The English Devolution and Community Empowerment Bill was introduced by the Government on 10th July 2025 and, amongst a number of provisions not relevant to the majority of commercial property practitioners, it contains a provision to prohibit upwards only rent reviews in commercial leases.
According to the Ministry of Housing, Communities and Local Government, the driver behind the proposed provision is that Upwards only Rent Reviews (UORR’s) can make rents unaffordable for tenants, artificially inflating rents and pricing small businesses out of town centres.
Which leases could be affected?
Despite the reference to “town centres” the proposals wouldn’t just affect retail leases, they would apply to all new commercial leases (as defined in the Landlord and Tenant Act 1954) being those premises occupied for the purposes of a business. This would therefore catch not only retail but warehousing, manufacturing and leisure premises too. It’s important to note that even if you contract out of the LTA 54, these provisions would still apply.
Somewhat worryingly, this would not affect head leases where the Landlord is not in occupation for business purposes, meaning there could be a position where a head landlord has a lease containing an UORR but the commercial occupying subtenant would be bound by the same obligation.
How would the proposed ban operate?
The ban would apply to ensure that any lease which refers to an upwards only review relating to the “reference amount” (be that the open market rent review, by reference to RPI/CPI or turnover rents) then if that reference amount falls then so to would the rent at review. In brief terms, at review your rent could go up or down (even if that lower level falls below the initial rent set out in the lease particulars).
Tat this stage, the only exception would be fixed, stepped rents pre-agreed at the outset of the lease. However there is a provision allowing for regulations to be made creating exceptions, but at this date there is no further information on what those might be.
The provisions would not apply retrospectively to leases already granted, however any renewal of those leases would be subject to the provisions (under the 54 Act or otherwise).
Can you opt out of these provisions?
No. The legislation also contains a number of anti-avoidance provisions.
What’s more, the legislation would allow tenants to trigger rent reviews even if the lease states that only Landlord’s can initiate the process.
When will this take effect?
This is very much unknown at this stage given the Bill will need to make its way through parliament. It’s anticipated that there will be significant lobbying from a number of parties (not least those in the commercial property sector to whom the provisions of the Bill are somewhat of a surprise, given there was no consultation in advance of its issue). The final terms of the Bill and it’s implementation may change throughout that process (or even fall away) so watch this space!
Contact Us
You can contact Rebecca Cleal for assistance on any of these issues by e-mailing Rebecca at rcleal@prettys.co.uk
You can also view our other commercial property services here.
