The commercial property sector was taken by surprise on 10 July 2025, when the government introduced its English Devolution and Community Empowerment Bill for, tucked away in this 338-page document, appears proposed legislation which effectively bans upward only rent reviews (UORR) in most commercial leases. 

Whilst not a completely "out of the blue" proposal (a ban on UORR was mooted 25 years ago by the Blair government), the provisions have been announced without consultation and have been criticised by the industry for having a potentially significant adverse effect on the commercial property market. The British Property Federation has been outspoken in its criticism, slamming the move as an example of the government interfering in "long established commercial leasing arrangements without any prior consultation or warning".

We answer the most significant questions regarding the issue, its potential impact, and what the future holds. 

The issue

What is upwards only rent review and why is it important? 

UORRs are rent review clauses in commercial leases which set, at the start of the lease, a mechanism for a review of rent (during the term of the lease) to an undetermined figure but which prevents the rent from ever decreasing. These types of clauses have been the cornerstone of the UK property market for years, giving landlords and investors security as to a minimum level of income. 

Why is the government proposing to ban UORRs? 

The government criticises UORR clauses which "pit landlords against businesses and can make rents unaffordable and cause shops to shut". In its limited guidance on the issue, the government states that the move is designed to empower small businesses and protect high streets by setting rents more efficiently and stimulating economic growth. 

The legislation 

How will the ban operate from a legislation point of view? 

The new provisions are mainly contained in schedule 31 of the Bill and will ultimately add a new schedule 7A to the Landlord and Tenant Act 1954 (1954 Act). 

Which types of leases does the ban apply to? 

The ban will apply to all business tenancies to which Part 2 of the 1954 Act applies, meaning where the tenant is occupying for business purposes. It will therefore affect leases from high street retail stores to large industrial sheds. It will apply whether or not the tenant has "contracted out" of its right to security of tenure under the 1954 Act. 

Which types of rent review will the ban apply to? 

The ban will apply to any rent review where, on the date on which the lease is granted, the rent to be paid following the review is not known or cannot be determined. This will include rent reviews (containing an upward only element) based on market rent, index-linked reviews with "collars" and turnover rents. 

Will the ban be retrospective, i.e., will it apply to rent review clauses in existing leases? 

The ban will not be retrospective and will not affect existing leases entered into before the Bill comes into force. It will also not apply to leases entered into pursuant to contracts exchanged prior to the Bill coming into force. It will, however, apply in renewal leases, and/or where the tenant is required to take a new lease pursuant to a put-option. 

Does the ban apply to leases where the tenant is not in actual occupation of the premises?

As currently drafted, it appears that the ban may not affect leases where the tenant is not in actual occupation of the premises. Therefore, the ban will apply to a sub-lease but not to the "head" tenant's own lease, meaning the tenant may be forced to pay its landlord more on rent review than its subtenant pays the tenant. The ban will also have an impact on the sub-letting market as it will not apply to leases which pre-date the ban but will apply to sub-leases that are entered into after the ban.

Does the proposed legislation offer any other benefits to tenants? 

If a trigger notice is needed to start the rent review process, the Bill gives tenants the right to initiate this process even if, under the terms of the lease, this power has only been allocated to the landlord. 

The effect 

What is the main effect of the ban? 

A rent review clause containing an upward-only provision will have no effect, with the new rent being the figure that it would have been without the upward-only clause. 

Which rent review clauses are and are not allowed? 

Rent reviews can still be index linked, but only on the basis that, if the index moves negatively, the reviewed rent would be below the passing rent (i.e., the rent payable pre-review). Index-linked reviews with a fixed minimum rent (i.e., a "collar") will not be allowed - any collar will be ignored.

Similarly, rent reviews can be made by reference to the market rent prevailing at the date of the review, but will be capped at that rate, so the rent can move downwards to match a lower market rent. 

The ban does not apply to rental increases which are fixed in advance (i.e., stepped rents).

The impact 

Will the ban actually benefit tenants? 

The government’s intention is to help small businesses, but there is doubt within the industry that a ban on UORRs will do much to help. There is already more flexibility in leases to small businesses (including high street tenants), as these are typically shorter-term leases which don't even include rent review provisions. 

In addition, the industry may attempt to bypass the UORR ban in ways which may disadvantage tenants, such as an increase in stepped rent leases, with rental levels which might not reflect the market to the detriment of the tenant. Alternatively, in an attempt to alleviate any uncertainty in rental income, landlords may insist on higher rents at the start of the lease, which is the opposite consequence of what the government intends. 

What is the impact on landlords and the commercial property sector generally? 

There is widespread concern within the industry that these proposals create significant uncertainty which may be damaging to investment in the commercial property sector going forwards. This is particularly worrying at a time when businesses need confidence. Landlords rely on UORR to guarantee a minimum level of income as a basis on which to invest, and continue investing, given its effect on property valuations for investment and lending decisions. The ban on UORR may lead to reduced valuations, and consequently reduced investment in areas where the government is actually trying to support. 

How might leases change as a result? 

At the outset, there will likely be a two-tier system with existing leases based on an UORR scenario, but with new leases which cannot include UORR. As alluded to above, landlords and investors are likely to find ways to alleviate the uncertainty caused by the ban on UORR, with increases in leases with index-based reviews (considering the limited number of occasions in practice on which indexes have gone down), and stepped rent arrangements. 

The future 

What are the timings for the Bill coming into force? 

At this stage, the Bill is only a proposal and there is not even a date for a second reading. The Bill itself is very long, and with parliamentary recess during the coming month, it is unlikely to move until later this year. 

What is the market expected to do in advance of the Bill coming into force? 

Given the complete lack of consultation with the industry, and the projected damage to investment in the UK commercial real estate sector as a result of the proposals, there is likely to be extensive lobbying against the Bill as it progresses through parliament. We will be watching this space and providing updates as the Bill progresses (or does not, as many in the industry appear to be hoping).