The debate over banning upwards-only rent reviews (UORRs) is not novel, revisited by the Labour Government in 2001. With the English Devolution and Community Empowerment Bill (presented on 10 July 2025) reintroducing the issue, this article examines one of the most substantial changes to the commercial leasing market.
This insight follows on from a previously written insight by Legal Director, Peter Hall on the English Devolution and Community Empowerment Bill.
1. Government rationale and legislative context
The Bill derives from the Government’s ‘Plan for Change,’ an initiative aimed at driving national renewal partly through revitalising small businesses. The Minister of State for Local Government and English Devolution, Jim McMahon, has said that UORRs ‘pit landlords against businesses and can make rent unaffordable…This (the ban) will help keep businesses running.’
The Government therefore hopes that this ban will minimise the inflation of rent allegedly due to UORRs to stimulate economic growth. Whether the ban will deliver this aim is subject to much debate.
The ban is nestled in the Bill at Clause 71, which would amend the Landlord and Tenant Act 1954 to ban UORRs.
2. When will the Bill come into force?
Whilst the timetable is unknown, the Impact Assessment refers to implementation being scheduled for 2027/2028 whilst other commentators suggest it could be as early as 2026. One cannot underestimate the level of lobbying that will occur in that time that may delay the process, especially given the lack of industry consultation conducted before the Bill’s introduction, highlighted by Sir James Cleverly at the recent second reading of the Bill on 2 September 2025. When questioning Angela Rayner, he asked, ‘What assessment has been made of the effective valuation of commercial property? If she is confident that this is such a good idea, why was there no scrutiny?’ These concerns will likely be echoed as the Bill makes its way through the parliamentary process.
On 16 September 2025, the Public Bill Committee scrutinised written evidence submitted by the public and the scrutiny will continue on 16 October 2025. It is likely considerable amendments will come into play over the course of these discussions.
3. What are the proposed changes and what leases will they apply to?
Apply to:
a) Applies to all new commercial leases that fall within Part II of the Landlord and Tenant Act 1954 (where the tenant occupies for the purpose of its business). Therefore, the ban is not retrospective and will only apply to leases made after the legislation comes into effect.
b) It will not apply to existing headleases even if the premises are underlet or to leases granted under an agreement for lease which have been entered into before the legislation comes into force.
The proposed changes:
a) The ban removes the upwards only element in leases where the potential new rent is not ascertainable at the time. Therefore, any review determined by variables such as market rent, notional rent, inflation or tenant’s turnover would also be considered to have an upwards and downwards elements, despite a clause in the lease stating it be upwards only.
b) If the mechanism in the lease allows for only the landlord to trigger rent review, this will be overridden so that the tenant can also trigger that review.
4. Circumventing the changes
Whilst the ban contains wide anti-avoidance measures, such as it includes ‘contracted out’ tenancies, prevents side arrangements and prevents landlords requiring the tenant to take a new lease at a new rent, there are some possible alternatives.
What is not banned is upwards only rent reviews that are ascertainable at the time, such as stepped or fixed rental uplifts.
We may also see the introduction of secondary legislation that will allow for further exceptions, such as allowing caps and collars to be used (i.e. the lease will set limits on how much rent can increase).
5. How might the ban impact tenants, landlords and the wider market?
Tenants may welcome this change, as it could strengthen their negotiating power and offer protection during economic downturns. However, landlords might respond by increasing rents at the outset or reducing incentives such as rent-free periods to counteract their unpredictable income stream. In the interim, tenants may delay negotiations until there is more certainty concerning the Bill.
Landlords may restructure leases through using alternatives (e.g. stepped rents) or having shorter headleases. Landlords may also be exposed to income gaps whereby their news subleases do not contain UORRs. However, their longer headleases that pre-date the legislation will.
The market may see reduced activity in the short term as investors take a ‘wait and see’ approach in anticipation of this legislation. In turn, tenants may hold off on moving or expanding until the rules are in.
In the long term, the Impact Assessment did note that the ban could result in investors becoming less willing to invest in the UK. There are several reasons for this. For example, they will be less confident in their asset guaranteeing an increasing cash flow. They may turn to other asset classes which offer a more predictable return or they may not be able to invest due to lenders being less willing to enter into real estate financing arrangements. Lenders look at expected income and if this is less predictable, they may ask for higher interest rates or stronger guarantees.
It may be that this ban will affect valuations because where properties are seen to have a higher risk, investors will want higher discount rates, pushing the value of the property down. This potential decrease in market activity may also be exacerbated by developers being discouraged by falling property values and higher construction costs, which could see a decrease in development and inward investment in the UK.
Despite the critics citing an array of possible negative implications, we should also look at the Ireland example, where UORRs were banned in 2010. Similar concerns were echoed in Ireland. However, the impact on its economy 15 years on appears nominal, albeit this may be due to factors such as the ban being introduced at a time when rents were rising, shorter leases and the fact that a number of mechanisms have been introduced to alleviate the ramifications.
6. Will the ban have the desired effect?
Whilst the Government has made their reasons for the ban clear, critics have suggested it may not have the desired effect. According to MSCI Lease Events Review, half of new leases in the UK Institutional Investor portfolios in 2023 were five years or less. This demonstrates an increasing trend that small businesses often take on short term leases which are not long enough to include rent review provisions. This trend coupled with the idea that small businesses are starting to take out more flexible leases such as those based on performance driven approaches (i.e. turnover-based rents) suggests that UORRs are a ‘largely historical problem,’ as highlighted by the Regulatory Policy Committee.
So how relevant will this legislation be to small businesses and are the Government blaming upwards only rent reviews for the downfall of UK high streets and ignoring more direct causes? These may include changing consumer behaviour and other costs such as higher wages and business rates, which have, for example, been reported as significant issues in the closure of pubs and restaurants.
Many in the industry suggest that the Government have overlooked alternative ways to revitalise high streets, such as limiting the ban to high street retail leases or offering incentives to landlords who voluntarily change their reviews in accordance with the ban, such as tax breaks.
7. What should you do?
a) Landlords: consider how the ban may impact future rental projections and how your leverage may be different in upcoming negotiations. Engage in industry consultation and monitor the progress of the legislation, especially given that the Government may reconsider the ban in response to feedback. Seek legal advice when negotiating renewals or funding arrangements.
b) Tenants: consider how your leverage will change in response to the ban and consider whether to adopt the ‘wait and see’ approach on upcoming renewals or new leases.
The proposed ban will no doubt be a significant intervention into the market and it will be interesting to see what affect it will have. Whether or not the ban will become law remains to be seen, the Bill has other priorities that are more centric to the governments ‘Plan for Change.’ Will Clause 71 fall by the wayside in favour of the more crucial elements of the Bill?
This insight is authored by Trainee Solicitor, Bella Bodmer. bella.bodmer@weightmans.com