The Government’s proposed ban on upwards only rent reviews in Commercial Tenancies
On the 10 July 2025, the Ministry of Housing, Communities and Local Government (MHCLG) through the medium of Deputy PM Angela Rayner published the English Devolution and Community Empowerment Bill. A Bill that promises to keep, ‘the government’s commitment to widen and deepen devolution across England, [by] providing Mayors with unprecedented powers to deliver growth’. The Bill also introduced a ban on upwards only rent review (UORR) clauses in commercial leases, which has come as a surprise to legal conveyancers.
Within clause 31 of the Bill, which is currently on its 2nd reading stage in the House of Commons, nestled between page 322 to 329 of the draft legislation, two new insertions to The Landlord and Tenant Act 1954 have been introduced.
New insertions Schedules 7A and 7B
- Schedule 7A, which prohibits specific rent review mechanisms, the subject of this article.
- Schedule 7B, which limits how rent can be set under landlord-imposed ‘put options’ (i.e. an agreement where the landlord can require the tenant to take a newlease at the end of the current one).
Schedule 7A prohibits rent review terms in new business tenancies which meet the conditions set out in A–D of the legislation (paras 2–5) that would result in rent exceeding a reference amount based on inflation, market or notional rent, or turnover (para 5). Tenants are then bestowed statutory powers to initiate or facilitate rent reviews where the lease terms do not permit them to do so (paras 8–9), and any term requiring payment for differences arising from the operation of these provisions is now void (para 10).
So why has this been introduced? The Government explained in paragraphs 905 to 960 of the Explanatory Notes, that the current key Legislation ‘The Landlord and Tenant Act 1954, Landlord and Tenant (Covenants) Act 1995, and Landlord and Tenant Act 1987,’ have created a legislative gap and that the lack of a definition ofhow rent reviews should operate in business tenancies needs to be plugged.
The Government has also insisted that by prohibiting rent review clauses that result in rents exceeding an objectively calculated reference amount, it is promoting transparency and fairness (paras 911–922). Tenants are then granted statutory rights to trigger and operate rent reviews where leases are silent or restrictive. This reduces landlords’ dominance, especially in declining markets (paras 930–934)
The provisions aim to establish a more balanced and predictable commercial leasing regime, protecting tenants from disproportionate rent increases while preserving legitimate market rent adjustments.
The effect that has left conveyancers scrambling for answers is that, if enacted, landlords can no longer rely upward-only rent review clauses or impose unpredictable rent-setting mechanisms and tenants are protected from rent escalation through vague or one-sided mechanisms.
What about Legal drafting, I hear you ask? In short, business tenancies will need to be drafted in a way that accounts for these statutory caps and so that unenforceable clauses can be avoided.
Key points to takeaway
- UORR clauses are banned in new leases granted after commencement unless they arise from pre-ban agreements.
- Index-linked rent reviews with a contractual minimum limit are banned, but those without and with caps remain permitted.
- Turnover leases that include a minimum base rent are banned, but those without a base rent are permitted.
- UORRs in renewals of pre-ban leases are banned, but those in pre-ban reversionary leases or options to renew are allowed.
- ‘Put options’ requiring existing tenants to enter new leases at variable or excessive rents are banned, but those for new tenants or with fixed day-one rents are not.
- Non-tenancy arrangements like licences or management agreements are not subject to the ban.
What should be addressed in the second reading? Although Schedule 7A formally allows CPI/RPI-linked reviews on the basis they are not ‘upwards only’, in reality they will be, due to inflation trends. This undermines the tenant protection objective and is likely to attract scrutiny.
But what do you think? Will the proposals make it through the legislative process in one piece, or will they be scrutinised and dismantled? Reactions from the wider conveyancing community have been mixed. A few of our favourite quotes illustrate the range of responses:
RICS – “The government should also focus on clarity, transparency and the widest adoption of leasing professional standards, including in respect of the small businesses referenced in the recent announcement. “
Property Week – “surprise move”
Melanie Leech CBE of the British Property Federation – “Interference in long-established commercial leasing arrangements without any prior consultation or warning has no place in the Devolution Bill.”
