Proposed ban on upwards only rent reviews in new commercial leases
On 10 July 2025, the English Devolution and Community Empowerment Bill was introduced to Parliament. If enacted, the Bill would bring significant changes to commercial leasing practices. One of the most notable reforms is the proposed ban on upwards‑only rent reviews. This article outlines the key provisions in Part 5 of the Bill, which sets out the framework for prohibiting upwards‑only rent reviews in commercial leases.
What are upwards only rent reviews?
Upwards only rent review provisions are clauses in commercial leases that allow rent to increase at the review date when the open market rent has risen, but prevent the rent from falling if market rent decreases. These clauses have been a common feature in commercial leases, providing landlords with protection against decreases in rental values. However, they can result in tenants paying above-market rent in a declining rental market.
Changes that will be introduced by the Bill
Clause 71 of the Bill would insert two new Schedules into the Landlord and Tenant Act 1954 (LTA 1954). The impact of these new Schedules would prohibit upwards-only rent reviews in commercial leases. This would apply to all new commercial leases and to renewal leases under the LTA 1954, whether inside or outside security of tenure. Any agreement purporting to preserve an upwards only rent review would be ineffective.
Additionally, the prohibition extends to put options where a tenant can be required to enter into a new lease (typically to protect the landlord’s interests in the event of tenant default or insolvency). The rent payable at the start of the new lease cannot be determined when the put option is entered into, the starting rent must match the rent payable under the previous lease. This ensures that put options cannot be used to increase the rent.
Please note the ban will not affect existing leases or on agreements for lease entered into prior to the legislation coming into force and that this bill does not affect Stepped rent arrangements where future rent levels are predetermined.
Whilst it is currently unclear if this change will come to fruition, the potential for such a change will concern landlords and may disrupt the market as tenants look to keep their options open pending introduction of these provisions.
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Disclaimer
This information is intended for general informational purposes only and does not constitute legal advice. We recommend seeking professional advice before taking any action on the information provided. If you would like to discuss your specific circumstances, please feel free to contact us on 0800 2800 421.
