The End of an Era? Part 1: Deconstructing the Ban on Upward-Only Rent Reviews

The UK's commercial real estate sector is facing a significant potential regulatory shift. A government proposal to abolish upward-only rent review (UORR) clauses in new commercial leases could dismantle a practice that has underpinned property investment for decades.

Announced on 10 July 2025, as part of the English Devolution and Community Empowerment Bill, this intervention aims to rebalance the landlord-tenant relationship, particularly in the struggling retail sector.

This first part of our series deconstructs the legislative machinery of the ban, examines the government's rationale, and outlines the political and industrial battleground on which its final form may be decided.

The Legislative Machinery: the Upward-only rent review ban explained

To comprehend the proposal's potential impact, a forensic look at its mechanics, as outlined in Clause 71 and Schedule 31 of the Bill, is essential.

The legislation is designed to amend the foundational Landlord and Tenant Act 1954, inserting new provisions that could fundamentally alter how future rents are determined.

• Core Mechanism: The central tenet of the proposal is the prohibition of any rent review clause in a new commercial lease that does not permit the rent to be revised downwards as well as upwards. The long-established UORR clause, which dictates that at a review point the rent can only increase or stay the same, would be rendered unenforceable in new agreements.

• Scope and Application: The proposed ban is forward-looking. It would apply only to new commercial leases entered into after the legislation comes into force. Existing leases would remain unaffected for their current term. However, in a critical and far-reaching detail, the ban would also apply to all renewal leases, whether statutory or agreed by consent. This suggests its impact could gradually but inexorably ripple through the entire stock of commercial property.

• Exclusions and Nuances: The legislation provides for specific exclusions. Leases that feature "stepped" rents, where increases are pre-agreed and fixed at the time the lease is granted, would not be affected. Furthermore, the Bill contains a subtle but significant rebalancing of power, granting tenants the right to unilaterally trigger a rent review, a right often previously reserved for the landlord.

The Government's Rationale: A Policy Mismatch?

The government has presented the UORR ban as a crucial intervention to support small businesses and revitalise the nation's ailing high streets.

The official rationale posits that UORR clauses "pit landlords against businesses," leading to unaffordable rents that force shops to close.

However, when this rationale is juxtaposed with the on-the-ground realities of urban regeneration, a potential policy mismatch becomes apparent.

Expert panels have repeatedly cited development viability as the single greatest obstacle to regeneration, pointing to affordability constraints, restrictive planning processes, and fragmented funding pots. Furthermore, they have flagged critical skills shortages and public procurement inefficiencies as major impediments to delivery.

The success of regeneration in cities like Manchester has been attributed not to leasing models but to decades of consistent political leadership and cohesive public-private partnerships. The government’s diagnosis that UORR clauses are a primary cause of high street decline could be seen as overly simplistic.

The policy acts as a targeted strike against a single symptom (rental inflexibility) while potentially failing to address the underlying pathology of regeneration, which is rooted in fundamental economic viability and the capacity to deliver new development.

The Legislative Gauntlet

The Bill is at a nascent stage, awaiting its Second Reading in the House of Commons.

This early phase provides a critical window for the property sector to mobilise. It is widely anticipated that industry bodies will engage in intensive lobbying efforts, arguing the ban could trigger unintended consequences that might ultimately harm the very tenants the government seeks to protect.

A key focus will likely be the broad discretionary powers granted to the Secretary of State to make exceptions, a clause that represents both a source of uncertainty and a strategic opportunity for industry stakeholders to carve out specific exemptions.

In our next post, we explore the potential consequences of the upward-only rent review ban.