The government’s proposed ban on upwards-only rent review (UORR) provisions in business leases is causing yet more turbulence in the property sector. This reform, embedded in the English Devolution and Community Empowerment Bill 2025 (the bill), proposes to “rebalance” the commercial landlord and tenant relationship. On 08 December 2025, the bill passed second reading in the House of Lords and has now reached the Committee stage.
At pre-agreed points in a lease, commonly every 5 years or so, rent is reviewed. An UORR clause means that rent can only increase or stay the same. We look at what this potentially means for commercial landlords and tenants.
What the government says are the pros of banning UORRs:
1. Fairer rent adjustments. UORRs have been criticised for locking tenants into ever-increasing rents, disregarding market conditions. Removing them introduces flexibility, allowing rents to reflect real market trends.
2. Boost for SMEs. Small and medium-sized businesses can struggle with rigid lease terms. This change could ease financial pressures on SME’s, the idea and aim being to foster growth and resilience in local economies and high streets.3.
3. Market responsiveness. By aligning rent reviews with actual market values, the drafters of the bill say this will encourage transparency and competitiveness—potentially revitalising high streets, hospitality venues, and commercial hubs, leading to fewer vacant units.
4. No passing on the costs of artificially high rents. The bill aims to reduce high rents being passed on in higher prices to be borne by consumers.
The cons for the commercial landlord:
1. Investor confidence will be hit. Landlords and institutional investors rely on predictable income streams. Scrapping UORRs may reduce certainty, making commercial property less attractive as an investment class.
2. More complex negotiations. We can expect more disputes over “market rent” definitions. Without the simplicity of UORRs, lease negotiations could become longer and costlier.
3. Potential rent volatility. While flexibility benefits tenants in downturns, it could also mean sharper rent hikes during boom periods—leading to unpredictability for both parties.
4. The effect on underleases. The new legislation is intended to be effective for all new (and renewal) commercial leases in England and Wales, the consequential effect on sub/underleases is still uncertain.
5. Increased costs to all parties. Familiarisation with fundamental changes to new contractual relations will take time to assimilate and understand, with consequential costs.
The Takeaways
Overall, the ban on UORRs signals a shift toward tenant friendly lease terms, but it is not without risk, for example, navigating new negotiation landscapes for both parties will inevitably incur cost.
Historically, rent reviews have been set at around 5 year intervals to avoid parties being entrenched in more regular review negotiations which are time consuming and costly. Might the new legislation mean landlords insist that reviews in new leases happen at shorter intervals, to off-set the risks to the landlord in having to wait a full 5 years before taking advantage of better or varying market conditions?
For landlords, the challenge will be maintaining value in their property assets and those long-lamented words – commercial stability.
The commercial property market looks to be entering a new era and adaptability will be key – as we watch the progress of the bill and scrutiny of the detail of the new proposed provisions at the committee stage.
