Proposed ban on upward-only rent reviews for commercial leases

The UK government proposed the English Devolution and Community Empowerment Bill on 10 July 2025. If passed, it will ban unascertainable upward-only rent reviews in commercial leases.

The current position

Upward-only rent review clauses have long been a standard feature of commercial leases. Under current traditional drafting, once the rent is reviewed, it cannot fall below the passing rent, regardless of market conditions at the time.

Key provisions of the proposed legislation

The new rules would apply only to business tenancies under the Landlord and Tenant Act 1954, where the tenant occupies a premises for business purposes.

The legislation would apply to new and renewed commercial tenancies only. Existing leases would remain unaffected.

If approved, it would prohibit unascertainable upward-only rent reviews, allowing for rent to move both up and down to reflect the market conditions at that time.

The impact on landlords and tenants

This proposal represents a material shift in the balance of negotiating power between landlords and tenants.

If enacted, landlords may be unable to secure higher rents where market rental values fall. This would provide less certainty for landlords in the long-term and could even affect property valuations.

Tenants, meanwhile, would benefit from greater financial certainty when taking on a commercial lease.

A well-advised landlord may look to offset the loss of an upward-only protection through other favourable lease terms, such as shorter lease lengths or alternative, ascertainable rent-review mechanisms like stepped rents.