On 10 July 2025, the government surprised the nation with the proposal for the ban of upwards-only rent reviews. This was included within a Bill[1] introduced to Parliament. The Bill proposes the addition of a new schedule 7A to the Landlord and Tenant Act 1954 and specifically targets commercial leases.
This raises an important question: what does this mean for commercial landlords and their tenants?
What is an upwards only rent review?
An upwards-only rent review clause ensures that rent will either stay the same or increase during review periods, even when market conditions would otherwise justify a reduction. Landlords value the income stability this provides, while tenants often feel exposed to unsustainable costs if the market were to weaken.
Schedule 7A – what does it propose to do?
This schedule proposes the prohibition of upwards-only rent reviews in new and renewal commercial leases. Crucially, this would not affect existing leases. Furthermore, the proposed ban would not prohibit index linked rent reviews, provided the indexation mechanism permits the resulting rent to fall below the current passing rent.
What would schedule 7A apply to?
Currently, Schedule 7A would apply solely to commercial tenancies; leases for premises which are occupied by a tenant for the purpose of their business. Residential properties would not fall under this schedule.
Importantly, the legislation will not operate retrospectively. Existing leases will continue under their current terms. However, landlords must comply with the new rules when renewing or granting leases after the prohibition takes effect.
The Bill includes robust anti-avoidance provisions, meaning landlords cannot contract out of these restrictions or circumvent them through creative drafting.
What are the implications of the ban?
The desired outcome is to protect commercial tenants from inflated rents in situations where the market is low or has fallen. For businesses operating within narrow margins, particularly in sectors such as high street retail, this provides valuable comfort during periods of economic decline. This proposal for commercial rents to mirror real time market conditions shows a significant move towards reforming commercial lease arrangements.
However, this has caused concern for landlords as it introduces uncertainty in financial planning and may impact projected property valuations. Such a ban could make commercial property a less attractive asset.
Concern also centres around the unintended consequences of this proposal. It is possible that landlords will respond to this ban by imposing higher starting rents to compensate for loss of upward-only protection. On the other hand, landlords may also lean towards favouring shorter lease terms, allowing more frequent opportunities to increase rents on the grant of new leases. These potential responses from landlord could undermine the objective of the Bill. Due to this, rather than gaining protection from inflated rates, tenants seeking affordable, long-term commercial premises may find such arrangements increasingly difficult to secure.
Conclusion
The overall impact of this proposal is yet to be determined and will rely heavily on how the market adapts. If implemented, the ban of upwards only rent reviews could foster more balanced tenancies or could lead to increasingly unfair lease terms. As the Bill progresses through Parliament, both landlords and tenants will need to pay careful attention to understand how this significant reform will reshape commercial lease arrangements.
Get in touch
If you would like assistance with commercial leases, sales, or purchases, please contact Tamsin Mann (Partner) or Annalisa Marsay (Trainee Solicitor). You can reach Tamsin by email at tamsin.mann@murrellslaw.com. You can contact Annalisa by email at annalisa.marsay@murrellslaw.com.
[1] The English Devolution and Community Empowerment Bill as introduced on 10 July 2025, accessible at English Devolution and Community Empowerment Bill – Parliamentary Bills – UK Parliament
