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The Proposed Ban on Upwards Only Rent Reviews

— Posted in Commercial Property

The Proposed Ban on Upwards Only Rent Reviews

On 10 July 2025, the UK Government proposed a ban on upwards‑only rent review clauses in new commercial leases under the English Devolution and Community Empowerment Bill (the "Bill"). The announcement came as a shock to the commercial property sector, having been made without prior consultation.

The Bill is currently progressing through Parliament and is at the reporting stage in the House of Lords.

What is an Upwards-only Rent Review clause?

An upwards‑only rent review ('UORR') clause allows rent to increase at set periods (typically every 3 to 5 years) but prevents it from falling below the initial rent.

The most common form is an upwards‑only open market rent review, where the rent is compared with the market rent of similar properties. If the market rent is higher, the rent increases. If lower, it remains the same as the initial rent. Other common rent review mechanisms include:

  • Index‑linked reviews (based on RPI or CPI); and
  • Fixed or stepped rent increases.

What is being proposed - and why?

The Government has proposed banning UORR clauses in all new commercial leases. The ban will apply to:

  • Protected leases under the Landlord and Tenant Act 1954;
  • Contracted‑out leases;
  • New leases and renewal leases granted after the ban comes into force. It will not apply retrospectively (i.e., not to leases which are already in place).

The ban has been introduced in response to the Government's position that:

  • UORR clauses keep rents artificially high, even during economic downturns which results in reduced tenant profitability;
  • Small businesses and hospitality operators are disproportionately affected by UORR clauses, leading to increased financial pressure for businesses and closures;
  • High rents contribute to more vacant commercial units, particularly on high streets;

Overall, the Government believe that UORRs distort the commercial rental market and allow rents to remain above true market levels. The ban will therefore make commercial leases fairer across the board and reduce landlord control over rental levels. The ban is intended to support the long‑term sustainability of high streets and encourage wider economic growth.

How will Landlords and Tenants be affected once the proposed ban comes into place?

For Tenants:

Potential benefits include:

  • Rent more closely aligned with true market conditions;
  • Reduced risk of businesses facing insolvency due to unsustainably high rents; and
  • Reduction in the number of vacant commercial premises.

Potential disadvantages:

  • Higher initial rents may be set offset the risk of future rent decreases for landlords;
  • Landlords may offer shorter, non‑protected leases to limit exposure to falling rents; and
  • Stepped or fixed rent increases may become more common, potentially pushing rent above market levels.

For Landlords:

  • Loss of rental revenue and income certainty, as the rents will fluctuate upon market conditions;
  • Impact on existing financing arrangements, which often rely on predictable future income; and
  • Decrease in investment to the commercial property sector.

Overall, the proposed ban is intended to address tenant concerns and rebalance negotiating power, though landlords may take alternative steps to protect their position, which may ultimately undermine the Government's aims for the ban.

What Happens Next?

Should the ban come into effect, the Final Impact Assessment for the Bill suggests implementation for 2027/2028. Given the potential impact of the ban and the close timeframe in which it may take effect, we would recommend both landlords and tenants begin considering the implications now.

Morgan Lungley is a Commercial Property Solicitor, she advises both individuals and businesses on a wide range of commercial property matters.