The only way is (not) up: ban on upwards only rent reviews

By Isabella Mason

Solicitor

15 December 2025

Blog News

 What is the proposed change and why is it happening?

It has become standard practice in commercial leases for the rent to be reviewed on an upwards only basis. The upshot of this is that landlords have the comfort and certainty of a secure income over a fixed period, even when the market is volatile.

That position however is about to change – on 10 July 2025, the Government introduced the English Devolution and Community Empowerment Bill. The Bill seeks to ban upwards-only rent reviews in new and renewal commercial leases within the meaning of Part 2 of the Landlord and Tenant Act 1954 (LTA 1954). The proposals will be inserted into the LTA 1954 if they become law. Whilst the drive behind the proposed reform is to inject life into our declining high streets, the Bill itself seeks to place a ban on all commercial leases, not just leases of high street retail premises.

The Bill has undergone its second reading in parliament and the House of Lords has voted on a third reading of the Bill. The implementation of the bill into law is still in the distant future and there is anticipated to be significant lobbying from the real estate sector in the interim.

The bombshell proposals have come as a shock due to the lack of consultation with the real estate sector about the impact of the Bill. What is also disconcerting for many, particularly for institutional investors, is the Government’s attempt to interfere with the ability of parties to contract freely.

What leases does the Bill apply to – is it protected leases only under the LTA 1954?

The Bill applies to any business tenancy within the meaning of Part 2 of the LTA 1954. This can include protected tenancies or those that exclude ss 24-28 of the LTA 1954. The Bill also catches tenancies where Part 2 of the LTA 1954 has the potential to apply. This will capture where a tenant sublets the whole of the premises.

Will other types of review be permitted?

The ban only prohibits upwards only reviews, therefore rent review clauses providing a mechanism for an upwards or downwards review are permitted, whether by reference to the open market or index-linked reviews (RPI or CPI).

Stepped rents and turnover rents are permitted, although expect more guidance on how the mechanisms for these will work in practice so as not to in practice only provide for upwards only reviews.

Are existing leases affected?

Existing leases will be protected from the changes throughout their lifetime. However, it does not end there. There are restrictions on how underletting clauses in existing leases will operate. For example, an existing lease may require the inclusion of an upwards only rent review in an underlease, but the Bill will prevent such a clause being effective.

The result is that if the existing lease prescribes that an underlease contain an upwards only review and that underlease is entered into after the ban; in addition to the ban itself, the superior landlord will lose control over other rent review terms in the underlease, even if they do not relate to an upwards only review.

Not only may there be a resulting rental imbalance between the rent in the underlease and the rent in the superior lease, but the Bill as drafted allows the landlord and tenant of the underlease to agree the rent review terms in the underlease. As an example, typically the review date in an underlease will mirror the review date in the headlease, but superior landlords will have less control over such terms once the provisions come into force.

Would a variation to an existing lease trigger the ban?

It is widely accepted that a material variation to an existing lease could lead to a surrender of the existing lease and a grant of a new lease. If a new lease is granted, this will trigger the new provisions and the new lease will be prohibited from having an upwards only rent review clause.

When can a rent review be triggered?

Whilst the usual position remains that the lease will define the review dates, there is also provision within the Bill for the tenant to have the power to trigger a rent review if the landlord delays the review. This will prevent landlords being able to invoke a late rent review (if the lease allows) to circumvent lower market rates and recovering a potentially large back payment of rent from the tenant.

Can you contract out?

The Bill contains anti-avoidance provisions preventing parties from circumventing the ban.

What are the consequences?

As all commercial leases will be affected by the Bill, it is anticipated that institutional investor landlords could be deterred from investing as heavily in commercial real estate. So far, investors have had the certainty and predictability of stable incomes generated from properties, essential for contributing to a healthy economy, however the Bill seeks to take away that certainty.

There is also expected to be greater lender caution in relation to financing the acquisitions of real estate, due to the lack of certainty of a stable income to be generated from commercial premises.

It is expected that landlords will steer away from longer lease terms with rent review. For leases that will be subject to review, landlords may set initial rents under a lease at an artificially high value to balance out any declines in the market at the relevant review date.

There is also likely to be a shift towards index-linked reviews incorporated into leases for properties situated in a perceived weaker real estate market due to their performance stability.

Practical steps to be taken by landlords and tenants

Landlords and/or tenants are limited in what they can do at this stage and it is a case of watch this space, with more updates expected over the coming months. However, landlords may begin to consider strategy for new leases/renewals over the next few years in light of the proposed changes.

The Bill is still in the early stages and the Government must carefully consider the impact on the real estate sector and what, if any, alternatives should be implemented to allay the concerns of the real estate sector.

Commentary in the industry suggests that the proposed reforms should not impose a blanket ban on all new and renewal commercial leases. For example, the ban can be limited to high street retail premises in specific geographic locations where the market may differ significantly.

It’s early days and it remains to be seen whether the proposals in their current form will bring about the stimulation to the high street economy as hoped for.

This article focuses on the how the changes will impact landlords. A second article will follow tailored to the impacts of the changes on tenants.

If you wish to discuss any of the issues highlighted in this article, please contact a member of our team here.

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.