A turning point for commercial leasing: reforming rent reviews in England and Wales

Upwards only rent reviews have long been a fixture in commercial leases across England and Wales. Typically occurring every five years, reviews either maintain the existing rent level or increase it. Rent may be adjusted in line with market rates or indexation, but the direction is always the same: up or unchanged. There's little to excite, save for the odd mismatch in hypothetical term, longer review period, time made of the essence or a linked break right.

Legislative shake-up

On 10 July 2025, the English Devolution and Community Empowerment Bill (Bill) was introduced to Parliament. Schedule 31 of the Bill proposes amendments to the Landlord and Tenant Act 1954 (the "1954 Act") which, if enacted as drafted, will prohibit upwards only rent reviews for new commercial leases, including renewals, resurrecting disputed rent reviews from early retirement.

Despite the title suggesting a focus on England, these proposals will affect England and Wales. Once in force, an upwards only rent review in a new commercial lease will be unenforceable. Instead, the rent will be reviewed using the method in the lease, but the outcome could go up or down.

Reviving the High Street

The ban is driven by a desire to encourage small businesses back to the High Street. The concern is that artificially inflated (or even static rents in a declining market) discourage investment and make property unaffordable, so contributing to the decline of High Streets.

The proposals follow the introduction of the mechanism in the Levelling-up and Regeneration Act 2023 which empowers local authorities to auction privately owned, persistently vacant High Street premises. Importantly, these new proposals extend beyond the High Street, applying to all commercial premises where the tenant occupies the space for business purposes under Part II of the 1954 Act.

The government claims that the commercial leasehold sector is not adequately regulating itself, particularly in a market downturn. Irrespective of external forces, rents remain the same or increase even if the market conditions are in decline, causing further financial strain for tenants and costs which are divorced from the wider economic reality. By contrast, Landlords can be argued to enjoy a guaranteed investment income insulated from market volatility, ensuring they can meet their financial obligations to the detriment of their tenants

Existing workarounds

Some tenants already navigate upwards only rent reviews by:

• negotiating shorter leases to avoid rent review during the term, or break rights linked to the rent review. Instead, they aim to push for market rent on expiry. The disadvantage is that, unless the lease has the protection of the 1954 Act, there is no guarantee of lease renewal.

• applying, if they have security of tenure under the 1954 Act, for interim rent at a market rate to ensure their rent is not inflated for the holding over period.

Rebalance or risk

The proposals are not in isolation. The Law Commission is already scrutinising the existing lease renewal process under the 1954 Act to decide if the 1954 Act is fit for purpose. Its interim statement issued in June 2025 backed the existing "contracting-out" model of security of tenure for market stability. Arguably eliminating traditional upwards only rent review provisions, will similarly risk destabilising the commercial leasehold market and erode investor confidence.

While the ban may encourage longer leases, it would limit flexibility in open market negotiations. As the proposals are prospective only, this could lead to a two-tier rental market with tenants of subsisting leases at a disadvantage and, conversely, legacy landlords at an investor advantage on valuation.

Get in touch

As the Bill proceeds through Parliament, its rent review provisions will undoubtedly face scrutiny. The commercial real estate sector – landlords, tenants, and investors alike – should prepare for change. Please get in touch with your Foot Anstey contact or one of our specialist real estate advisors to discuss the potential impact of the potential ban on your business.