As Parliament progresses the English Devolution and Community Empowerment Bill through its committee stages, commercial property landlords and investors face potentially significant changes to how rent reviews operate in business tenancies.

The Government has proposed prohibiting upward-only rent review (UORR) provisions in new commercial leases. While existing leases won’t be affected retrospectively, the changes would apply to lease renewals and new leases once enacted.

Ian Liddle, Joint Managing Partner and Commercial Property Partner at Farleys, recently provided expert analysis on these proposals to commercial property consultants Wildbrook, examining what the changes could mean for the sector.

Understanding the Proposed Changes

An upward-only rent review typically states that rent will be reviewed to the higher of the passing rent or the market rent. In practice, this means rent can stay the same or increase, but cannot decrease.

The Government maintains that upward-only rent reviews contribute to the decline of town centre retail by creating artificially inflated rents that penalise tenants and lead to vacant premises. However, many in the property industry question whether this broad-brush approach addresses the real issues affecting high streets, such as business rates, parking costs, and enterprise support.

The ban will apply to any rent review mechanism where the rent following a review is uncertain or cannot be determined at the date of grant, potentially ending:

  • Upwards-only open market rent reviews
  • Index-linked rent reviews with a collar or floor that ensure a minimum uplift
  • Turnover-based leases where a minimum base rent is reserved

Market Implications

The changes could reshape the commercial property landscape in several ways:

  • Shorter lease terms – Landlords may prefer three to five-year leases with no rent review, impacting medium to long-term income security and affecting investment values.

  • Negotiation dynamics – Even before becoming law, upward/downward reviews may become a negotiation point, with tenants potentially seeking extended incentives if landlords pursue higher starting rents.

  • Investment strategy shifts – Investors may place higher premiums on long-term occupation by strong covenant tenants, while landlords with shorter-term occupiers will need to be more proactive with renewals and property improvements.

  • Financing considerations – Finance structures that assumed rental growth through upward-only reviews throughout a lease term will need reassessment.
  • Development funding – Forward funding on speculative developments could reduce, as investors typically rely on guaranteed minimum returns. Without upward-only reviews, achieving return forecasts becomes more challenging.

The most immediate consequence will likely be landlords offering shorter lease commitments. Historically, upward-only rent reviews enabled landlords to offer longer-term leases with confidence that rental income would keep pace with inflation and market conditions.

Analysis

Wildbrook approached Ian for his expert opinion on several key questions about the proposed changes. We have summarised Ian’s comments below.

 

Will the Ban Apply Only to Retail, or All Commercial Sectors?

The current drafting applies across all business tenancies, not just retail or high street. It covers all tenancies under Part II of the Landlord & Tenant Act 1954, including both contracted-out and in-standard leases. This means office, retail, logistics, industrial, licensed premises – basically any business lease where rent review clauses like open-market, index-linked, or turnover-based are used. Stepped or fixed rents remain outside the ban.

While the policy was motivated by high street concerns, no carve-out exists for retail-only. Any sector using those mechanisms is impacted.

Are There Ways Around the Proposed Ban?

Landlords will need to adapt, but direct avoidance is limited by anti-avoidance clauses and restrictions.

Permitted structures will include:

  • Fixed or stepped increases (such as 3% annual uplifts)

  • Index-linked reviews (CPI/RPI) that allow for downward movement

  • Turnover-based reviews with potential for rental reduction

  • Caps and collars may be introduced through secondary legislation, though collars set below the starting rent could be prohibited to prevent circumvention

Anti-avoidance measures will render void:

  • Side letters or agreements that top-up downward-reviewed rents

  • Put options and other mechanisms meant to preserve upward-only outcomes

The Bill also empowers tenants to trigger or force rent reviews if landlords delay them, preventing landlords from postponing a rent review in a falling market. So rather than looking at ways around the changes, it is thought that the market will shift towards alternative structures – fixed uplifts, indexation, turnover-based rents – rather than hinge on avoidance.

What Happens to Third-Party Surveyors and Expert Witnesses?

While the ban may reduce open-market rent reviews, it doesn’t completely eliminate the need for expert determination.

Index-linked increases and fixed uplifts generally don’t require expert valuation, so we’ll see fewer triggers for surveyor-led market assessments. However, disagreements over interpretation of clauses, the level of caps and collars, or index application could still lead to arbitration or expert determination.

The role of third-party surveyors as arbitrators or expert witnesses remains relevant in disputes over market rent resets where open-market reviews still occur but are bidirectional, determining ambiguous lease terms, reviewing turnover or index application, and reviewing upward-only rent review clauses in leases completed before the ban’s implementation.

While the volume of open-market reviews may decline, the need for objective third-party oversight will continue, especially in contested outcomes.

What Happens Next?

The Bill is currently undergoing Committee Stage in the House of Lords during January and February 2026, followed by Report Stage, Third Reading, then Royal Assent, likely in mid-2026.

Post-Royal Assent, secondary legislation will define commencement dates, implementation timelines, and any caps and collars exemptions. We expect consultation on details such as regulatory boundaries for index-linked reviews.

Law firms, landlords, and occupiers are already analysing drafting strategies. During 2026, we’re likely to see guidance and lease precedent shifts. The effective implementation date is expected between 2027 and 2028, though that could be adjusted based on secondary regulations.

You can read Wildbrook’s full analysis on their website: What’s next for the rent review?

Need Commercial Property Advice?

Ian Liddle is Joint Managing Partner at Farleys with over 35 years’ experience in commercial property, corporate insolvency, and contract matters. Regularly featured for his work in the Legal 500, Ian heads up Farleys’ commercial team, which he established over 20 years ago. His clients appreciate his pragmatic approach and his ability to provide clear and concise legal advice.

At Farleys, our commercial property team has extensive experience advising landlords, tenants, and investors on all aspects of commercial property transactions and lease negotiations.

If you need advice on how these proposed changes might affect your commercial property portfolio, or you’re negotiating new leases and rent reviews, our team can help.

Contact us on 01254 606 008 or via our online enquiry form.