In July 2025, the UK government introduced a significant proposal under the English Devolution and Community Empowerment Bill to ban upwards-only rent review clauses in new commercial leases in England and Wales. This move marks a major shift in commercial lease agreements, aiming to create a more balanced and fair environment for tenants, particularly small businesses.

Key Changes to Commercial Lease Agreements

1. Ban on Upwards-Only Rent Reviews

The proposed legislation seeks to prohibit rent review clauses that only allow increases (upwards-only rent reviews) or guarantee a minimum increase (minimum uplift mechanisms) in new commercial leases. This change applies to leases under Part II of the Landlord and Tenant Act 1954, including leases within or contracted out of the 1954 Act’s security of tenure provisions.

2. Exceptions to the Ban

The ban would not affect existing leases and would only apply to new leases and renewals granted after the legislation comes into effect. Additionally, the ban does not apply to fixed or stepped rent increases specified at the start of the lease or those that allow rent to be reviewed both upwards and downwards.

3. Impact on Landlords and Investors

For landlords and investors, this change removes a mechanism that previously provided a degree of protection against market downturns, potentially affecting income stability and long-term financial planning. Some landlords may consider favouring shorter-term leases or incorporating fixed increases at traditional review intervals to maintain rent levels.

Implications for Tenants

For tenants, particularly small businesses, this change offers greater certainty and fairness in lease agreements. The removal of upwards-only rent reviews means that rent can decrease in line with market conditions, potentially reducing operational costs during economic downturns.

The proposed ban on upwards-only rent reviews represents a significant shift in UK commercial lease law, aiming to create a more balanced and fair environment for tenants. Both landlords and tenants should be aware of these changes and consider their implications when entering into new lease agreements.

If you need assistance understanding how these changes affect your situation or require guidance on negotiating commercial lease terms, Falcon Solicitors are here to help. Our experienced commercial property team offers clear, practical advice tailored to your needs. Contact us at +44 1753 577071 or email admin@falconsolicitors.com to schedule a consultation.