A significant reform is on the way for commercial landlords across England and Wales, as the government prepares to outlaw upward-only rent reviews in new lease agreements. This move, part of the proposed English Devolution and Community Empowerment Bill, could reshape how rents are negotiated and reviewed in the commercial property sector.

What's Changing?

If the proposals are passed into law, landlords will no longer be allowed to include clauses in new contracts that only allow rent to increase commonly known as "upward-only rent reviews." Instead, future leases will need to reflect fairer and more flexible review mechanisms.

Under the new framework, landlords can still use a range of rental structures, such as:

• Fixed or stepped rents   where rent changes are pre-agreed and increase at set intervals

• Index-linked or turnover-based rents   tying rent to inflation or tenant revenue

• Market rent reviews   allowing rents to adjust both up and down based on market conditions

Existing leases with upward-only clauses will not be affected and will continue until the end of their current term.

Reactions from the Property Sector

The proposed changes have sparked concern among landlords, investors, and property finance professionals. Many argue that upward-only clauses have historically offered security for long-term investments particularly those made by pension and insurance funds in commercial developments.

Industry body Propertymark has acknowledged these concerns, emphasising the importance of maintaining investor confidence and ensuring that any policy shift is carefully managed to avoid disrupting future development and the overall supply of commercial property.

Why the Change?

The UK Government sees the reform as a step towards revitalising town centres and supporting local economies. By making commercial rent agreements more flexible and market-responsive, the aim is to reduce long-term vacancies and create a more attractive environment for businesses to return to high streets.

While a specific timeline has not been confirmed, the proposals are expected to be debated in Parliament later this year. If passed, they could mark a major turning point for how commercial property agreements are structured going forward.

What Landlords Should Do Now

Although the legislation is still in development, landlords and commercial property professionals should begin reviewing their leasing strategies and prepare for potential changes. Open communication with tenants, legal advisors, and financial partners will be key to navigating the transition smoothly.