Is this an end to upward-only rent reviews in commercial leases?

By Tasmin Sarai

Trainee Solicitor

Commercial Property

03 November 2025

Blog News

In July 2025, the UK Government published the ‘English Devolution and Community Empowerment Bill.’ Part 5 of the Bill proposes a ban on upward-only rent review clauses in commercial leases – a development that could fundamentally change the commercial property landscape.  

Although reform in this area has long been discussed, this Bill marks the most significant move to legislative change to date. If implemented, it it would have a substantial impact on the way leases are negotiated and structured, as well as the valuation and financing of commercial properties.

This article explores what the Bill proposes, the Government’s rationale, and the possible consequences for landlords, tenants and investors.

What are upward only rent reviews?

Upwards-only rent reviews are a long-established feature in commercial leases. Where a rent review is linked to a variable such as market rent or inflation, an upward-only clause provides a mechanism which prevents the rent from decreasing, even if the market conditions fall. As a result, this can leave a tenant paying rent above the true market level.

For landlords and investors, upward-only provisions offer certainty and income stability, ensuring that a minimum rental income is secured. They can support valuations and funding arrangements. For this reason, such clauses have remained prevalent in the commercial leasing market over the years.  

What is the Bill proposing?

The Bill proposes to prohibit upward-only mid-term rent reviews in commercial leases, covering all leases where a tenant is occupying a premise for business purposes. This includes new leases, whether or not they are protected by security of tenure, and renewal leases where the tenant has security of tenure under the Landlord and Tenant Act 1954. The proposed ban would not affect fixed or stepped rent increases specified and determined at the beginning of a lease, or rent review clauses that are both upward and downward.

In addition, the ban would not be retrospective. Existing leases containing upward-only provisions would remain valid and enforceable. This protection also extends to transactions where contracts have been exchanged prior to the legislation coming into force, even if the lease has not yet completed.

Currently, the bill does not propose an alternative mechanism for rent reviews, meaning parties would need to adopt another structure if the ban was implemented.

Why is a ban on upward only rent reviews being proposed?

The Government has suggested that upward-only rent reviews are imbalanced and contribute to unaffordable rents, particularly for high streets and small businesses, leaving many premises vacant. The Ministry of Housing, Communities and Local Government noted that such clauses can “pit landlords against businesses and can make rents unaffordable and cause shops to shut down.”

Supporters of this proposal see the reform as a vital measure to restore and revive the high streets and foster more vibrant local communities by elevating pressures on businesses. In addition, it is being seen as a positive step to encourage economic growth.

Ultimately, the aim is to protect tenants where market conditions deteriorate and prevent inflated rents from forcing tenants to leave their premises.

What will be the effect of the Bill?

The removal of upward-only clauses may give tenants greater flexibility to negotiate reductions where the market has deteriorated. This scope for reductions may support smaller businesses and prevent inflating rents deterring them away from high street or other business premises.

However, there is a concern surrounding the negotiations around leases. Lease negotiations could become more complex and commercially sensitive, which may do more harm than good for tenants. Landlords may respond in several ways:

• Index-linked rent reviews: Where the rent will be reviewed in line with the inflation rates.
• Higher starting rents: Landlords may increase initial rent levels to protect themselves against the risk of not having a minimum rent secured. 
• Shorter leases with break clauses: Lease structures may shift to shorter term leases with a greater focus on landlord break clauses to provide flexibility where there is increased uncertainty surrounding rental income. Whilst the post pandemic market has already seen a shift to shorter term leases, lease terms may be reduced further. In addition, landlords may opt to exclude leases from the 1954 Act to end leases sooner, providing less security for tenants.

The abolition could also undermine property valuations with projected rental incomes becoming less predictable. In addition, if landlords can no longer rely on a guaranteed minimum income, lenders may reassess risk and tighten financing terms. This will be due to reduced confidence in a guaranteed increased cashflow. Therefore, the effect on property investment strategies could significantly shift to take these increased risks into account.

What happens next?

A second reading of the Bill took place on 2 September 2025. In addition, the Public Bill Committee have scrutinised written evidence submitted by the public. It is now scheduled to go before a Public Committee on 12 November 2025. There will likely be considerable amendments to the bill over the course of discussions.

Although the Bill is still in its early legislative stages, the proposals are significant. Landlords and tenants should monitor developments closely, given the potential for the wide-ranging impact on lease negotiation strategies.

If you are a landlord, tenant or investor and would like tailored advice on how this Bill may affect your leases or negotiations, please contact our Commercial Property team here. We can help you prepare for the proposed changes and ensure your interests are protected.

Disclaimer: General Information Provided Only
Please note that the contents of this article are intended solely for general information purposes and should not be considered as legal advice. We cannot be held responsible for any loss resulting from actions or inactions taken based on this article.