The UK Government plans to ban upwards-only rent review clauses (UORRs) in commercial leases, arguing they keep rents artificially high, harm small businesses and contribute to struggling high streets. UORRs prevent rent from decreasing, offering landlords income security but creating affordability issues for tenants, particularly during downturns.
The proposed legislation bans UORRs in all new commercial leases across England and Wales under Part II of the Landlord and Tenant Act 1954, yet will not affect existing leases. It extends to offices, retail, industrial, leisure and healthcare premises to render any UORRs unenforceable, ensuring rent reviews can move both up and down rather than only rising or guaranteeing minimum increases. While specified fixed or stepped increases agreed at the outset will remain valid, renewal leases with security of tenure also fall within the scope of the prohibition. Moreover, the Bill includes strong anti-avoidance provisions to prevent parties contracting out of the rules, though ministers may later create limited exceptions through secondary legislation, such as caps or collars.
The debate on whether to implement such a ban dates back to the 1990s and resurfaced in 2001 and 2021, yet has gained new momentum today, with a government bill making reform more likely. The shift is intended to help small businesses by removing landlords’ guaranteed rental growth, therefore reshaping landlord–tenant dynamics and encouraging fairer rents by supporting companies’ right to negotiate cheaper prices. Yet many high street retail premises occupy short leases without rent reviews, meaning they may see little advantage. This has given rise to concerns, as opponents warn that the ban could disrupt established leasing practices, causing landlords to respond with higher initial costs or favour short-term leases to recalculate rents based on prevailing market conditions at each renewal, undermining affordability and market certainty. For investors and lenders, the loss of guaranteed rental growth also threatens property valuations, funding structures and long-term confidence, potentially discouraging investment.
However, if implemented, the legislation would not only impact landlords, tenants and investors, but also law firms. While it may marginally affect their own leasing costs as occupiers, it is more likely to drive increased demand for advisory work on drafting, negotiating and litigating commercial leases under the new regime.
Written by Jemima Lines
Sources: Financial Times, Royal Institution of Chartered Surveyors, Greenberg Traurig Law, Norton Rose Fullbright, Travers Smith, Clyde & Co, Farrer & Co, Linklaters.
