Sudden move to ban upwards only commercial rent reviews
On 10 July 2025, without any prior warning, draft legislation was introduced in Parliament to ban a mainstay of the market, upwards only rent reviews (“UORR”) in commercial leases. The legislation is Schedule 31 to the English Devolution and Community Empowerment Bill (“the Bill”). It is currently at 2nd reading in the House of Commons and it applies to England and Wales. The changes will not apply retrospectively. There will be different implications for different sectors of the real estate market and the drafting will likely go through significant revision as it passes through Parliament.
Our initial assessment of some of the potential impacts generally on UORR is below. The table summarises those arrangements that we consider will be banned by the Bill and those that should be unaffected. Of course, things are likely to change as the Bill progresses.
Banned
| Not banned | |
| 1. | UORR provisions in new leases | Pre-ban leases with UORR provisions, or new leases with UORR provisions entered into pursuant to pre-ban agreements for lease or options
Leases with fixed rental uplifts or any other formulaic rental uplifts (such as stepped rents) so that the new rent can be calculated at the outset |
| 2. | Index-linked rent reviews with a collar/floor (this may extend to an index-linked service charge, since service charge is usually a rent) | Index-linked rent reviews without a collar/floor.
Caps are unaffected by the ban |
| 3. | Turnover leases with a minimum base rent | Turnover leases without a base rent |
| 4. | Geared leases with a minimum base rent (but query whether ban applies if the tenant is not occupying for the purposes of a business) | Geared leases without a base rent
UORR provisions in management agreements, licences and other arrangements that are not a tenancy
|
| 5. | UORR provisions in statutory or voluntary renewals of pre-ban leases | UORR provisions in pre-ban reversionary leases or in leases granted pursuant to pre-ban option to renew |
6.
| For existing tenants, agreements for lease or put options with “day-one” UORR designed to circumvent the effect of the ban
| For new tenants, agreements for lease or put options with “day-one” UORR. This is not banned because it is a new tenant
Tenant’s options to renew with “day-one” UORR (even if option is contained in the new lease). This is not banned because the tenant is not required to enter into the renewal lease.
Reversionary leases with a “day-one” UORR - a “day-one” UORR is not caught here because the rent is established on day one and does not effect a “change during the term of the tenancy” |
