Key Takeaways
- A rent review clause sets out when and how rent can be changed during the term of a commercial lease – typically every 3 or 5 years.
- Upward-only rent review clauses, which prevent rent from falling even when market rents decline, are now banned for new commercial leases granted on or after 17 March 2026.
- Existing leases with upward-only clauses are unaffected by the new rules; the ban applies only to leases granted after the commencement date.
- Open market rent review clauses allow rent to move up or down in line with the market, and are now the standard for new leases.
Rent review clauses are one of the most commercially significant parts of any commercial lease. They determine whether your rent can increase over the course of the tenancy, and by how much. For businesses occupying premises on longer leases, a poorly understood or unfavourable review mechanism can cost tens or hundreds of thousands of pounds over time.
The law changed significantly in 2026. From 17 March 2026, upward-only rent review clauses are prohibited in new commercial leases in England and Wales. This is the most significant reform to commercial rent law in decades, and it changes the dynamics of lease negotiations for both landlords and tenants. Our commercial property solicitors at Osbourne Pinner offer a free 30-minute consultation and can advise on rent review clauses and the impact of the 2026 changes.
What Is a Rent Review Clause?
A rent review clause is a provision in a commercial lease that allows the rent to be reassessed at specified intervals during the lease term. Commercial leases tend to run for several years, often 5, 10 or 25 years. A fixed rent that was agreed at the start may no longer reflect market conditions by the time the lease has run for a few years.
Review clauses typically operate every 3 or 5 years. The clause will set out the basis on which the reviewed rent is calculated, the procedure for triggering a review and what happens if the parties cannot agree on the new figure.
Types of Rent Review Clause
There are several common types of rent review mechanism used in commercial leases.
Open Market Rent Review
An open market review sets the rent at what a willing tenant would pay a willing landlord for the property on the open market at the review date, on the terms of the existing lease. This reflects actual market conditions at the time of the review. Under the pre-2026 rules, most open market review clauses contained an upward-only ratchet, meaning even if market rents had fallen, the rent could not go below the previous figure. That ratchet is now prohibited for new leases.
Index-Linked Review
Some leases link rent increases to the Consumer Price Index (CPI) or the Retail Price Index (RPI). The rent increases each year by the percentage change in the relevant index, up to a cap or subject to a collar. Index-linked reviews are more predictable than open market reviews but can result in significant cumulative increases over longer lease terms, particularly in periods of high inflation.
Fixed Increase Reviews
Some leases provide for a fixed rent increase at each review date, for example an increase of 3% or 5% regardless of market conditions. These clauses give both parties certainty but can result in the rent moving significantly out of line with the market over time, in either direction.
The Upward-Only Rent Review Ban: What Changed in 2026
Before 17 March 2026, upward-only rent review clauses were standard in commercial leases. They meant that at each review date, the rent could be increased if market rents had risen, but could not be reduced even if market rents had fallen. The rent was said to be ‘ratcheted up’ over time. For tenants, this meant they bore all of the downside risk from market fluctuations while the landlord captured all of the upside.
From 17 March 2026, upward-only clauses are void in new commercial leases. Any clause that prevents rent from being reviewed downward at a review date will have no effect. This does not mean rent automatically falls. If market rents have risen, the rent can still go up. But if market rents have fallen, the reviewed rent can now reflect that.
Existing leases are unaffected. If your current lease contains an upward-only clause and was granted before 17 March 2026, that clause remains enforceable for the rest of the lease term.
What the Changes Mean in Practice
For tenants taking on new leases, the change removes a significant source of risk. A business that signs a 10-year lease in 2026 cannot find itself paying above-market rent for the final five years because the review mechanism prevented a downward adjustment.
For landlords, the change may affect how they approach lease negotiations and how they structure rent review provisions. Some landlords may seek shorter lease terms, higher initial rents or index-linked mechanisms that provide more certainty. The commercial property market is still adjusting to the new rules, and lease negotiations in 2026 are reflecting that uncertainty.
See also: Unfair Rent Review in a Commercial Lease
Rent Review Disputes
Where the parties cannot agree on the reviewed rent under an open market clause, the dispute is usually referred to an independent expert or an RICS arbitrator. The procedure will be set out in the lease. Most leases specify that if no review is triggered within a certain period after the review date, the rent is deemed to have been agreed at the current level. This makes it important to act before those deadlines pass.
Surveyors deal with the valuation aspect of rent reviews. Solicitors are needed where there are disputes about the interpretation of the review clause itself, covering questions such as what assumptions should be made about the hypothetical lease, what disregards apply or whether the review has been validly triggered. These are legal questions, not valuation ones. Our rent review dispute solicitors can advise on contested reviews.
Speak to a Commercial Property Solicitor about Your Rent Review Clause
Rent review clauses are easy to overlook when signing a lease but can have a significant financial impact over the term. Understanding what your clause does – and whether a review has been triggered correctly – matters both for tenants managing their occupancy costs and for landlords seeking to protect their rental income.
At Osbourne Pinner, our commercial property solicitors advise landlords and tenants on rent review clauses, the impact of the March 2026 changes and disputes over the interpretation and operation of review provisions in existing leases.
Please note that this article is for informational purposes only and does not constitute legal advice. We always recommend speaking to a qualified solicitor for advice tailored to your specific circumstances.
We offer a free 30-minute consultation to discuss your situation. You can speak with us via video call or visit our offices in Harrow, Canary Wharf, Piccadilly Circus or Manchester. To arrange your consultation, call 0203 983 5080, email [email protected] or complete the form below.
