Insights | Edition 2
Lease Advisory A market at a crossroads - The UK’s upward-only rent review ban The UK commercial property market is on the cusp of dramatic change. The government’s plan to ban upward-only rent review (UORR) clauses in new and renewed commercial leases is now formally contained within the English Devolution and Community Empowerment Bill, which is currently in the early stages of the parliamentary process. There is no firm or immediate timescale for implementation, and the exact date the ban might come into force is still being determined through parliamentary scrutiny and potential industry lobbying. The Bill was introduced to Parliament on 10 July 2025, with its second reading taking place on 2 September 2025. It was then sent to a Public Committee on 12 November 2025 for detailed analysis and potential amendments, with the committee expected to report by that date. The Bill must still pass through several further stages in both the House of Commons and the House of Lords before it can become law. Government impact assessments have suggested that implementation might be scheduled for 2027 or 2028, indicating a longer-term plan. However, other industry sources have indicated that it could become law within the next 6 to 12 months, though this remains uncertain given the potential for lobbying and ongoing parliamentary debate.
Crucially, the ban will not apply retrospectively to existing leases, only to new leases and those renewed after the legislation comes into force. The final form of the legislation could be subject to change as it progresses through Parliament. The proposed reforms will apply to all new commercial leases and renewals in England and Wales, including those governed by the Landlord and Tenant Act 1954. Existing leases will remain unaffected, providing some comfort to current landlords and tenants. Upward-only clauses, whether linked to market value, inflation, or turnover, will become unenforceable. Rent reviews must allow for both increases and decreases, and tenants will gain the right to trigger reviews, even if that right was previously reserved for landlords. Robust anti-avoidance measures are planned, and only fixed or stepped rent increases (where the amount is clear from the outset) will remain permitted. While the suggested reforms have a long way to go before becoming a reality, the government’s decision has already created market uncertainty among landlords and the UK investment market at a time when
businesses need confidence. For many decades, upward-only rent reviews have given the UK property market a competitive edge over other international markets. Removing this mechanism could negatively affect inward investment and capital values, forcing tenants to pay higher rents to maintain the same capital value. The UK investment market is not geared up to have rent reviews that can go up as well as down; it is driven by predictability and income certainty from the landlord side. The reforms aim to create fairer lease terms and reduce costs for tenants, but the sudden introduction, without prior consultation, has unsettled the market. Landlords and investors now face the prospect of increased income volatility, less predictable valuations, and potentially reduced investment appetite, especially among risk-averse institutional investors. As the Bill progresses, all stakeholders, landlords, tenants, investors, and advisors, must stay alert to the evolving legislative landscape. The coming months will be critical in shaping the future of the UK’s commercial property market. The final form and timing of the ban remain subject to parliamentary debate and possible amendment.