Read more about: Central Government, Latest news,
16 July 2025
Recent proposed reforms in England and Wales look to ban upward‑only rent review clauses (“UORR clauses”) in new commercial leases.
To understand what these new Government proposals may mean for you and your organisation, we have explored them in greater depth.
The English Devolution and Community Empowerment Bill (the “Bill”) proposes that UORR clauses – a common feature in many commercial leases – would be prohibited in new leases, though existing ones will remain valid.
The ban would only apply to business tenancies and would not be retrospective (i.e. it would not apply to existing leases, but it will apply to lease renewals).
As a result of the ban, landlords would have to choose between:
The Government has framed the Bill as a means to prevent small businesses from being locked into unpredictable inflated rents over the course of their tenure.
The Bill is also pitched to revitalise high‑streets and prevent properties from remaining vacant due to exorbitant rent costs.
The proposed change is likely to put tenants in a stronger position with greater negotiating leverage and statutory protection.
However, landlords may potentially seek to increase the starting rent to compensate for the loss of any upward value increases which they would have ordinarily benefitted from on review.
Landlords with investment properties are likely to need to re‑assess their rent strategies. The potential shift from a degree of income certainty with UORR clauses to a rent which is either fixed or up/down may result in their financial modelling becoming more uncertain, investment becoming riskier and potentially reduce willingness to invest in certain property classes.
The use of a rent cap and collar may provide a means of mitigating against any volatile market drop and, therefore, provide greater certainty of rent.
If the Bill becomes law, there may be a shift towards stepped rent models or turnover‑based approaches to compensate for removed upward‑only security.
The precise detail of the statute will be crucial, and it remains to be seen whether the government intends to legislate any further than is currently proposed.
Leases governed by the new rules will require updated review clauses, reflecting either fixed rent periods, market-adjusted open reviews or perhaps more creative turnover/stepped rents.
Clear drafting of any rent agreement will be crucial in this regard, to ensure enforceability and certainty.
The Bill has only had its first reading in Parliament and is therefore at a very early stage of its legislative journey, however, the potential ramifications for the property industry could be far reaching and significant.
The Real Estate team at Sharpe Pritchard will be monitoring the progress of the Bill and will publish significant updates.
If you would like to discuss how the proposals may impact you or your business please contact James Mallery-Nelson (jnelson@sharpepritchard.co.uk) on 0207 405 4600.
This article is for general awareness only and does not constitute legal or professional advice. Law and guidance is continually being updated and the law may have changed since this page was first published. If you would like further advice and assistance in relation to any issues raised, please contact us today by telephone or email.
