The ban on upwards-only rent review clauses

The English Devolution and Community Empowerment Bill was introduced into the House of Commons on 10 July 2025, and one part of the Bill was a particular surprise to all professionals in the commercial real estate sector, there having been no prior consultation.

Clause 71 and Schedule 31 of the Bill introduced a proposed ban on upwards-only rent review clauses in commercial leases. Without a predictable rental income and therefore commercial certainty, commercial property values will undoubtedly become vulnerable, which in turn will impact investment.

It has been suggested that the aim of these provisions is to protect the declining high street by ensuring that high-street retailers can continue to afford the rent. However, the Bill goes further than just being limited to the retail sector as the provisions will apply to all commercial tenancies including hospitality, healthcare and even churches.

The Bill is likely to take effect in 2027/2028 and basically has the effect of placing a complete ban on upwards-only rent reviews in certain circumstances.

Although the intended result is that business tenants will benefit from rents that reflect the market, landlords will of course look for ways to protect the level of rents they can charge. This could therefore mean more contracted out leases, with landlord break options, and higher initial rents.

Which leases will be affected by the ban?

If the ban is passed, it will not be retrospective but will apply to all new leases granted after the Bill comes into force. This means that all leases or agreements for lease entered before that date will not be affected.

Anit-avoidance provisions

The Bill includes anti-avoidance provisions, for example if a rent review is expressed to be triggered by the landlord alone, there is an implied right for the tenant to trigger the rent review. The tenant must however give notice of his intention to do so, in writing and within the time stipulated in the lease for instigating the rent review limit. The tenant cannot rely on a ‘time is not of the essence’ provision that may be included in the lease.

Effect of the Bill

There are concerns across the sector that the Bill could undermine investor confidence and lead to an unintended downturn in the market. Furthermore, given that the statistics show that 90% of commercial leases are for five-year term or less, such leases are, in any event, unlikely to include rent review provisions.

What future leases may look like if the Bill is passed

If upwards-only rent reviews are banned, landlords are likely to respond as follows:

1. Fixed or stepped rent increases which will provide landlords with some over future rental income.
2. Greater use of index-linked rents.
3. Rents being set at inflated rates at the outset  to  offset against the possibility of a downwards rent review in the future.
4. Shorter leases, for example five years with no rent review.

The Birketts view

We will have to wait and see whether the Bill delivers on its promise of reviving our high streets.  What we do know is that there is a delicate balance in weighing the interests of tenants against property owners and investors. Any proposals should not only seek to protect the tenant but also encourage continued investment in the UK’s commercial real estate, particularly in today’s uncertain economy.