Evaluating the ban on upwards-only rent reviews

Although the English Devolution and Empowerment Bill gained Royal Assent on the 29th April 2026, little has been said on when the it will take effect from. Market speculation ranges from as early as this year, to 2028, with the majority of commentators presuming 2027 at the earliest – although there has been no comment as of yet from the government to confirm this. The absence of a confirmed commencement date creates a transitional period where behaviour may diverge.

What could happen

A later start date gives the market more time to adapt. In that scenario, the impact may be less abrupt, reducing the risk of a sharp reset at the point of change.

If implementation happens more immediately, the question is whether that leads to a measured evolution in lease structures, or a period of short-term acceleration activity as parties look to secure existing arrangements ahead of change, which could impact transaction volumes and pricing in the near term.

The ability to include caps and, critically, collars (floors) in index-linked reviews will largely determine whether indexation behaves as a continuation of the current system or represents a more fundamental shift in risk. This is particularly important for long-income strategies. The Government has confirmed that it will consult on the treatment of caps and collars before the regime is brought into force – however, given the objective of ensuring rents can move both upwards and downwards, it is likely that any allowance for collars will be constrained.

What could happen

If collars are allowed, indexation becomes a relatively comfortable substitute for UORRs. Income remains largely predictable, and any repricing may be modest.

If collars are prohibited, the change is more structural. Income becomes inherently more variable, particularly over longer holding periods. This may lead to repricing and a reassessment of risk, particularly for long-duration assets.

If a flexible solution (e.g caps but no floors) is allowed, this may require further innovation in lease structuring.

Indexation is emerging as the most obvious replacement for UORRs. That assumption rests on tenant acceptance as much as landlord preference.

What could happen

In stronger markets, occupiers may accept indexation as part of securing space, particularly where supply is constrained. In that case, the shift may be relatively frictionless.

In more price-sensitive sectors or locations, occupiers may push back, particularly in an environment of volatile inflation. That could lead to more bespoke structures, or a resurgence in fixed rent deals and shorter lease terms.

Although permitted, fully bidirectional open market reviews introduce a level of income uncertainty that is structurally different from the historic model. This goes directly to how landlords underwrite risk and how assets are priced.

What could happen

Landlords favour more predictable structures (such as indexation or fixed uplifts), meaning true open market reviews remain more niche.

Broader adoption in markets where flexibility is valued or tenant demand is weaker, leading to more variable income profiles.

Landlords and occupiers may diverge in preference, resulting in more bespoke lease structures, rather than a single market norm.

A significant proportion of UK real estate, particularly pension and annuity capital, is underpinned by investors seeking stable, bond-like income.

What could happen

If alternative lease structures such as indexation are seen as credible substitutes and provide sufficient predictability, capital may remain broadly stable.

There may be an increased use of financial hedging, whereby investors may seek to manage downside risk externally.

If income becomes too uncertain relative to liabilities, some investors may look elsewhere. That could mean reduced demand for long-income assets, or a shift in capital towards fixed-income markets.

This affects whether landlords can act today to preserve future income streams. Regearing and forward-start leases have become an important asset management tool.

What could happen

If reversionary leases are not captured, we may see increased use of forward structuring to effectively lock in legacy review mechanisms. This could create a temporary behavioural shift, particularly among institutions.

If they are captured, it limits that route. In that scenario, the focus turns more directly to how leases will be structured under the new regime, rather than how far the current regime can be extended.

Without an assured upward trajectory at review, landlords may look to other mechanisms, notably lease expiry, to maintain control over rental levels.

What could happen

If lease lengths shorten, landlords gain more frequent opportunities to reprice, but at the cost of higher leasing risk. Vacancy, incentives and capex become more important drivers of returns.

If longer leases persist, they are likely to be structured differently, with more emphasis on fixed uplifts or indexation, shifting risk within the lease rather than removing it altogether.

For a period at least, the market may need to price two different sets of lease structures, those that retain UORRs and those that do not.

What could happen

In the near term, legacy UORR-backed income may attract a premium, particularly for investors prioritising certainty. This could create a valuation divergence between otherwise similar assets.

Over time, as new structures become embedded and better understood, that divergence may narrow. The market has adapted to structural shifts before, but the transition phase is unlikely to be entirely smooth.

Hybrid mechanisms have historically helped bridge the gap between landlord and occupier positions. They are a natural candidate for replacing UORRs - if they are deemed compliant.

What could happen

If permitted, the market may settle around blended structures that retain some elements of income protection while accommodating downward movements. In that case, the transition could feel evolutionary rather than disruptive.

If ruled out, the market becomes more polarised. Landlords may favour indexation for certainty, while tenants may push towards open market reviews. That could widen bid/ask spreads in leasing negotiations, particularly in weaker occupational markets.