Upwards‑only rent reviews have long been a common feature of commercial leases. These clauses ensure that rent can only remain the same or increase at review dates, even where market rents have fallen. While this has provided landlords with income certainty and supported property values, it has often been seen as unfair to tenants.
Introduced on 10 July 2025, the English Devolution and Community Empowerment Bill proposes a ban on upwards‑only rent review clauses to ensure that rents better reflect prevailing market conditions. The aim is to relieve financial pressure on tenants, particularly during economic downturn, and boost the resilience of high streets and local economies. The ban is expected to come into force around 2027 or 2028.
What does this mean for landlords?
For landlords, the proposed change could result in more fluctuations in income and the potential for rent reductions at review periods. This may have an impact on property valuations and longer‑term investment strategies.
To mitigate these risks, landlords may consider alternative approaches, such as:
- Shorter lease terms with no rent review provisions
- Fixed or stepped rent increases
- Setting rents at higher levels at the outset of the lease
These structures may help provide greater certainty over future rental income while remaining compliant with the proposed legislation.
What about tenants?
Tenants are likely to benefit from rent reviews that more accurately reflect market conditions, potentially offering financial relief during challenging economic periods. However, landlords may seek to rebalance risk by tightening other lease terms, for example by:
- Reducing rent‑free periods
- Increasing initial rent levels
Tenants will need to carefully review new rent review provisions and understand how disputes will be resolved if agreement cannot be reached. Importantly, tenants will also have the right to initiate rent reviews where landlords delay them, ensuring timely rent adjustments even in a declining market.
Impact on existing leases
The proposed ban will not directly affect existing leases. However, it will have implications on how underletting provisions in existing leases will operate.
Where a head lease requires upwards‑only rent reviews to be included in underleases, those requirements will become ineffective once the ban is implemented. As a result:
- Landlords will lose control over other rent review terms in underleases
- Other related controls, such as synchronising review dates with the head lease, may also fall away
Landlords may therefore wish to review and amend existing leases before the new legislation comes into force to preserve other underletting controls relating to rent review provisions where possible.
Anti‑avoidance measures
The proposed legislation includes anti‑avoidance provisions designed to prevent indirect attempts to preserve upwards‑only outcomes. These measures will invalidate:
- Side letters or agreements designed to “top‑up” rent following a downward review
- Certain “put options” (where a tenant can require a landlord to grant a lease)
- Other contractual mechanisms intended to maintain upward‑only rent review effects
How we can help
At Stephensons, our commercial property team has extensive experience advising landlords, tenants and investors on lease negotiations and property transactions. If you are concerned about how the proposed changes may affect your property portfolio, or you are negotiating rent review provisions in a new lease, we are here to help.
Contact Stephensons today on 0161 696 6174 to speak with one of our specialist commercial property solicitors.
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