Introduced on 10 July 2025, the English Devolution and Community Empowerment Bill seeks to prohibit upwards-only rent review clauses in new commercial leases – a reform that would mark a major shift in commercial leasing practices.
What are upwards-only rent reviews?
Upwards-only rent review provisions are clauses in commercial leases which allow rent to increase at specified intervals – known as review dates – provided market rent has increased. In effect, if the market rent rises, the rent payable under the lease is adjusted upwards. However, if the market rent falls or remains static, the rent remains unchanged.
If the proposed Bill becomes law, rent review provisions in new leases will no longer be “upwards-only” or subject to any minimum rent increase and any clause purporting to achieve such an outcome would be rendered void. Instead, rent would be capable of going upwards or downwards, depending on prevailing market conditions at review.
Key provisions of the proposal
- The proposed restrictions on upwards-only rent reviews would apply to all new commercial leases and renewal leases granted to tenants occupying premises for business purposes, irrespective of whether the tenant has contracted out of its right to security of tenure under the Landlord and Tenant Act 1954.
- The ban would not apply retrospectively. Accordingly, it would have no effect on existing leases or on agreements for lease entered into prior to the legislation coming into force. Stepped rent arrangements – where future rent levels are predetermined – would also fall outside the scope of the prohibition.
- The Bill contains extensive anti-avoidance provisions, preventing landlords and tenants from contracting out of the restrictions. Consequently, any agreement purporting to preserve an upwards-only rent review would be ineffective.
- In addition, where a trigger notice is required to initiate the rent review process, the Bill would empower tenants to serve such notice, even if the lease reserves this right exclusively to the landlord.
Anticipated impact of the ban
The objective of the proposed ban is to ensure that tenants are not bound to pay above-market rents during periods of economic downturns. According to the Government, upwards-only rent reviews can jeopardise business viability. Enabling rents to adjust downwards promotes economic resilience and stimulates high street regeneration. On the other hand, opponents of the ban contend that upwards-only rent review clauses underpin commercial property values and investment confidence. Such provisions, they argue, provide landlords, lenders, pension funds, and institutional investors with stable and predictable returns – an essential feature of the UK property investment market.
It is also worth noting that the practical impact of upwards-only rent reviews has already been reduced in recent years due to changes in leasing practices. The average term of a commercial lease is now between three and five years, and such short-term leases rarely include rent review provisions. In longer leases (where rent reviews typically occur every five years) tenant break options are increasingly common.
Looking ahead
The reform would complement existing measures introduced by the Levelling-Up and Regeneration Act 2022, which empowers local authorities to conduct high-street rental auctions of vacant commercial premises. The proposal is particularly timely, given recent data indicating that approximately one in seven high street shops in the UK currently stands vacant.
It remains to be seen whether the UK will follow the example of Ireland, which implemented a similar ban on upwards-only rent reviews in 2010. While the Bill currently awaits its reporting stage, what is certain is that this proposal is likely to provoke substantial discussion and debate across the property and investment sectors in the months ahead.
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