Upward-only rent reviews will be outlawed in new leases across England and Wales under the English Devolution and Community Empowerment Bill. Concerns have been raised by the sector about how this move could affect property values and investor confidence. Plus, a shift of this magnitude requires careful implementation to prevent unintended consequences for future development and commercial supply.
Linking rent reviews to inflation has traditionally enabled insurance and pension funds to invest in major property developments by offering stable, predictable returns, and Propertymark recognises the concerns raised by landlords, lenders, and investors.
What could change?
Under the proposals, landlords will be banned from adding increase-only rent review clauses to new contracts. However, they will be able to offer
- Fixed or stepped rents
- Index-linked or turnover-based rents
- Market rent reviews, if they reflect both upward and downward movements
Existing leases with upwards-only clauses would remain valid until the end of their term.
The UK Government believes the change will boost local economies and help end the blight of vacant high street shops. A timeline for implementation is not yet confirmed, but it is expected to be debated in Parliament later this year.
Responding to the Department for Levelling Up, Housing and Communities (DLUHC) consultation on High Street Rental Auctions (HSRA), Propertymark states empty properties can become magnets for anti-social behaviour and vandalism, impact a location’s economic performance as well as impact positive footfall risking the viability of other businesses nearby resulting in threats to job opportunities.
Do rent reviews really need to be reworked in this scenario?
In the retail sector, traditional rent structures have given way to more flexible agreements, such as turnover-based rents, which align costs with business performance.
Mechanisms like CVAs and restructuring plans have offered tenants greater flexibility when rents become unsustainable. However, the high number of vacant retail units points to deeper market challenges that extend beyond concerns over rent review practices.
What concerns are being raised?
Landlords and property investors, including pension funds and major commercial real estate bodies, have warned that scrapping upward-only reviews could create uncertainty around long-term income and affect borrowing, development funding, and portfolio value. Some say it may reduce the appetite for investing in retail or commercial stock altogether. This could, in part, exacerbate the collapse of the high street.
Changes to renewal terms also under consideration
Separate from the proposals for changes to rent reviews, the Law Commission is undertaking a review of the Landlord and Tenant Act 1954, a central piece of legislation for the commercial leasehold market in England and Wales.
In June 2025, the Commission set out its initial recommendation that the model of security of tenure should remain in place and that the existing mechanism for “contracting out” of renewal rights should be retained. However, it intends to consult further on raising the threshold for excluding short-term tenancies from the Act from six months to two years, which could remove more short-term arrangements from the Act’s protections.
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