Proposed Ban of Upward-Only Rent Reviews sends shockwaves through UK Commercial Property Market

The news of the Government’s surprise proposal on 10 July to effectively ban upward-only rent reviews in commercial leases has sent shockwaves across the UK property market this month.

The proposal is included in the English Devolution and Community Empowerment Bill introduced to Parliament by the Deputy Prime Minister. If passed, the proposal would allow commercial rent reviews to adjust both upwards and downwards, marking a major shift for property investors, lenders and businesses from the long-established norm of “upwards only” rent reviews where rents can only increase or remain the same at review.



Industry Concerns

The proposal has sparked concerns across the commercial property sector- not only due to the lack of industry consultation prior to its introduction but also alarm over the uncertainty created by the proposed ban and harm to commercial property investment. With income stability and property valuations left unprotected, significant concerns have been raised over development suffering, funding becoming harder to secure and capital shifting to more predictable, stable markets.

A Fairer Approach?

For others, the proposal represents fairness- arguing that in a real estate market that is constantly fluctuating, rent reviews should also be able to move in both directions. They ask why should tenants be locked into paying rents that no longer align with current market realities?

What Happens Next?

As the Bill progresses through Parliament, the property industry will be monitoring ongoing developments closely. Whilst there is no certainty over what the final outcome will be, the potential impact on leasing strategy could be significant. Our specialist Lease Advisory team are well-placed to assist both landlords and tenants navigate through rent review and lease renewal negotiations in this ever-changing market.