End of the One-Way Street? What the Proposed Ban on Upward-Only Rent Reviews Means for Landlords and Tenants
A significant shift may be coming to commercial leasing. The government has proposed banning upward-only rent review clauses a mechanism that has long shaped how rent is negotiated, reviewed, and protected. If introduced, this could be one of the most notable changes to lease structuring in recent years.
What is an upward-only rent review?
Common in longer commercial leases, upward-only rent reviews allow landlords to increase rent at set intervals (typically every 3 to 5 years) but never decrease it, even if market rents fall. This offers landlords income certainty and supports asset valuation, but limits tenant flexibility, especially in the tougher markets.
What’s changing?
The proposed ban forms part of wider reforms aimed at revitalising high streets and creating fairer lease terms particularly for smaller and independent businesses facing inflation and rising occupancy costs.
This change is linked to the High Street Rental Auction Scheme and has been included in the English Devolution and Community Empowerment Bill introduced on 10 July 2025. It reflects a wider move toward market responsive and balanced lease arrangements.
When will the rules apply?
The proposals remain at an early stage and the legislative process including consultation will take time.
Current industry expectations suggest implementation won’t happen before 2027. Once implemented, the ban is expected to apply only to new leases completed on or after the commencement date, including those within the scope of the Landlord and Tenant Act 1954 (‘Act’), that is, leases used for business purposes regardless of whether they are contracted out of the Act. Existing leases and agreements agreed before the law changes will generally remain unaffected.
How does it affect landlords and tenants?
This shift will change how rent negotiations are approached.
Landlords, removing upward-only clauses introduces uncertainty. The predictable rent increases they rely on may no longer be guaranteed, impacting valuations, financing, and investment strategies. Landlords may need to reconsider rent review structures whether open-market reviews allowing increases or decreases, fixed stepped rents, or turnover-based models.
For tenants, there may be more flexibility and potential affordability, especially if rents stabilise or fall. However, tenants should be cautious on alternative review methods can still lead to rent increases, as potentially losing upward-only language doesn’t guarantee a reduction. The focus will need to be on the specifics of rent review mechanisms, not just the headline terms.
What should you do now?
Landlords should use this opportunity to review their lease templates and rent review assumptions, especially for assets approaching refinancing or sale. Flexibility in rent structures may become a commercial advantage.
Tenants and their advisors should revisit existing leases and prepare for future negotiations. Heads of terms should be examined closely, particularly where rent review clauses may lock in long-term financial risk.
This change is about more than reacting to the legal change, it signals a shift in how commercial risk is shared through lease terms.
