The end of upward-only rent reviews? What the government’s proposal means for landlords and tenants

Picture this: you’re a landlord, sipping your first coffee of the day, scanning the morning headlines. For years, your commercial leases have included the rock-solid “upward-only rent review” clause, a safety net ensuring rents never fall. Suddenly, that certainty looks under threat. 

The government has quietly dropped a bombshell into the property market: a proposed ban on upward-only rent reviews in commercial leases. Tucked into the English Devolution and Community Empowerment Bill, the measure has sparked fierce debate across the sector. While the legislation is still at its early stages, its potential to reshape the commercial leasing landscape is undeniable. 

Simon Carter, CEO of British Land and President of the British Property Federation, warned that “the UK government’s proposed ban on upward-only rent reviews in commercial leases could deter investor confidence and disrupt property market dynamics.” 

Anything that leaves rent “unknown” at the outset is covered. Even anti-avoidance provisions are included to prevent landlords from slipping in creative drafting to preserve rent ratchets. Only fixed stepped rents where increases are pre-agreed would remain untouched. 

The case for change 

The government’s rationale is straightforward: flexibility. In an unpredictable economic climate, upward-only clauses can trap tenants in leases that no longer reflect market reality. When rents fall, occupiers still face ratcheted payments, risking insolvency. 

The policy is pitched as a lifeline for high street businesses. Allowing rents to go down as well as up could offer breathing room and reduce closures. Supporters argue it levels the playing field, aligning lease terms with actual market conditions. 

The Royal Institution of Chartered Surveyors (RICS) has warned that creating market uncertainty now, when the sector is already grappling with high debt costs and fluctuating demand could do more harm than good. 

Lessons from abroad 

The UK would not be the first to abandon upward-only reviews. Ireland abolished them in 2010, triggering short-term turbulence. Investors, lenders, and valuers scrambled to adjust, and some landlords leaned on inflation-linked or turnover leases. Over time, however, the market found its balance. 

Elsewhere, upward-only clauses are uncommon. Globally, the UK is in the minority for treating them as standard. That raises the question: are we clinging to a system that other mature markets have already moved past? 

Still, alternative rent models may gain traction. Turnover-based leases, linking rent to business performance could better align the interests of landlord and tenant. Fixed stepped rents might also rise in popularity, offering clarity from day one. 

Politics, timing, and the bigger picture 

It’s worth asking whether the proposal actually addresses the high street’s struggles. Many retail tenants, the supposed beneficiaries already operate on short leases that don’t include reviews. Their challenges lie elsewhere: sky-high business rates and the relentless shift to online shopping. 

Gavin Whitney, partner at UK law firm Fladgate, cautioned that “This proposed ban risks inflicting severe unintended damage on the broader economy, which is already under strain. By undermining property values, it could reduce returns for everyday property owners and pension funds alike, leaving many worse off, including the government itself through lower capital gains tax and stamp duty land tax receipts.” 

Critics suggest the government is chasing headlines rather than tackling root causes. The Bill’s surprise introduction, with little consultation, has done little to calm industry nerves. MPs will debate the principles after the summer recess, and the committee stage will allow for amendments. Lobbying from landlord groups is almost certain. 

A turning point for UK commercial leasing? 

Whether or not the ban becomes law in its current form, it signals a profound shift in thinking about commercial leases. What was once an untouchable clause a bedrock of the UK investment market is now firmly under scrutiny. 

For landlords, the key question isn’t just whether this change will hurt their portfolios, but how the market will adapt in the long run. For tenants, it’s an opportunity to push for leases that reflect reality rather than ratchets. 

The proposal may or may not survive intact, but one thing is clear: the upward-only rent review, a mainstay of UK leasing since the 1950s, is no longer untouchable.