That is now set to change. The English Devolution and Community Empowerment Act 2026 (the Act) has received Royal Assent and contains provisions that will ban UORRs in commercial leases.
When will the ban come into force?
The Act received Royal Assent on 29 April 2026 with a commencement date yet to be confirmed by the Government.
Current market expectation is that the ban is unlikely to take effect before 2027 and may be delayed until 2028. The Government has also committed to consult on the use of caps and collars (mechanisms that limit how far rent can rise or fall at review) which may affect the timing further.
Which leases are affected?
The ban will apply to all business leases in England and Wales entered into after the legislation comes into force, subject to the transitional provisions discussed below.
The legislation is generally not retrospective. Existing leases, as well as those entered into before the ban, will remain unaffected. However, there is an exception relating to lease renewal options.
The retrospective element: why 17 March 2026 matters
A lease will be caught by the ban if it is granted by an option to renew (or other “tenancy renewal arrangement”) that was entered into on or after 17 March 2026.
For example, if a lease entered into after 17 March 2026 contains an option to renew, the original lease can still include an upwards-only rent review. However, the renewal lease granted under that option will be subject to the new rules and cannot include a prohibited rent review mechanism.
This means that decisions being made in lease negotiations right now are within scope. Any lease or agreement being entered into that includes an option to renew in the future should be carefully considered in light of the Act.
What rent review mechanisms will be prohibited?
The key distinction is whether a rent review mechanism genuinely allows rent to fall or whether it preserves a minimum level of income.
The Act targets mechanisms where the reviewed rent must be the higher of the passing rent or some other referenced amount.
Open market rent review provisions that genuinely allow rents to increase or decrease in line with market conditions will continue to be permitted. By contrast, mechanisms that prevent rents from falling below the existing passing rent, such as upwards-only rent review clauses, will be prohibited.
Implications for landlords and investors
Landlords may respond by seeking higher initial rents to compensate for the reduced certainty or by offering fewer incentives such as rent-free periods to incoming tenants. Shorter lease terms with more frequent rent reviews are also predicted to become common.
The reforms may also influence property valuations and investment decisions, particularly where investors have historically relied on predictable rental growth.
Implications for tenants and occupiers
For tenants, the reform is broadly positive. Rent reviews will be able to reflect both increases and decreases in market rental values. Tenants will also have a right to trigger rent reviews to enforce the review provisions of the lease.
Tenants should also be aware that landlords facing reduced certainty may offer shorter leases, which creates its own challenges for occupiers seeking security of tenure and those who have incurred significant fit-out costs.
How to prepare: steps to consider now
There are steps that can be taken ahead of the ban coming into force:
- Review any leases or agreements entered into since 17 March 2026. If they include options to renew or other tenancy renewal arrangements, these should be reviewed carefully in light of the Act. The ban may affect the rent review provisions in any resulting renewal lease.
- Audit your portfolio. Landlords should review existing leases to identify assets and consider whether it is beneficial to secure longer lease terms or lock in UORR provisions while they remain available.
- Consider early lease renewals (Landlord and Tenant Act 1954 protected tenancies). Where a tenant has security of tenure under the 1954 Act, triggering an early renewal now may allow UORR provisions to be locked in for a further term before the ban commences.
- Consider tenant covenant strength and security packages. Landlords facing greater uncertainty over future rent levels should consider whether enhanced security (such as rent deposits or guarantees) is appropriate when agreeing new leases or renewals.
- Tenants: consider whether to delay renewals. Tenants who would benefit from the new two-way review mechanisms may wish to consider whether delaying a renewal until after the ban comes into force is commercially viable, particularly where existing rents are above market level.
What happens next?
Although the ban is not yet in force, landlords, tenants and investors should not assume they can wait until the commencement date before considering its impact. Lease negotiations taking place now, particularly those involving renewal options or long-term occupation strategies, may have implications for future rent review provisions. Taking advice at an early stage can help avoid unintended consequences.
How TWM can help
With the commencement date approaching, now is a good time to review your lease portfolio and future leasing strategy. Our Commercial Property team advises landlords, tenants, investors and lenders on all aspects of commercial leasing, including lease negotiations, renewals, portfolio management and rent review provisions.
To find out more, please contact a member of our Commercial Property team.