On 10 July 2025, the UK Government introduced the English Devolution and Community Empowerment Bill (Bill), which includes a significant change for commercial property: a proposed ban on upward-only rent reviews in new leases.
What’s being proposed?
Under the Bill, any upward-only rent review clause within a new or renewed commercial lease will be unenforceable. These clauses typically ensure rent can only increase, or stay the same, based on factors like market value, inflation, or tenant turnover.
The new rules would apply only to business tenancies as defined by the Landlord and Tenant Act 1954 (1954 Act) – that is, leases where the tenant occupies the premises for business purposes. Note that this doesn’t mean a lease must enjoy security of tenure under the 1954 Act for the Bill to apply to it.
It doesn’t appear to apply to headleases or other leases not covered by Part 2 of the 1954 Act.
Key points:
- Fixed or “stepped” rent increases will still be allowed
- Existing leases will not be affected until renewal
- Leases granted pursuant to contracts (agreements for lease or options) entered into before the law comes into force will be also exempt (again, until renewal)
Can parties opt out?
No. The Bill includes anti-avoidance provisions:
- Landlords cannot require tenants to take new leases at unknown future rents
- Tenants will be allowed to initiate rent reviews, even if the lease says only the landlord can do so
Some limited exceptions may be introduced later via regulations, such as allowing caps and collars on rent reviews, but these aren’t yet confirmed.
Why's this being introduced?
The government aims to:
- Support small businesses
- Keep high street rents affordable
- Reduce vacancy rates and associated anti-social behaviour
This is part of a broader push to devolve power to local authorities and stimulate regional economic growth.
When will it happen?
The Bill is still in the early stages of the legislative process and could be amended or delayed. Given expected opposition from investor-landlords, the timeline is uncertain. However, some believe it could become law within the next 12 months.
What could the impact be?
If enacted, the ban could have a significant impact on the commercial property market by:
- Reducing income predictability for landlords
- Affecting property valuations and investment appetite
- Encouraging shorter lease terms or more cautious pre-lease negotiations
- Affecting market certainty and sentiment
While rents could still rise if market conditions support it, landlords may need to rethink lease structures to manage the risk of falling rents.
The proposed changes are still to be reviewed, meaning any risks are currently hypothetical. However, it will be important for landlords, particularly landlord-investors, to monitor progress of the Bill and, if the ban remains a feature, consider how its effect can be mitigated.
To discuss any of the issues raised in this article please contact Peter Collins.
Our content explained
Every piece of content we create is correct on the date it’s published but please don’t rely on it as legal advice. If you’d like to speak to us about your own legal requirements, please contact one of our expert lawyers.