A solution to the ban on upward-only rent review
30 April 2026
(2026-Apr: LinkedIn) The ban on upward-only rent review is on the statute books. The English Devolution and Community Empowerment Act 2026 received Royal Assent on 29 April 2026. Next step in force date.
Since the Bill was published on 11 July 2025, I have not encountered any tenant wanting the review basis in a new lease or renewal lease to be open. The requirement for an open review (upward/downward) not brought on by the prospect has been on restructuring, the usual insistence for a day-one review to market rent, as if the lease were renewed under LTA54.
What started as an institutional investor desire for certainty has become a feature of the commercial property investment market. The way that tenants have avoided upward-only review is a short term lease.
I do not get involved with property finance – ungentlemanly. That landlords have accommodated short leases, either by agreement or no choice, does not appear to have made much difference to borrowing to buy the investment. I should think short term leases more of a problem for landlords whose existing loan facilities are due for review and the lender’s assessment of the borrower’s commercial property knowledge is risky. At a guess, any borrower that obviously knows what they’re talking about is less likely to be of any concern for the lender. It is the difference, I should think, between mortgaging each property and a debenture.
Institutional investors wanting certainty implies that such investors would not want to take the risk otherwise. I cannot think of any other type of alternative investment that is a one-way bet. Given that investors were buying commercial property long before upward-only review existed makes me think that what is likely to have happened was the introduction during the 1970s of the open market review, as a replacement for the previous pre-fixed incremental increase every 7, 14, and 21 years. Assuming that is correct, there is nothing to stop landlords and the commercial investment market generally from reverting to as was and having fixed increases intervals.
The only real difference is the effect of inflation but how to estimate what a future fixed-increase should be is easily overcome by valuing every investment as reversionary, not rack-rented. For example, a pre-fixed uplift to £100, 000 pa that when the time arrives transpires should be £120,000 would be valued on the erv £120,000 pax.
How to get £120,000 payable could also be overcome, for example, by having an artificially high fixed £150,000 pa payable only if comparable evidence supported the rent at the time. The ban does not prevent pre-fixed rents because they are known about beforehand. The ban does not prevent a landlord from agreeing a lower rent so why not have a prefixed amount that was always likely to be be a non-starter?
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