Landlords beware: Government targets upwards only rent reviews in commercial leases
In a surprise move the Government has, in the English Devolution and Community Empowerment Bill, proposed a ban on upwards-only rent reviews in commercial tenancies entered into once the Bill becomes law. The Bill also introduces a mechanism for tenants to trigger rent reviews where this power is otherwise reserved to the landlord.
In a bill aimed at delivering growth and empowering communities, the ban is described as a measure to prevent shop vacancies and regenerate high streets by redressing the balance of power between landlord and tenant when it comes to rent reviews.
While the ban may well be welcomed by struggling tenants, landlords have not reacted positively and creative workarounds seem inevitable, such as fixed/stepped rent increases (which escape the ban) and/or offering shorter lease terms so as to retain greater control over rent increases, neither of which are ultimately likely to benefit tenants. In any event, if the Bill is designed to help smaller high street tenants as opposed to retail giants, it ignores the fact that many tenants prefer to take short-term leases (which do not have rent reviews at all) to maintain flexibility as their businesses grow. The Bill also risks driving out overseas and institutional investors, for whom fixed or increasing returns are an important factor when investing into the sector. If investors decide their money would be better placed elsewhere, this could lead to a reduction in the properties available for commercial tenants, effectively depriving high streets of the very kind of investment the Bill was designed to encourage.
The Bill was subject to its first reading on 10 July 2025. A lively Commons debate should be expected alongside the Second Reading on a date to be announced.
Subcribe to news and views... upwards only rent review clauses will be banned for commercial leases, to drive growth and avoid vacant and unused properties which too often blight town centres and high streets.
https://bills.parliament.uk/bills/4002
