The proposed ban on upwards‑only rent review (UORR) provisions in commercial leases has taken a significant step forward following the passage of the English Devolution and Community Empowerment Bill through the House of Lords. Recent government‑backed amendments widen the reach of the ban and introduce an important retrospective effect, which is already relevant to transactions being entered into now.

What is changing?

The Bill has always proposed to prohibit upward‑only rent review mechanisms in new business tenancies and most renewal leases, while leaving existing leases largely unaffected. You can read in more detail about the proposals relating to the ban on UORR in our previous updates in July and December 2025.  

However, amendments carried in the House of Lords in March and April 2026, and agreed in the Commons this week, will lead to an increase in the degree of retrospectivity of the regime.

Key amendments of note

1. Renewal options entered into from 17 March 2026 are now in scope

   The ban will apply to leases granted pursuant to a “tenancy renewal arrangement” entered into on or after 17 March 2026, even though the ban itself has not yet come into force. This includes renewal options and similar mechanisms agreed now but exercised in the future. In practical terms, parties entering into leases today could find that their future renewal lease is caught by the ban, notwithstanding that the initial lease was lawfully granted with an upwards‑only rent review.

2. Initial rent on renewal must also comply

   The amendments extend the ban beyond rent review clauses alone. Where a renewal lease is granted under a caught renewal arrangement, the initial rent of that renewal lease cannot be set by a variable mechanism (such as market rent or index‑linked formulas) that would operate on an upwards‑only basis.

   This prevents a “workaround” whereby reviews comply with the legislation, but the starting rent on renewal is fixed at a higher level.

3. Narrower protection for pre‑existing agreements

   Earlier versions of the Bill excluded leases granted pursuant to agreements entered into before commencement. The amendments narrow this exclusion so that it does not protect renewal arrangements entered into on or after 17 March 2026, even if they form part of a wider transaction agreed earlier.

4. Broader definition of renewal arrangements

   The Bill now makes clear that both tenant and landlord‑controlled mechanisms are captured. Put options, call options and arrangements requiring a tenant to take a new lease (including those contained in side letters or separate deeds) are all within scope.

What has not changed?

• Existing leases with upwards‑only rent reviews will generally remain unaffected.
• Fixed or stepped rents agreed at the outset are still permitted.
• The ban applies only to business tenancies and does not extend to purely residential lettings.

Practical implications

These amendments have immediate relevance for parties negotiating commercial leases and agreements now:

• Landlords and investors should review renewal options carefully, as future income assumptions may be affected earlier than anticipated.
• Tenants may benefit from greater future flexibility on renewal, even where the initial lease includes an upward‑only review.
• Funders and valuers will need to factor in the potential impact on long‑term rental growth.
• Parties may increasingly look to shorter terms, stepped rents or fixed uplifts to provide certainty.

Current status and timings

The Bill has completed its Lords stages, and the House of Commons is finalising its consideration of the amendments (though the amendments relating to the ban on UORR are essentially agreed). It is therefore anticipated that the Bill will receive Royal Assent very soon, perhaps by the end of May. 

Further government consultation is expected on the provisions relating to the UORR ban before these actually come into force and, while further changes remain possible, it seems clear that the expanded treatment of renewal arrangements is now an established feature of the proposed regime.