The Government is to ban upward-only rent reviews for commercial leases.
UORR clauses are the most commonly used rent review clauses in modern commercial leases where the basis for review is by reference to open market rent or a consumer prices index.
They provide for the annual rent under a lease to be reviewed at set intervals (often every three or five years) to the higher of (a) the passing rent i.e. the annual rent at that time and (b) a reviewed rent. This means the annual rent would either increase or remain the same and would never decrease at review.
These clauses benefit landlords as they provide certainty as to the level of annual rent they will achieve throughout the term of a commercial lease, knowing that the annual rent will not fall below the initial amount.
However, they are not in the best interests of tenants who, as a result, do not get the benefit of any lower rent if i.e. the market rent decreases but their annual rent remains the same.
The English Devolution and Community Empowerment Bill has now received Royal Assent, meaning its provisions will become law. This Bill includes a ban on UORRs in commercial leases.
The Government claims the ban will help keep small businesses running, boost local economies and job opportunities, and help end vacant high streets and the unacceptable anti-social behaviour that comes with them.
Laura Saul, Director in the commercial property team at Wake Smith Solicitors looks at the key points for commercial property landlords.
The ban has been enacted under the English Devolution and Community Empowerment Act 2026 (“the Act”), which amends the Landlord and Tenant Act 1954 (“LTA 1954”). The Act received Royal Assent in April 2026 and is anticipated to come into force during 2027.
The ban will apply to all business tenancies in England and Wales for commercial leases falling under the LTA 1954, including leases which are contracted out of the security of tenure provisions of the LTA 1954 (i.e. the tenant does not have a statutory right to renew their lease at the end of the term) and leases where the tenant is not actually in occupation i.e. where a tenant has sub-let the premises to a third party undertenant. Agricultural leases and mining leases will, however, be exempt.
Under the Act all UORR clauses and “higher of” wordings will become unenforceable, however, stepped or fixed uplifts will still be allowed i.e. the parties can still agree set figures for the increase of annual rent at set review dates when negotiating the lease. It is possible further exceptions will be brought into force through secondary legislation, but this has not yet been confirmed.
The ban is not retrospective and so will not apply to existing commercial leases, nor will it apply to any new commercial lease granted pursuant to arrangements (e.g. an agreement for lease) made before the Act came into force. However, it will apply to new leases and lease renewals (including statutory lease renewals under the LTA 1954).
The Act also states that, under a sub-lease, the review terms are to be agreed between the landlord and tenant of the sub-lease, so the superior landlord would not have control of how the sub-lease rent review is operated, compared to the standard position whereby the landlord is consulted or involved in the process.
Despite any wording to the contrary in any commercial lease, the Act will allow the tenant to trigger a rent review to avoid landlords triggering reviews at a time that the market is most favourable to them.
Laura added: “The current assumptions are that landlords may try to get leases into place prior to the Act coming into force, may negotiate a higher starting annual rent to protect themselves from a potential decrease in annual rent after a review date or may start to favour index-linked rent review clauses which are less likely to give a decreased rent, while tenants will wish to delay entering into leases and contracts to ensure the provisions of the Act apply.
“Landlords may be likely to want shorter leases without rent review (to allow the rent to be renegotiated on renewal) and with landlord break clauses to allow more flexibility, whilst tenants might start arguing for longer leases with tenant break clauses, even though this may give rise to Stamp Duty Land Tax/Land Transaction Tax liabilities.”
For further advice on UORR or other commercial property matters contact Wake Smith Solicitors on 0114 266 6660 or click here.