Are upwards only rent reviews to be banned?
This article was written for and published as original content in the East Anglian Daily Times property section.
For decades, commercial leases have often contained upwards-only rent reviews. These provisions provide landlords with the comfort that the rent payable on review will be no less than the rent payable before the review, despite the market rent being lower.
Unexpectedly, on 10 July 2025 under the English Devolution and Community Empowerment Bill, the Government announced that they are considering prohibiting upwards only rent reviews in new commercial leases. The ban is not retrospective so will not affect leases completed before the Bill comes into force nor will it affect leases where a contractual agreement for lease was entered into before this date.
What does this mean for me?
The Bill’s impact could be profound. If the Bill is passed, we may see a move to shorter term leases as landlords avoid leases with rent review clauses, preferring to re-negotiate directly with the tenant at the end of the term. Additionally, landlords may be reluctant to grant a commercial lease within the protection of the security of tenure provisions of the Landlord and Tenant Act 1954 as the lease may be liable to upwards and downwards rent reviews under statutory renewal which many landlords will want to avoid.
The Bill aims to invigorate high street retail but tenants of high street units are generally on short term leases so will be unaffected by these proposals.
Property investors may be alarmed that a ban on upwards-only rent reviews removes their dependable secure fixed income replacing this with unpredictable returns.
Furthermore, financing may be affected since upwards-only rent reviews allow lenders to assess the viability of any borrower’s ability to repay the loan and lenders may become more cautious in lending resulting in a stagnated market.
When will the changes happen?
The Bill is currently only a proposal, so we await further developments to determine the impact this will have on the commercial property market.
For further information, updates and expert legal advice, please contact the specialist Commercial Property team at Thompson Smith and Puxon by calling 01206 574431 or by emailing enquiries@tsplegal.com.