Many commercial leases are subject to rent reviews i.e. clauses which allow the landlord to periodically review the rent payable by the tenant for the remainder of the lease. Rent review clauses became a popular method of combatting high inflation rates in the UK after the Second World War, when most leases were granted for a term of around 20 years, and reviews typically took place at 7 or 14 year intervals.
Most commercial leases nowadays last for ten to fifteen years, with rent reviews typically occurring every three to five years. Traditionally, rents have only ever gone up or stayed the same after review due to a prevalence of ‘upwards only’ review clauses. But what if rents could go down too?
The Proposed Reforms
In England and Wales, most leases are governed by the Landlord and Tenant Act 1954 which, among other things, affords tenants ‘security of tenure’, ensuring they can request a new lease on similar terms to the current one when it expires.
Schedule 31 of the English Devolution and Community Empowerment Bill, introduced to Parliament in July 2025, contains a surprise amendment to the 1954 Act - it proposes a ban on upwards-only rent review clauses. Despite the title, the proposal would apply in Wales too, and would cover most new leases, even renewals.
If this indeed goes on to become law, rents would be reviewed using the method specified in the lease, but could go up, down or even stay the same. It would not apply to fixed increases or stepped rents, which may become more popular as a result.
Why Are They Doing This?
In the Government’s view, increasing or stagnant rents, particularly during market downturns, subjects tenants to increasing financial strain, whilst landlords enjoy guaranteed income insulated from market volatility, and have contributed to the decline of the British High Street. The ban on upwards-only rent reviews stems from a desire by legislators to reinvigorate the High Street by ensuring that existing retailers stay open and by attracting smaller businesses back to it.
What This Means for Businesses
Many commercial tenants navigate the uncertainty caused by ‘upwards only’ rent review clauses by negotiating short leases to avoid rent reviews, whilst others negotiate a right to break (terminate) the lease upon review. Reforming rent review clauses would mean that such workarounds would no longer be as important for commercial tenants, however, lease negotiations could also become more complex as a result and it is yet to be seen what effect this proposal might have on initial rents and the incentives commonly offered to tenants at present.
How We Can Help
The proposal to place a ban on upwards only rent reviews marks a significant shift in the commercial leasing landscape. If passed, it could offer greater security for tenants by bringing rents in line with real market conditions but could also introduce new complexities for both sides.
At Forbes Solicitors, we know that securing good commercial premises on good commercial terms is often critical for business success. Our team of experts in Commercial Property are artfully skilled in navigating the complexities associated with commercial leases, and are relied upon by household names and small businesses alike, for their discretion, efficiency and ability to achieve great results for clients. Give us a call on 0800 689 3206 or make an enquiry.
For further information please contact Helen Marsh