The only way is up.....or is it? Upward only rent reviews in England and Wales

What you need to know

• On 10 July 2025 the UK Government introduced the English Devolution and Community Empowerment Bill to the House of Commons.   

• The majority of the Bill is given over to the reform of local government in England.

• But a handful of provisions would, if enacted, radically reshape market practice for rent reviews in commercial leasing in England and Wales.

What you need to do

• Although the political landscape is now quite different to that in 2021, it is not likely that the Bill will make it through the parliamentary process unscathed.  

• While the ban on UORRs is positioned by the Government as necessary intervention to improve the fortunes of the beleaguered UK high street, the impact would be far more widely felt, affecting broadly the whole of the commercial property sector. 

Rent review in commercial leases

Most longer term commercial leases include provisions for rent review. Rent reviews typically take place at five year intervals, and may involve re-setting the rent by reference to the open market rental value of the property at the review date, or by reference to a published index, such as the Retail Prices Index (RPI) or the Consumer Prices Index (CPI).
  
Under all of these rent review methodologies, the rent review clause is almost always an "upwards only rent review" (UORR). This provides that the new rent can only increase or stay the same, but cannot be reduced on rent review. The certainty generated by these provisions is beneficial for the ecosystem of property investors and lenders underwriting investments based on expected income and improves the certainty of appraised values.

It is currently open to landlords to agree with their tenants the basis and frequency of rent review. Although the issue has received some political attention over the last few decades, these provisions have largely been left to a combination of market forces and self-regulation within the property industry. This Bill would change that.

What would change?

The Bill has the effect of introducing a ban on UORR clauses for broadly all commercial property leases. The key elements of the ban on UORRs are:

• The ban would apply to new and renewal leases (so there would be no impact on the continuing enforceability of rent review provisions in existing leases). The ban would also not apply to leases granted under agreements for lease entered into before the ban becomes effective.

• Unlike the security of tenure provisions included in the Landlord and Tenant Act 1954, there would be no ability for landlords and tenants to contract out of the ban on UORRs.

• Any provision which provides for rent review by reference to any of the following will be unenforceable to the extent they prevent downwards rent review:

  • the effect of inflation or any other index or multiplier on the rent; 

  • either or both of actual open market rent for premises, or hypothetical or notional rent for premises; or 

  • the amount of the tenant's turnover.

Collars set at 0% or lower (to limit the impact of downwards rent review) accompanying the above mechanisms will be similarly unenforceable. 

• Where the methodology above produces a lower rent than the pre-review rent, that lower rent will apply. 

• "Stepped" increases to passing rent at pre-agreed intervals, fixed at the time the lease is entered into, will not fall foul of the ban. 

• Where a lease stipulates that a rent review will only take place if one party takes action to trigger the rent review, and the terms of the lease do not permit the tenant to take that action, the tenant will nonetheless be permitted to trigger the rent review by notice to the landlord.  

• Any agreement which purports to circumvent the ban on UORRs is void. The ban on UORRs applies irrespective of whether the rent review clause is contained in the lease, or in any other document.

• Exceptions to the ban on UORRs may be introduced by subsequent regulations. Guidance notes accompanying the Bill recognise that there may be situations where exceptions are justifiable, such as permitted collars and caps, but the Bill does not presently contemplate any material exceptions. 

What's next?

This is not the first time this issue has received legislative attention. In 2021 the Commercial Rent (Prohibition of Upward-Only Reviews) Bill, presented by the Liberal Democrats, proposed similar reforms (although that Bill would have had retrospective effect in relation to pre-existing leases).  That Bill received little attention and did not reach the Committee Stage.

Although the political landscape is now quite different to that in 2021, it is not likely that the Bill will make it through the parliamentary process unscathed. While the ban on UORRs is positioned by the Government as necessary intervention to improve the fortunes of the beleaguered UK high street, the impact would be far more widely felt, affecting broadly the whole of the commercial property sector.
 
As expected, opposition from the investor community has been loud and immediate. As the Bill is only just beginning its parliamentary journey, whether the ban on UORRs becomes law at all very much remains to be seen. Market participants will be watching closely.