Commercial landlords face uncertainty over ban on upward-only rent reviews

Experts have slammed the Labour government’s decision to ban upward-only rent reviews in commercial leases.

The government have announced under the English Devolution and Community Empowerment Bill, commercial landlords will be banned from adding increase-only rent review clauses to new contracts.

The clauses, which typically occur every three to five years in a lease, allow rent to either increase or remain the same at each review, but never decrease, even if market rents have fallen, and this provides landlords with stability and certainty over their income.

However, industry experts warn that the proposed ban will create huge uncertainty and have far-reaching consequences.

Exacerbate the collapse of the high street

Under government proposals, instead of upward-only rent reviews, commercial landlords will be able to offer fixed or stepped rents, index-linked or turnover-based rents and market rent reviews, if they reflect both upward and downward movements.

The government has confirmed existing leases with upwards-only clauses will remain valid until the end of their term.

The government claim the ban will make commercial leasing “fairer for tenants and stimulate economic growth.”

However, industry body Propertymark warns many commercial landlords and property investors are worried the ban will create huge consequences.

The industry body says on its website: “Landlords and property investors, including pension funds and major commercial real estate bodies, have warned that scrapping upward-only reviews could create uncertainty around long-term income and affect borrowing, development funding, and portfolio value.

“Some say it may reduce the appetite for investing in retail or commercial stock altogether. This could, in part, exacerbate the collapse of the high street.”

Short-term lets hit by changes

Propertymark also says the Law Commission is undertaking a review of the Landlord and Tenant Act 1954, a central piece of legislation for the commercial leasehold market in England and Wales.

The industry body warns commercial short-term lets could be hit by the changes.

Propertymark says: “In June 2025, the Commission set out its initial recommendation that the model of security of tenure should remain in place and that the existing mechanism for “contracting out” of renewal rights should be retained.

“However, it intends to consult further on raising the threshold for excluding short-term tenancies from the Act from six months to two years, which could remove more short-term arrangements from the Act’s protections.”

This means if the recommendations are enacted, short-term leases under two years will lose legal protections they currently have under the Act, which include safeguards against eviction and security of tenure.

Proposal seems to have come from nowhere

Scott Goldstein, partner at law firm Payne Hicks Beach, criticises the ban on upward-only rent reviews

He said: “This proposal seems to have come from nowhere. Although it will doubtless give some commercial tenants cause to celebrate, it is concerning that the proposal appears to have been developed in isolation from the work that the Law Commission is doing to amend the 1954 Act.

“It would have been better for all proposals relating to commercial tenancies to be considered at the same time, so that an assessment could be made of the impact that each could have on the other.”