Proposed abolition of upwards-only rent reviews: the opportunities and setbacks

The government has recently proposed the abolition of upwards-only rent reviews in commercial leases in England and Wales. 

This article explores upwards-only rent reviews, the scope of the government’s proposal to abolish the same in commercial leases and the potential positives and negatives. 

What is an upwards-only rent review clause?

An upwards-only rent review clause is a standard provision in a commercial lease agreement that ensures that rent stays the same or increases when the it is reviewed at the contractual review date. This provides landlords with the guarantee that rent will not decrease regardless of whether the market has declined. 

What is proposed?

The English Devolution and Community Empowerment Bill is the government’s proposed bill to deliver on its manifesto. The government states that the draft legislation ‘is fundamental to deliver the government’s ambitious Plan for Change.’ 

The bill had its first reading in parliament on 10 July 2025 and one of its key reforms is to abolish upwards-only rent review clauses in new and renewed commercial leases defined by reference to the Landlord and Tenant Act 1954. It will not have retrospective effect but will apply to all new commercial tenancies regardless of whether they are contracted out of the 1954 act. The government’s guidance states ‘The ban aims to make commercial leasing fairer for tenants, ensure high street rents are set more efficiently, and stimulate economic growth.’

The abolition of these clauses will mean that the rent for any premises occupied by a tenant for the purposes of their business could decrease, stay the same or increase. It will impact the retail, office and industrial sectors to name but a few. Agricultural tenancies is the only exemption confirmed by the government to date.

Potential positives of the proposal

Should the bill become law, the abolition of upwards-only rent review clauses could:

• Allow tenants opportunities to negotiate lower rent when the market has declined, when previously they would not be able to do so. 
• Support smaller businesses and potentially prevent them from being priced out by inflating commercial rents in town centres etc.
• Deter tenants from paying inflating commercial rents, subsequently deterring higher prices for consumers. 
• Encourage empty buildings to be used and occupied by businesses, allowing rent to be received by the landlord for the use of their empty property.

Potential negatives of the proposal

Just as the potential positives are for the tenant, the following negatives seem to be more of an issue for landlords:

• Upwards-only rent review clauses are standard provisions which currently provide property investors with predictable income streams. Their abolition would make income projection far more difficult.  
• Landlords will likely argue that the abolition will undermine the value of the property and depress the commercial property market generally.
• It could lead to protracted litigation, increased costs and increased court time due to parties potentially being unable to reach agreement.

When will the abolition come into effect?

The first reading of the bill has only just taken place and the date is yet to be scheduled for its second reading. The proposals will be debated and potentially amended during the bill’s passage through parliament and, even if the bill does receive Royal Assent, we don’t yet know whether the final version will include the abolition of upwards-only rent reviews.  

Next steps

We will continue to monitor the position of the bill and provide further thoughts and guidance if necessary. 

If you have any queries or would like to discuss this, please contact the property litigation team.