The End of Upward-Only Rent Reviews?

The English Devolution and Community Empowerment Bill, which had its first reading in the House of Commons on 10 July 2025, contains an unexpected ban on upward-only rent review clauses in new commercial leases. The Government has stated that the policy behind this ban is supporting smaller businesses who are struggling to keep up with open market rent reviews that only allow rent to rise, not fall.

The measure has generated concern among landlords and investors, particularly given the surprising lack of prior consultation on such a major reform in a sector that has historically operated with minimal statutory intervention. For now, the Bill remains in its early parliamentary stages and is highly susceptible to changes following lobbying, with its Second Reading due in September.

This article sets out the scope of the proposed ban and its implications for the commercial rental sector if passed as it currently stands.
 
Scope and Effect of the Ban
The proposed ban would apply to all new business tenancies created after commencement of the Bill to which Part II of the Landlord and Tenant Act 1954 applies – i.e. where the tenant occupies the property for business purposes. Existing leases will only be affected if they are renewed after the Bill commences. This may enhance the value of landlords’ reversionary interests in pre-ban long leases (i.e. over 25 years).

Under the Bill, any open market rent review clause that allows rent to increase only — without the possibility of it decreasing — will be void in new leases. Rent will be able to move up or down, regardless of what the rent review clause expressly states.

A fixed or stepped increase in rent that is clear and calculable from the outset will be permitted: for example, a fixed £5,000 p.a. increase every five years. This contrasts with variable uplifts (e.g. market or index-linked) that guarantee upwards-only movement without allowing reductions, which would no longer be enforceable.

It appears that a rent ‘collar’ (a minimum rent on review) will be permitted only if paired with a corresponding rent cap (a maximum rent). For example, a clause setting a collar of £40,000 p.a. must also include an appropriate cap (e.g. £45,000 p.a.). This cap and collar approach may provide a degree of financial certainty for both landlords and tenants.

Anti-Avoidance Provisions
The Bill contains a number of anti-avoidance provisions to prevent circumvention of the ban on upwards-only rent review clauses.

Parties cannot contract out of the ban as they can with security of tenure. No agreement, clause or side mechanism can reintroduce an upward-only review, even indirectly.

Any put option aiming to replicate the effect of an upward-only review is automatically void. This refers to a landlord’s contractual right to require the tenant to take a new lease at an unknown uplift, which would effectively bypass the ban.

If a rent review requires a trigger (for example, 6 months’ notice), tenants will be allowed to initiate it even if the lease reserves this right exclusively for the landlord. This prevents landlords from delaying reviews to avoid rent reductions and ensures tenants can enforce a review when market rents have fallen.
 
Commercial Impact and Anticipated Landlord Response
This proposal, if implemented, would materially alter the risk allocation in commercial leases. Landlords and investors would lose a key mechanism that has long supported their predictable future income from commercial properties.

This may affect the value of their interests, which in turn may cause problems for those who are highly leveraged as lenders may require a reduction in the indebtedness to reflect the reduced value.

Landlords may seek to manage risk by setting initial rents above market value to offset potential future decreases, but of course the market will limit this ability.

Alternatively, landlords might opt for an inflation-linked rent review – if they are prepared to risk rent reductions if inflation becomes negative. Landlords might be encouraged by the fact that it is rare for the DPI or CPI to decrease over a long period of time. Although, those with mortgages may find the lender is not of the same view.

Landlords may also choose a stepped rent structure to secure predictable income growth throughout the lease term, utilising the allowance for predetermined rent increases. However, this could face resistance from prospective tenants, who may negotiate for other benefits or concessions to offset the impact.
 
Political Reaction to the Bill
Unsurprisingly, the lack of prior consultation for this transformative ban has attracted significant concern from landlords, investors and other industry actors.

The British Property Federation has cautioned that such sudden, unvetted policy shifts risk destabilising confidence in an already pressured commercial property market.

Whilst the Bill currently leaves some scope for landlords to maintain limited financial certainty through specific rent review mechanisms, the proposed ban would still produce a seismic shift in commercial leasing, with far-reaching effects on income stability, asset valuation, and lease negotiations.

Regardless, ongoing lobbying and parliamentary scrutiny may alter the Bill’s final form, potentially adding exemptions and clearer definitions. In the light of the heavy backlash, the current details of the ban should be seen as provisional until the Bill completes its legislative journey.

We will continue to monitor the Bill as it travels through the legislative process. In the meantime, please do not hesitate to reach out for tailored legal advice on commercial leasing arrangements.

Mark Vinall, Partner, Ashley Wilson Solicitors LLP