By Isabella Mason

Associate Solicitor

15 April 2026

Article Blog

Part 1 of this article series considered the impact of the proposed upwards only rent review on landlords of commercial premises. This article will consider the implications for tenants and possible side effects on the horizon for future transactions should the Bill become law.

For a summary of what the proposed upwards only rent review is, you can read my previous article here.

Since the article, the progress of the Bill through Parliament has been swift, with the Bill currently in the third reading stage in the House of Lords.

A recent amendment includes the Bill now having retrospective effect in relation to leases with “tenancy renewal arrangements” i.e. a lease containing an option for renewal. The amendment seeks to impose the ban on any lease granted pursuant to an option which is contained in a lease granted on or after 17 March 2026. The amendment will need to be considered and approved as part of the Final Stage of the Bill passage process, so watch this space. 

 A ban on upwards only rent reviews is likely to be welcomed by commercial tenants across the real estate sector. Most leases with rent review provisions contain upwards only rent reviews, the result being that when there are falls in the local market rents, a landlord is protected from the same. This is not the case for tenants who are faced with having to pay a rent higher than the market rent, even if their business is not doing so well.

Tenants have historically been on the back foot with upwards only rent reviews and the proposed reform seeks to restore a balance between landlords and tenants.

As ever the devil will be in the detail and landlords will always look to protect their interests.

Consequences for tenants

• Landlords may insist upon a higher initial rent when taking a new lease to offset the risk of rents decreasing at a rent review.

• More leases with shorter terms may become commonplace that do not contain a rent review. Such leases are also more likely to be contracted out from ss 24-28 of the Landlord and Tenant Act 1954. This means less certainty of business continuity for tenants, however more certainty of what they will be paying over that term.

• Landlords may be less inclined to offer incentives to tenants on taking a lease, for example rent-free periods or fit-out contributions, the result being higher upfront costs for tenants.

• Currently, upwards only open market rent reviews are more common. However, the ban could mean that we see more index linked rent reviews. These link rent to the CPI or RPI. Index linked reviews are perceived to offer more growth and stability. The result for tenants is that they could face potentially increasing rents if index linked, in addition to dealing with more complex mechanisms to calculate the rent at review.

In principle, the index linked rent reviews do not offend the ban on upwards only rent reviews as reductions could occur in periods of deflation. For example, the CPI briefly fell to 0.1% in April 2015 and the RPI fell to 0.4% in April/March 2009. Otherwise, at all times in the last 50 years the UK has experienced inflationary price pressures.

• With the ability for rents to move up or down, more rent review disputes will be on the horizon as tenants will want to suppress rents, but landlords will want to uplift rents.

• The good news for tenants is that landlords cannot contract out of the ban as a means of avoiding the effects of the proposed legislation.

• Tenants will have freedom to serve notice on landlords to trigger a rent review. More often than not, tenants cannot trigger a rent review under a lease, meaning tenants are at the mercy of landlords, who may only trigger a review when market rents have increased.

• Cashflow issues for intermediate landlords. If a tenant wishes to sublet their lease and a pre-ban headlease contains provisions for an upwards only rent review in the sublease, this will trigger the ban on upwards only reviews in a post-ban sublease. The result is that intermediate landlords are prevented from passing on higher rents payable under the headlease to subtenants under the post-ban sublease.

 Next steps

Although the proposed reform is perceived positively for tenants, budgeting effectively when taking a new lease may be more challenging where there is less certainty on the direction that the rent will take over the lease term.

It will be important for tenants to engage advice early on when taking new leases to ensure adequate drafting once the Bill becomes law.

Once the third reading of the Bill is complete in the House of Lords, it will proceed to the final stages of the process, involving consideration of amendments and Royal Assent to be sought.

If you have any questions regarding the content of this article, or you would like to speak to a member of our team, you can contact us here.

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Please note that the contents of this article are intended solely for general information purposes and should not be considered as legal advice. We cannot be held responsible for any loss resulting from actions or inactions taken based on this article.