment Bill
• The Bill is currently being heard clause-by-clause in the Lords Grand Committee (debate resumed 5 March 2026)
• Further amendments are expected, but commentators still regard passage of the Bill in 2026 as plausible. 

Given that the legislative timetable can change, parties entering into new commercial leases in 2026 should bear these proposals in mind when negotiating heads of terms and drafting leases

What this could mean for values, lending and development

• Valuations and yields:  If rents can fall as well as rise at review, valuers may adjust growth assumptions and adjust predicted exit yields, especially for assets heavily reliant on stepped rents.  Commentary since mid 2025 has already flagged the risk of lower valuations and increased borrowing costs if rental income becomes less predictable
• Borrowing: Lenders may scrutinise an investor landlord’s ability to repay debt more closely if rent review outcomes become less certain.  Investors could see banking covenants tighten, and borrowing costs rise.  This may be particularly impactful where investors refinance existing stock, that has previously benefited from upwards-only reviews
• Development costings:  Assume modest rent growth and test what happens if market dips or investor buyers demand a higher yield (which lowers the price they will pay).

Practical steps for landlords and funders

• Look ahead at key dates - Make a simple list of leases with rent reviews, renewals or completions due in the next 12–24 months.  Check those dates against the Bill’s likely timetable so none of your critical events occur right as the law changes and, if they do, make sure your documents allow flexibility
• Pressure test your numbers - Re run your models on the basis that a review could go up or down.  Include a downside where open market rent falls. Share these what ifs with valuers and lenders early to avoid last minute issues
• Tidy up your review clauses - Consider review structures that track the market fairly:
  
  • Open market review with a sensible cap/collar
  • RPI or CPI linked with cap/collar, or
  • Turnover linked (where it suits the asset)
  • Spell out assumptions clearly (vacancy, inducements, fit out costs) so there is no ambiguity later. 
• Keep costs transparent - When rent can move around, recoverable costs (for example, service charge and other operational expenditure) come under more scrutiny.  Take advice from a surveyor to see how the updated RICS Service Charge Standard (in force since December 2025) can support with keeping budgets clear and reducing disputes
• Talk to lenders early - If your loan-to-value or banking covenants rely on stepped rental growth, discuss alternatives at heads of terms stage, for example, a minimum rent threshold, or agreeing a fixed term loan, so funding still stacks up if reviews fall as well as rise. 

Practical steps for tenants taking new leases 

• Build in flexibility - Ask for shorter terms with options to re gear, or index linked reviews with sensible caps.  If you have an open market review, request open evidence and fair treatment of inducements and fit out, so you are not paying for value you created yourself
• Look at total occupancy cost - Add up annual rent, service charge and insurance as one “affordability” cost.  Take advice from a surveyor to see how the RICS Service Charge Standard can guide discussions on what is included and how costs are shared
• Use break rights sensibly - If you can, time any break rights near review dates so you can reset to market if needed.  Make sure any conditions to use a break are realistic and achievable. 

What we’re seeing in the market

2026 is a year of broad property reform in the UK, from the new residential tenancy regime to steps on leasehold/commonhold and building safety.  All of these point towards clearer, more balanced rules for owners and occupiers.  That policy direction helps explain why the upwards-only rent review ban continues to move forward in the Lords, even though details may still evolve before Royal Assent. 

Key takeaways

Plan on a 2026 ban and draft for reviews that can move up or down
Expect valuation effects, especially at refinance or on forward funded projects.  Build this into numbers now
Lean on surveyors to guide you on RICS service charge best practice to reduce disputes, if rent becomes more variable. 

How we can help

Higgs LLP advises owners, lenders and occupiers on lease strategy, re gears and funding. We can run a portfolio health check (leases/reviews/refinances), prepare suggested drafting for alternative rent review mechanics, and support you with aligning your documentation with funding requirements.