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Proposed Ban on Upwards-Only Rent Reviews Under New Bill
What the English Devolution and Community Empowerment Bill Could Mean for Commercial Leasing
On 10 July 2025, the UK Government unveiled the English Devolution and Community Empowerment Bill, surprising the commercial property industry. One of the most significant and controversial provisions is the proposed ban on upwards-only rent review clauses in commercial leases.
What are upwards-only rent reviews?
Many commercial leases include rent review clauses allowing the rent to be adjusted periodically (often every 3–5 years). Typically, these provisions are “upwards-only”: the new rent is set at the higher of:
(i) the current rent payable or
(ii) the rent as determined by the review mechanism (for example, the open market value).
This guarantees that rent will never decrease, providing landlords, investors, and lenders with predictability of income.
The Bill proposes to outlaw this “upwards-only” mechanism in new leases and lease renewals (including protected tenancies under the Landlord and Tenant Act 1954) entered into after the legislation comes into force. Crucially, the ban would not apply retrospectively, meaning that existing leases would remain unaffected.
The changes would capture rent reviews based on market rents, index-linking, and turnover rents, but not fixed or stepped rent increases. Where a rent review process is triggered by a landlord’s notice, the Bill would also allow tenants to serve notice themselves, preventing strategic delays.
Why does this matter?
If implemented, this would represent a major shift in commercial leasing practice, with significant implications for all parties:
Landlords, Investors and Lenders:
- Impact on valuations – The reduced certainty of future rental income could affect property and portfolio valuations.
- Negotiation strategies – Landlords may move towards index-linked or stepped rents, or prefer shorter lease terms (or longer terms with break clauses) without reviews.
- Lease renewals – Any lease renewals containing upward-only provisions will need to be amended to comply with the new law.
- Timings – Parties currently negotiating new or renewal leases may wish to complete them promptly to avoid the changes.
Tenants:
- Increased bargaining power – Tenants negotiating new leases or renewals may find themselves in a stronger position.
- Protection in downturns – Linking rents to market or economic trends could see rents decrease in times of economic stress, providing relief for small businesses.
- Risk of higher fixed rents – Landlords may attempt to mitigate uncertainty by imposing higher fixed or stepped rents at the outset, which could result in rents being higher than they would otherwise be.
- Strategic timing – Some tenants may choose to delay negotiations until after the Bill takes effect.
What should you do next?
- Review upcoming leases – Factor the Bill into any ongoing or upcoming negotiations for new or renewal leases.
- Assess portfolio impact – Consider how the proposed ban could affect valuations and rental income projections.
- Seek legal advice – Early advice can help mitigate risk and position you strategically.
- Monitor developments – The Bill is still in its early stages and may evolve; stay informed of any further proposals for commercial property reform.
In summary
The English Devolution and Community Empowerment Bill marks a significant potential shift in the commercial property landscape by banning upwards-only rent review clauses in new and renewal leases. While the Bill is still in its early stages, its impact could be far-reaching – affecting lease negotiations, rental income predictability, and the balance of power between landlords and tenants.
How we can help
Our Commercial Property team is closely monitoring the Bill’s progress and advising clients on how to prepare for these proposed changes. Whether you are a landlord, investor, lender, or tenant, early planning is essential to protect your position and take advantage of any opportunities the reforms may bring.
If you have questions about how the proposed ban could affect your leases or property portfolio, please contact our team for tailored advice.