Summary
As part of the English Devolution and Community Empowerment Bill (the Bill), the Government has announced plans to ban upwards-only rent reviews in new commercial leases in England (English Devolution and Community Empowerment Bill). The proposal reflects a broader push to reform the commercial property market. The Bill is currently in its early stages of parliamentary review and its second reading has not yet taken place, so as yet there is not a specific commencement date and the final form of the Bill is not yet known. The ban would apply to all business tenancies in England and Wales (commercial leases to which Part 2 of the Landlord and Tenant Act 1954 applies). There was no industry consultation prior to the Bill, which is unusual, so there will likely be significant lobbying prior to its commencement.
What Landlords and Tenants Need to Know
- The ban will apply only to new leases granted after the legislation comes into force. Existing leases will not be affected.
- Open market rent review clauses in future leases will need to permit rent reductions as well as increases, fundamentally changing the commercial risk profile for landlords.
- Also banned will be minimum increases (collars) in index-linked rent reviews (although caps will not be banned).
- The proposal could influence valuation, lending assumptions and investment strategies going forward.
What Tenants May Think
- In anticipation of reform, tenants negotiating new leases now may find landlords more flexible—either voluntarily offering market rent reviews or other tenant-favourable terms.
- This could be a valuable time to raise the issue during heads of terms negotiations.
Potential Pushback
- Landlords may respond to the loss of upwards-only clauses by:
- Increasing initial base rents.
- Adding index-linked uplifts or minimum rent floors.
- Tenants should be cautious of "workarounds" that could undermine the spirit of the reform and seek clear drafting to preserve true rent flexibility.
Practical Steps for Landlords and Tenants
- Review of leases and heads of terms to prepare for the new requirements.
- Evaluate current transactions to determine whether they may need to be completed ahead of the legislative change.
- Assess long-term impacts on your property portfolio, especially where asset value has been based on upwards-only rent assumptions.
- Stay alert to legislative progress—the text of the Bill may change during the legislative process, and further detail will be crucial for implementation planning.
This reform would mark a significant shift in commercial leasing practice. In their newsletter of 17 July 2025, the British Property Federation wrote, "We're writing to the Deputy Prime Minister following the Government's out-of-the-blue announcement last week of its intention to ban Upwards Only Rent Reviews. We'll be highlighting the impact of such announcements without consultation or warning on already fragile investor confidence, the lack of evidence in the Government's impact assessment and the limited benefit we think it's likely to have on high streets. The ban is in the English Devolution and Community Empowerment Bill, which will receive its Second Reading in Parliament on 2 September 2025. We will be gathering detailed member insights and data in the coming weeks to inform our lobbying ahead of that debate."
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
