Having received Royal Assent on 29 April 2026, the provisions of the English Devolution and Community Empowerment Act 2026 are now settled.
The Act introduces a ban on upwards only rent review (OURR) clauses in new commercial leases in England and Wales, by way of amendments to the Landlord and Tenant Act 1954.
The ban operates through the concept of a "reference amount", which is the rent determined by applying the relevant review mechanism, which is either an inflation-linked calculation, an open market rent, or a turnover-based figure.
Where the reference amount is lower than the passing rent, the reviewed rent must fall to reflect that reference amount, rather than being held at the higher passing rent as would occur under a traditional UORR clause (or indeed any other minimum figure, even if lower than the passing rent).
We’ve seen different interpretations of these provisions in the context of review clauses, which state that the rent will be reviewed to the higher or highest outcome of multiple variable mechanisms. For example, a common review clause might require the rent to be reviewed to the higher of the open market rent and the rent linked to RPI.
Alternatively, in a turnover rent lease, the revised base rent might be the higher of the current base rent increased by RPI and a specified percentage of the tenant's turnover in the previous year. The Act does not expressly permit or prohibit the use of multiple variable mechanisms.
On one interpretation, each variable mechanism should be applied separately, in which case the rent review provisions could trigger the application of the prohibition, since the rent determined under one of the mechanisms will necessarily be higher than the other(s).
This might have led to the legislation requiring the reviewed rent to be the lowest of both/all of the reference points, meaning landlords would no longer want to specify multiple bases and would be better off choosing one.
However, the Government has now indicated that formal guidance will be released confirming that it will be permitted to have multiple variable mechanisms and for the rent to be reviewed to the higher of them, provided the parties have agreed to this in advance, and there is no floor on the outcome of the operation of the variable mechanisms, considered together.
So, where two or more reference amounts are specified, the higher of those figures may be used as the revised rent, provided at least one of the chosen measures has legitimately increased.
For landlords and investors, this is welcome news. It provides reassurance that where a lease includes a review to the higher of the outcome of multiple variable mechanisms, a significantly negative result under one measure (for example, a sharp fall in open market rents) will not automatically dictate the revised rent if another measure (for example, linked to inflation) legitimately produces a higher figure.
Landlords with turnover rent leases will also benefit from this guidance, as a single poor trading year by a tenant will not see the base rent collapse if the index-linked calculation produces a higher figure.
For tenants, whilst the ban on UORR will be welcomed, the guidance underscores the importance of understanding the full mechanics of any rent review clause before entering into a lease.
The forthcoming formal guidance is expected to encourage tenants to be mindful of the arrangements they are signing up to and the various options that could be involved. Tenants should take particular care when agreeing to leases with multiple bases of review, as they may find that the ban on UORRs does not provide the level of downside protection they might expect where the rent is benchmarked against more than one measure.
