The Government has proposed a ban on upward-only rent reviews in commercial leases and put options.
The English Devolution and Community Empowerment Bill (the Bill) had its first reading in the House of Commons on 10 July 2025. Unexpectedly and without consultation, the Bill includes a proposal to prohibit upward-only rent reviews in commercial leases.
As currently drafted, the ban would apply to both leases contracted out of the security of tenure provisions under the Landlord and Tenant Act 1954 and those that benefit from such protection. In addition, the Bill would give tenants the right to trigger a rent review.
If enacted, the ban would apply to all forms of rent review whether based on open market value, indexation, or turnover. However, the legislation is not intended to have retrospective effect.
Similar provisions will apply to setting the initial rent for a lease granted pursuant to a put option where a tenant can be compelled to take a lease. Notably, this would not apply where the tenant holds an option to renew.
Why has the government introduced this ban?
The Government has stated that upward-only rent reviews “pit landlords against businesses and can make rents unaffordable and cause shops to shut”. It further claims that the reform is intended to “keep small businesses running, boost local economies and job opportunities, as well as ending the blight of vacant high streets and the unacceptable anti-social behaviour that comes with them”.
The Government has stated that the reform aims to ensure rent review mechanisms reflect market conditions rather than artificially restricting rents to upward-only movements. However, it remains unclear whether any market analysis has been conducted to assess the potential impact of this reform and, whether it could have adverse consequences for both landlords and tenants.
What will be the impact of this ban?
If implemented, the ban would mean that rents could increase or decrease at review. Unsurprisingly, this provision has been met with strong opposition from the investment sector. It makes the basis for investment more challenging, adding another hurdle to the process and increasing uncertainty in the market during a time when stability and growth are urgently needed.
This seemingly short-sighted reform risks causing significant unintended damage to an already fragile economy. By undermining property values, it could reduce returns for individual landlords and pension funds alike, ultimately leaving many worse off. Even the Government may suffer, through lower receipts from capital gains tax and stamp duty land tax.
Although anti-avoidance measures are planned, landlords may respond by seeking greater financial security in other ways. These could include demanding premiums for longer leases, increasing initial rents to hedge against downside risk, or negotiating stepped rents to mitigate revenue volatility.
When will this come into force?
The Bill is not currently in force and is awaiting its second reading in the House of Commons. It must pass through several legislative stages, providing ample opportunity for amendments or for the proposal to be withdrawn entirely. As such, it may be several months or longer before the Bill receives Royal Assent, and its final form could differ significantly from the current draft.
We anticipate this proposed ban will prompt considerable debate in the months ahead. Whether the Government listens to the concerns of industry stakeholders and revises or abandons the measure remains to be seen.
