Partner Gemma Stephenson, in our Commercial Property & Planning team, discusses the possibility of a ban on Upward Only Rent Reviews, and what this would mean for landlords and tenants.
The English Devolution and Community Empowerment Bill (“the Bill”) introduced into parliament on 10th July 2025 contains a proposal to ban upwards only rent reviews. This isn’t the first time the subject has arisen - in 2021, a ban on upward only rent reviews was proposed in a private member’s bill, and long before that, the move was considered by the Blair government.
What are upwards only rent reviews?
Rent reviews in commercial leases offer a mechanism whereby the rent is reviewed periodically, usually every 3-5 years. Rent is generally reviewed either with reference to the rent which would be available in the open market for the property at the time of the review, or with reference to changes in the Retail Prices Index or Consumer Prices Index. Most leases which contain rent reviews will also contain a provision that the rent can only increase at review. In these cases, if the open market or index linked rent is lower than what the tenant is already paying, the rent will stay the same.
What is proposed and why?
The Bill proposes a ban for upwards only rent reviews in business tenancies. It is set to apply only to those leases entered into after (and if) the Bill comes into force. It is worth noting that the legislation would also apply to renewal leases under the Landlord and Tenant Act 1954. This means that any rent reviews to be determined in the future (open market, index linked or with reference to turnover) will need to allow for a decrease as well as an increase in rent.
The governments reasoning for the proposal is an attempt to assist small businesses, with particular emphasis on high streets and shops, in removing artificially high rents and ensuring that rents are more affordable and better reflect the economic climate at the time of the review.
What changes are likely to be seen if the Bill passes?
Whilst any reviews which are included in leases following the passing of the Bill will need to allow for a decrease in rent, it is likely landlords may seek to use other mechanisms to lessen the impact of the legislation. These are likely to include:
- Stepped Rents: Unlike rent reviews where future rent is uncertain and conditional on other factors, such as the market; stepped rents are agreed in advance at the outset and documented in the lease. They provide for specified increases in rent at various dates in the lease, such as every year or two. As currently drafted, stepped rents would be allowed if the Bill were to come into effect.
- Higher Initial Rents: With upward only reviews not being an option, we may see a market increase in initial rents offered and shorter less generous rent free periods as a counterbalance, which notably would have the opposite effect to the government’s intentions.
- Landlord Break Clauses: to tie in with rent reviews. In much the same way as we commonly see tenant break clauses in line with rent reviews currently, so if the review is likely to mean the rent is more than they can afford they can exit the lease, we may see similar provisions if landlords cannot achieve the desired rent at review.
There are still a number of steps to be taken for the Bill to pass, and along the way there may be amendments. However, the ban on upward only rent reviews would be welcome news to tenants, who in times of economic uncertainty and a falling market wonder why they cannot benefit from decreases in property prices or a slowing of the index. The same cannot be said for landlords who rely on the certainty of a minimum income that upward only reviews provide.
For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800.
This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.
