Government Moves to Ban Upward-Only Rent Reviews in Commercial Leases
Surprise announcement from the Government as they propose a ban on upward-only rent reviews and what this means for commercial landlords?
The English Devolution and Community Empowerment Bill had its first reading in the House of Commons on 10 July 2025. In a surprising move, the Bill includes a proposal to prohibit upward-only rent reviews in commercial leases.
As currently drafted, the ban would apply to all new (including renewed) commercial leases, whether or not they are protected under the security of tenure provisions of the Landlord and Tenant Act 1954.
The proposed restrictions cover all types of rent review mechanisms, including open market and index-linked.
Why has this ban been introduced?
It has been stated that upward-only rent reviews “pit landlords against businesses and can make rents unaffordable and cause shops to shut.” It claims the proposed reform is designed to “keep small businesses running, boost local economies and job opportunities, and end the blight of vacant high streets and the unacceptable anti-social behaviour that comes with them.”
According to the Government, the objective is to ensure rent review mechanisms reflect actual market conditions, rather than locking rents into upward-only trajectories. However, there is currently no clear indication that any market analysis has been conducted to assess the broader implications of this reform, including potential unintended consequences for both landlords and tenants.
How will this impact landlords and tenants?
Tenants may view the proposed changes as an opportunity to negotiate longer lease terms, with rents that can rise or fall in line with market conditions, similar to what typically occurs on lease renewals.
Landlords, however, are likely to take a more cautious approach. With the removal of upward-only rent reviews reducing income predictability, many may prefer shorter lease terms or opt for contracted-out arrangements to maintain flexibility and control. While longer leases have traditionally offered income security, this reform could significantly alter that equation.
In addition to this, landlords may seek to offset reduced rent certainty by pursuing alternative forms of financial security. This could include requesting upfront premiums for longer lease terms, setting higher initial rents to hedge against potential market downturns, or negotiating stepped rent structures to smooth out income fluctuations over time.
If enacted, the ban would allow rents to move both up and down at review, introducing a level of volatility that has drawn strong criticism from the investment community. Critics argue the change undermines investment certainty, complicates valuation models, and adds another layer of risk at a time when market stability and growth are critically needed.
When will this come in?
The Bill is not yet in force and is currently awaiting its second reading in the House of Commons. It must pass through multiple legislative stages, allowing significant scope for amendments or for the proposal to be withdrawn altogether. As a result, it could be several months or more before the Bill receives Royal Assent, and its final version may differ markedly from the current draft.
Should the proposals be enacted, rent review clauses are likely to emerge as a key point of contention in lease negotiations. With higher stakes and increased uncertainty, parties can expect more complex negotiations, a rise in disputes, and added strain on an already overburdened court and arbitration system.
Whether you're a landlord, investor, or occupier, our team is ready to guide you through what may become one of the most impactful legislative changes in commercial leasing in a generation.
Get in touch today to review your lease structures, portfolio strategy, or investment plans, and stay ahead of the curve.