Government Moves to Ban Upwards Only Rent Reviews
Without warning or consultation, the Government published, on 10 July 2025, Schedule 31 of the English Devolution and Community Empowerment Bill. This Bill contains a ban on upwards only rent reviews in commercial leases. This proposal is at the earliest stage of the Parliamentary process, and whilst lobbying is expected from the real estate sector, the Government’s aim is to shift the balance of power in the commercial property market.
Upwards only rent review clauses are provisions in commercial leases that prevent rents from decreasing, even if market rates fall. Typically, such clauses state that, at each rent review date, the rent may only stay the same or increase, never decrease. Popular with landlords for ensuring predictable income, they are disliked by tenant groups and small businesses, as they can be seen to create unaffordable lease structures.
Key points on the proposed ban of upwards only rent review:
- The ban would apply to business tenancies, whether or not the lease is contracted out of the 1954 Act.
- It would apply to new leases and renewals, with the ban not applying retrospectively to existing leases.
- Where the ban applies, any clause that functions as an upwards only rent review would be considered unenforceable.
How would the ban work?
The ban would apply where the following four conditions are met:
- The lease is a business tenancy.
- The lease has been granted after the ban has come into force. This means existing leases will not be affected, but renewals of existing leases will.
- The lease includes provision for the increase of rent to a sum that cannot be calculated at the grant of the lease.
- The method for determining the new rent includes the following:
- The amount of rent is calculated using the amount of inflation or any other multiplier of the tenant’s turnover.
- The amount of the new rent is or could be different from the original amount.
Condition 4 would be met even where only part of the condition is satisfied.
The reaction to this legal development is mixed
The Government considers this a targeted intervention to level the playing field between landlords and commercial tenants. They believe upwards only rent reviews create an imbalance between landlords and businesses, driving up rents and making commercial spaces increasingly unaffordable for tenants.
On the other hand, landlords are broadly concerned that the ban on upwards only rent reviews will undermine the predictability of rental income and potentially reduce asset values. Many view the move as a blunt policy intervention that introduces uncertainty into financial planning. While some acknowledge the need for greater flexibility in rent structures, there is a strong feeling that such a change should be market led rather than imposed by regulation.
What next?
While no date has been set for the Bill’s second reading, it is widely expected to move forward after the Parliamentary summer break. This will mark the first opportunity for MPs to debate the key principles of the Bill. The legislation will then enter the Committee Stage, where each provision is scrutinised and amendments may be proposed. Following this, the Bill will go through a third reading in the Commons, before being passed to the House of Lords for further debate. Should there be any disagreements between the Houses, the Bill may pass back and forth until a final version is agreed.
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Please note the contents of this article are given for information only and must not be relied upon. Legal advice should always be sought in relation to specific circumstances.
