What Goes Up, Might Come Down; The End Of Upwards Only Rent Reviews?

The English Devolution and Community Empowerment Bill could bring about a major change for commercial lettings.

The English Devolution and Community Empowerment Bill (“the Bill”) which was introduced in Parliament on 10 July 2025, shocked the property industry due to the inclusion of a proposed ban on upwards only rent reviews in new commercial leases. The government maintains that upwards only rent reviews are a contributing factor in the decline of town centre retail, as they can lead to artificially inflated rents which unfairly penalise tenants, thus leading to vacant premises.

The proposal

The relevant provisions in the Bill, if they become law, will apply to all leases where a tenant is occupying a premises for the purpose of a business, regardless of whether tenant has ‘contracted out' of its right to security of tenure.

Whilst the Bill is only in draft form if enacted as currently drafted, the ban will apply to any rent review mechanism where, at the date of grant of the lease, the rent to be paid following a review is uncertain or cannot be determined, thus we could potentially see an end to:

1. Upwards only open market rent reviews;
2. Index linked rent reviews with a collar or floor i.e. that ensure a minimum uplift in rent; and
3. Leases where rent is linked to turnover where a minimum base rent is reserved.

The changes proposed will not apply retrospectively, so existing leases will not be affected save for one exception. A revised version of the Bill, published on 30 October 2025, includes provisions that would retrospectively amend existing superior leases which contain clauses requiring that sub-leases include an upwards only rent review; the Bill would modify those clauses in the superior lease to permit a rent review in that sublease that is not upwards only.

It is worth noting that the Bill would also give tenants rights to take any action required to trigger a rent review even where a lease provides for such action to be taken by the landlord. This would therefore prevent landlords choosing not to operate a rent review in a falling market.

The potential impact

There is understandable concern within the property industry that these proposals will lead to huge uncertainty and ultimately therefore be damaging to investment in commercial property. The Bill in its current form could lead to a substantial revaluation of investment properties and a stifling of the market. Even in the absence of such extreme impacts what we could end up seeing is shorter lease terms to enable rents to be rebased more frequently or leases with fixed rental increases, pure index-linked rents or formula-based stepped rents (where the increase can be calculated at the outset). Whether it will lead to a return to the bustling high streets that the government are aiming for remains to be seen.

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