Banning upward-only rent reviews might play well in a headline. But as policy for the commercial market, it risks being a blunt instrument and the unintended consequences could land on the very high streets it’s meant to help. We spoke to Rupert Collis, Partner and Head of Lease Advisory, to explore his views on why a headline-friendly reform could reshape leasing, valuations and investment across the commercial market
On 10 July 2025, during the second reading of the English Devolution and Community Empowerment Bill, Angela Rayner (Deputy Prime Minister and Secretary of State for Housing, Communities and Local Government) said the Government would ban the unfair practice of upward only rent reviews in new commercial leases.
The awkward questions nobody has answered (yet)
· Where was the consultation with RICS and other market bodies and what evidence base sits behind the proposal?
· Has the Government modelled the valuation impact properly including the knock-on effects for borrowing, investment appetite and local-authority portfolios?
The political intent is easy to understand: protect occupiers and give high streets a fighting chance. The problem is that lease terms don’t exist in isolation. Change the rules on rental growth and you change the way assets are valued, financed and traded across retail, industrial, offices and everything in between.
What the market will do next?
· Commercial leases are negotiated and rent review mechanics are one of the ways landlords and tenants price risk.
· For long-term investors (including pension funds), predictable income supports valuations and underpins borrowing and investment decisions.
· Remove upward-only reviews and you introduce more income volatility so don’t be surprised if pricing, lending terms and incentives shift to compensate.
If landlords can’t rely on the same rent review structure, they will look elsewhere to protect returns. In practical terms, that can mean less generous packages, fewer rent-free periods, smaller capital contributions and tighter fit-out support. That’s most likely to be felt where longer leases still matter and occupiers invest heavily up front, such as offices, hospitality and industrial/distribution.
And once you accept that rents could fall at review, a few wider consequences come into play:
· A higher perceived risk profile for commercial assets.
· More cautious lending terms from banks and other funders.
· A reassessment of yields used in valuations, particularly where income certainty has been a key part of the story.
Comparator: Ireland (2010)
Ireland is the obvious comparator. It banned upward-only rent review clauses in new commercial leases via section 132 of the Land and Conveyancing Law Reform Act 2009 (effective 1 March 2010). From that point, rent reviews in new leases had to allow rents to move up or down with the market. The ban wasn’t retrospective and that helped create a two-tier landscape, where many pre-2010 leases kept more restrictive terms for years.
The wider economic impact in Ireland was often described as nominal, helped by timing near the bottom of the cycle, when rents were rising and downside risk felt lower. Landlords also tweaked drafting to manage risk, including:
· Landlord-only triggers
· Index-linked rent reviews
· Caps and collars
England and Wales sit in a different place. High-street rents have largely rebased after years of downward adjustment (including COVID-related concessions and higher vacancy). That’s why some in the market see this proposal as tackling a problem that was more acute in the past than it is today, while leaving bigger structural issues untouched.
Will high-street tenants actually feel the difference?
· In Ireland in 2010, 10- and 15-year leases on prime commercial property were still common, so rent review mechanics mattered to a lot of deals.
· In England and Wales, many occupiers, especially on the high street, have already moved to shorter terms (often three or five years).
· Rent reviews are far more typical in leases longer than five years, so a ban limited to new leases may not help as many of the tenants it’s designed to protect as the headline suggests.
The likely result: a two-tier lease market
Because the ban would not be retrospective, it’s hard to avoid the conclusion that we’ll end up with a split market:
· Leases granted before the ban could continue to include upward-only provisions for many years (particularly where long terms remain outstanding).
· Those leases could become harder to assign or sublet if incoming tenants price in the restriction and demand a discount.
· Landlords may be less inclined to agree early surrenders if a replacement lease can’t replicate the same rent review structure.
Timing: why this is already affecting negotiations
The ban is not expected to be fully in force until 2027, but parties are already drafting and negotiating with one eye on what’s coming.
· New leases: a lease granted in 2026 may not be immediately caught (depending on commencement), but many landlords and tenants may choose to avoid upward-only wording now to reduce future friction.
· Renewals / retrospective trigger (17 March 2026): if a renewal mechanism (for example, a tenant option) is created on or after 17 March 2026, the ban is intended to apply.
The bigger question: is this the right lever?
· If the investment market simply reprices (with lower yields accepted, as happened in Ireland), the disruption may be less dramatic than some fear, but repricing still matters for development viability, refinancing and transactional activity.
· Expect alternative structures to fill the gap: index-linked reviews, caps and collars, and other mechanisms designed to reinstate certainty, just in a different form.