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Ban on Upwards-Only Rent Reviews in Commercial Leases
What is happening?
On 10 July 2025, the Government published the English Devolution and Community Empowerment Bill, which contains a significant provision for the real estate sector: a ban on upwards-only rent review clauses in commercial leases.
This reform is set out in Schedule 31 of the Bill, tucked away in the final section of a 338-page document largely focused on local government reforms.
If enacted, the change will mean landlords can no longer include clauses that guarantee rent will either stay the same or increase at review dates, even if market conditions dictate that rent should fall.
What is Upwards-Only Rent Review
An Upwards-Only rent review is a clause in a commercial lease that allows the rent to be reviewed at regular intervals, but never reduced, even if the market rent fall.
So the Rent can go up or stay the same but it never goes down.
How does it work?
- The lease includes review dates (e.g. every 5 years)
- On a review date, the rent is compared to the current market rent or calculated using another method (like inflation).
- If the new calculation is higher than the existing rent, the rent increases.
- If the new calculation is lower, the rent stays the same - it does not decrease. Why is this important/relevant?
Upwards-only rent review has been a cornerstone of UK commercial property leasing for decades. These clauses underpin:
Property valuations
Investment decisions
Loan security for lenders and banks
Removing them could fundamentally change the way landlords, investors, and lenders approach commercial property.
The Government argues the change will help revive the high street by giving tenants fairer rent terms, especially in sectors like retail and hospitality, where businesses often struggle with rigid rent structures despite challenging trading conditions.
However, critics, including the British Property Federation, warn of a risk to market stability, as removing upwards-only clauses may discourage property investment and complicate lending models.
When will the change take effect?
The Bill is currently passing through Parliament, and no commencement date has yet been confirmed.
When it does come into force:
The ban will not be retrospective.
Existing leases signed before the ban will be unaffected.
Leases completed after the ban takes effect will be subject to the new rules, unless they arise from a pre-commencement agreement for lease.
Lease renewals will be caught by the ban, even if the original lease was signed before the change.
Which industry will be affected?
The commercial real estate sector is directly impacted, including:
Landlord and Property owners
Retail and hospitality tenants
Investors, developers, and REITs
Banks and lenders (as valuations will be affected)
Law firms and legal teams advising on property transactions
Key points to know:
The ban applies to all business tenancies, regardless of whether the lease is contracted out of the Landlord and Tenant Act 1954.
It affects market rent reviews, turnover rents, index-linked rents, and side-by-side rents where the rent cannot be known at the outset.
Stepped rents, where increases are fixed in advance, are not affected.
Caps on rent increases are allowed, but minimum rent protections (“floors” or “collars”) are not.
Landlords can no longer reserve the exclusive right to trigger a rent review; tenants will not have equal rights to initiate the process or refer disputes for expert determination.
Workarounds, such as granting landlords the put option to impose a renewal lease at a minimum rent, are also prohibited.
What do trainee solicitors need to know?
For Trainee Solicitors working in real estate, finance, or commercial law, this is a critical development to monitor. Here’s why:
Drafting and Negotiation:
Trainees involved in lease drafting will need to ensure compliance with the new rules. Expect to see an increase in index-linked rent reviews, though these will need careful review to avoid inadvertently breaching the ban.
Due Diligence:
During transactions, trainees will need to check whether leases include upwards-only provisions and understand if they are affected by the new law, particularly for lease renewals.
Advising Clients:
Trainees should stay up to date with market reactions, as this change could lead to shifts in investment strategies and property valuations. Understanding the wider commercial impact will be important when supporting client advice.
Litigation and Dispute Resolution:
The change may trigger more rent review disputes, especially where clauses are ambiguously worded. Trainees in litigation seats could see related instructions.
Training and CPD:
Firms may offer internal training on the new law. Trainees should prioritise attending these sessions to stay current and add value during lease negotiations and real estate matters.
Final Thoughts
This is one of the most significant changes to commercial leasing practice in decades. Trainees and junior lawyers should track the Bill’s progress and understand both the legal and commercial implications of the ban on upwards-only rent reviews.
Legal Lingo
What are Floors or Collars in Rent Reviews?
In commercial leases, “floors” or “collars” refer to minimum rent protections built into rent review clauses.
They set a minimum threshold below which the rent cannot fall, even if market conditions or rent review calculations suggest it should.
Examples of a Collar:
Initial rent: £100,000
Rent Review formula: Review to a higher of the market rent or £95,000
Even if the market rent drops to £95,000, the collar (floor) forces the rent to stay at £95,000.
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