Upward Only Rent Reviews – What’s changing and when?

Timing

The provisions in the Act prohibiting UORRs are not yet in force.

Commencement of these provisions will be brought into effect by secondary legislation, rather than automatically on Royal Assent. Until those commencement regulations are made, UORR clauses in leases (subject our comments below about tenancy renewal arrangements) will remain operable.

While there is market speculation that commencement may not occur until 2027 or later, the Act itself does not fix a date. Recent experience suggests  the Government may move quickly in the current climate.

Consultation

One factor that might delay implementation is that the government has recognised the need for consultation on how secondary legislation may be used to set parameters for rent caps and collars in indexed rent reviews and the "options to de-risk investments in commercial property."

However there is no indication for timing and the scope of any consultation remains to be seen.

Any consultation phase will be crucial for landlords, tenants and investors, as it is likely to shape market‑standard drafting for post‑commencement leases.

What will the Act apply to?

Once in force, UORR clauses contained in:

• new business tenancies; and
• variations of existing business tenancies

will not be operable as originally documented unless those leases or variations are made pursuant to a “protected pre‑commencement arrangement.”

A protected pre‑commencement arrangement is one which is entered into before the relevant part of the Act comes into force. In broad terms, if parties have contractually committed to grant or take a lease before commencement, that lease may still contain an UORR provision which will not be caught by the Act.

"Business tenancy" in this context applies to lettings that are both inside and outside the security of tenure provisions in Part II of the Landlord and Tenant Act 1954.

This is subject to an important carve‑out for "tenancy renewal arrangements."

Tenancy renewal arrangements

The Act distinguishes tenancy renewal arrangements from other pre‑commencement deals.

Crucially, tenancy renewal arrangements entered into on or after 17 March 2026 will be caught by the ban. In this respect the Act applies retrospectively.

A tenancy renewal arrangement is defined as an arrangement under which the tenant under an existing tenancy:

• can require the landlord (or another person) to grant a new tenancy, or
• can be required by the landlord (or another person) to take a new tenancy.

The Act does not define what constitutes an “arrangement” but will include put and call options and agreements for lease in circumstances where the deal meets the statutory definition of tenancy renewal arrangement.

This means that deals being documented now between existing landlords and tenants will need to be reviewed to ensure the terms negotiated in respect of rent remain operable as intended.

How does the ban operate?

The effect of the ban is that rent review clauses must no longer operate so that rent can only move upwards but rent is set according to what the Act refers to as the "reference amount"

In simplified terms:

• rent review clauses must be capable of resulting in the rent staying the same or decreasing, as well as increasing; and

• provisions that seek to compensate a landlord for a downward movement for example, through side payments or other mechanisms are expressly prohibited.

Subletting

The Act also recognises the impact that rent review has on successive leasehold interests in the same property structure.

Once the Act is in force, provisions in a superior lease which require an underlease to include rent review terms which would result in an UORR will be of no effect. The Act provides that the actual rent review terms of any such underlease are to be agreed between the parties to the underlease.

The ban on UORR  introduces a significant limitation on the freedom of commercial landlords and tenants to negotiate and document rental provisions in the  commercial leasing market. Renewal negotiations, conditional deals and portfolio strategies are already being shaped by the forthcoming regime, particularly for arrangements may be entered into from 17 March 2026 onwards.

We are working closely with clients to assess exposure, refine leasing strategies and precedents and prepare for the upcoming consultation. Please contact our Real Estate team if you would like to discuss how these changes may affect your portfolio or forthcoming transactions.