The New Guide to Upwards‑Only Rent Reviews
In July 2025, the UK Government unveiled a bold proposal embedded in the English Devolution and Community Empowerment Bill to ban upwards‑only rent review (“UORR”) clauses in new and renewed commercial leases across England and Wales
This represents one of the most significant overhauls in commercial property law in recent memory. The following guide outlines the current state of play, implications for landlords and tenants, and practical measures to navigate the evolving landscape.
What Are Upwards‑Only Rent Reviews?
An upwards‑only rent review clause stipulates that, at each rent review interval—typically every five years—rent may stay the same or increase, but cannot decrease, even if market rates fall. For instance, a tenant paying £100,000 p.a. remains liable for that amount even if current market rent is only £90,000 p.a.
These clauses have been a staple in commercial leasing for decades, affording income certainty to landlords and property investors, supporting valuations, and securing finance.
Conversely, tenants—especially small businesses—often argue they embed excessive risk and bind them to above‑market rents in economic downturns
Government’s Proposed Ban: Scope and Intent
The Key Features:
The Bill, introduced on 10 July 2025, proposes to prohibit UORRs in all new business tenancies (“commercial leases”) to which Part II of the Landlord and Tenant Act 1954 applies—including both statutory and contracted‑out leases
The ban also covers renewals of existing leases granted after the Bill comes into force, except where tied to an agreement for lease concluded before commencement (i.e. no retrospective impact)
Open market rent reviews, index‑linked reviews with minimum thresholds (collars), and turnover‑based rent reviews that contain a downward restriction are all captured. Only fixed or stepped rents—where increases are pre‑agreed—remain lawful
The Bill empowers tenants to trigger a rent review, even if the lease reserves that right to the landlord, ensuring transparency and preventing landlords from delaying or evading downward adjustments
Anti‑avoidance provisions prevent back‑door arrangements—such as side‑agreements or put options—that replicate the effect of UORRs. Drafting designed to circumvent the spirit of the ban will be void
The proposal is part of the Government’s broader “Plan for Change”, targeting town centre regeneration, high street occupation, and supporting small and medium‑sized enterprises
Ministers assert that UORRs have contributed to artificially inflated rents, making premises unaffordable and fuelling vacancy and decline—a scenario they hope to reverse by making the system fairer and more flexible
Who Supports or Opposes the Reform?
Small business groups have welcomed the proposed ban. For instance, the Federation of Small Businesses described it as a “potential lifeline” for SMEs burdened by inflated rents
Hospitality trade body UK Hospitality characterised UORRs as longstanding barriers to survival in the sector and endorsed the ban as “the right move”
The British Retail Consortium expressed support, viewing the measure as a tool to make the high street more accessible for independent retailers
Critics:
Leading voices in the commercial property sector, such as Simon Carter, CEO of British Land and President of the British Property Federation, have sharply criticised the reform. Carter warned that the measure was introduced without consultation, risks undermining investor confidence, and could deter capital inflow by reducing income transparency in the UK market
Critics argue the legislation misunderstands the real challenges facing high streets, which they attribute more to high business rates, fragmented ownership, and lack of investment rather than rent review mechanisms
Likely Commercial and Market Impacts
The proposed ban on upwards-only rent reviews is expected to have wide-ranging implications for lease negotiations, investment valuations, and the landlord-tenant dynamic.
From a lease drafting perspective, landlords are likely to shift away from open market reviews towards fixed uplift or stepped rent models, which remain permissible under the new framework.
These alternatives offer predictability while still enabling rental growth, though they remove the flexibility previously afforded by market-based mechanisms. While index-linked reviews may still be used, they must allow for downward adjustments in rent—any clause that artificially prevents rent from falling, such as a floor or collar, will be deemed unenforceable under the proposed legislation.
The removal of upwards-only mechanisms could also reshape the investment landscape. With rent no longer guaranteed to increase—or even remain flat—valuation methodologies will need to adjust to reflect this increased volatility. This could dampen investor appetite in certain sectors, particularly retail and regional offices, where yields have traditionally relied on the long-term certainty provided by upward-only clauses.
Lenders, too, may become more conservative in underwriting commercial real estate transactions, applying greater scrutiny to future income assumptions.
In practical terms, shorter leases may become more prevalent as both parties seek to manage their exposure to rent fluctuations. We may also see fewer rent review provisions altogether, with landlords opting instead for simpler fixed-increase schedules.
However, these approaches do not eliminate uncertainty—they merely reframe it. Rent-setting at lease commencement will become even more crucial, potentially leading to inflated initial rents as landlords seek to price in the risk of future downward movements.
What Happens Next: Timing and Prognosis
The draft Bill is currently at its first and early parliamentary stages, and as of August 2025, no commencement date has been set
The legislation is not retrospective, and only leases granted after the law comes into force (excluding those pursuant to pre‑commencement agreements) will be impacted.
Industry lobbying and consultation is expected to intensify. Major property bodies may urge amendments, particularly around scope and easing landlord concerns about investor confidence
Potential secondary legislation may clarify the use of caps and collars or carve out exceptions for certain development-related leases
International precedent, such as Ireland’s ban on UORRs since 2010, suggests that while short‑term market uncertainty arose, the reform was ultimately considered successful in preventing rent rigidity—a useful reference point for UK stakeholders
