The UK’s plans to ban upwards-only rent reviews: implications for leaseholders

On 10 July 2025 the Government took the property world by surprise with the proposal to ban upwards only rent reviews (UORR).

The landmark piece of legislation proposed is designed to allow people to take back control of their regions, rebalance prosperity and deliver economic growth. Included at the end of the Bill is a proposal to ban the long established and recognised clauses in leases providing that rent on review can only ever be increased, and never decreased.

The hope is that it will keep small businesses running, boost local economies and job opportunities and reduce the number of high street vacancies. But will this be the case? Will it have other knock-on effects? Will this affect the investment market?

Under the proposals rent review clauses must provide for both upwards and downwards changes, such that they match the market in the local area and achieve a fair rent for the property at the relevant time.

What do we know now?

There has been little major developments since the bold announcement last year. It was expected that there would be progress by early 2026 with the report stage in the House of Lords. The Bill is currently at Committee Stage in the House of Lords and more significant updates are expected soon.

The Committee Stage in the House of Commons followed the initial wording and the proposed wording was amended to address a few anomalies that were highlighted in the original drafting and close off any supposed loopholes.

Challenges for new lease negotiations

Landlords and tenants negotiating new leases will face a significantly altered landscape as the government moves to implement this ban. With upwards-only reviews becoming a thing of the past, landlords may need to consider alternative strategies to secure their investments while attracting new tenants. It could also increase the complexity of negotiations. Landlords might push for shorter lease terms or other review methods, such as RPI or CPI linked reviews (which will invariably trend upwards), or propose stepped rent increases to ensure that their investment is secure. The alternative is that the market will shift even more towards short term leases with no rent reviews. If these leases are then excluded from the right to renew then this may create issues for those tenants who do not take the correct advice.

For businesses seeking to secure premises, the potential for lower rents during economic downturns is undeniably beneficial. However, tenants must also weigh this against the potential challenges of entering into lease agreements that could be more volatile, especially in uncertain economic times. The balance of risk may shift, requiring a reassessment of how businesses view commercial leasing.

Thoughts of the market

As might be expected, the market has been divided. Tenants, operators and their representatives have been pushing for this for many years. Clearly this will be a huge advantage for them as it will ensure that rents fairly reflect the market conditions at the time.

UKHospitality has long been lobbying for this change. Kate Nicholls, Chair of UKHospitality, commented in July: “Unjust upward-only rent review clauses have been hitting hospitality businesses for decades, making rents unnecessarily expensive. They have been punishing the high street and constraining investment, and it’s the right move for the Government to ban them completely.”

The investment market is on the other side of the fence.

Melanie Leech, Chief Executive of the British Property Federation, has said of the ban: “Interference in long-established commercial leasing arrangements without any prior consultation or warning has no place in the Devolution Bill.”

She has argued that the ban risks denting investor confidence and could make the UK a less attractive place to invest compared to other international markets, with returns becoming less predictable.

Tom Pope of Lightlease comments: “UORRs created a distorted playing field, where over-rented units lingered long after their commercial logic had expired. They fuelled a kind of rental inertia — pushing landlords to keep units vacant rather than accept lower rents that might reset a valuation. I have been involved in countless situations with clients unable to shift a property because of an outrageously high rent that did not reflect the market, sometimes over-rented by more than 100%.  That sort of behaviour protects a spreadsheet, but not a street”.

Revolution?

The discussion around banning UORR has long been around in the UK. Various lobby groups have pushed for this, and Tony Blair’s government did consider it.

Ireland introduced similar legislation, and the same arguments were levelled. The Irish example, on the face of it, appears to have been working well since. Whilst there was an immediate short-term impact on the market, it has adjusted since and according to many there has not been any long-term significant impact.

It was noted that those properties with long term UORR leases actually demanded a premium within the market, but this was obviously only temporary. There was an increase in inflation linked and turnover leases in the retail sector.

What does the future hold?

The ban on UORRs represents a significant change in the commercial leasing landscape. Leaseholders may benefit during market downturns, but the willingness of landlords to adapt remains uncertain. For those negotiating new leases, the absence of upwards-only rent reviews creates a new dynamic, necessitating a re-evaluation of how businesses negotiate terms in commercial leases.

The systemic shift away from this long-standing practice raises concerns about tenant security (such as shorter leases and bigger rent deposits) as landlord confidence is hit. As the Government moves forward with implementing this ban, all stakeholders in the property market must navigate the complexities of leasing agreements in a newly regulated environment. The balance of power is likely to shift, with potential implications for tenant relations, rental income security, and the overall health of the commercial property market in the UK. It will be imperative for businesses to remain vigilant and adaptable as they engage in this evolving landscape. If the situation in Ireland is anything to go by, then stability is not far around the corner.

At Thomson Snell & Passmore, we have a dedicated, well established Portfolio Asset Management team advising both landlords and tenants. We will be monitoring developments with the new legislation closely over the coming months and are well placed to provide advice.

An earlier version of this article appeared in Caterer, Licensee and Hotelier Magazine.