One ban to bind them all: End of the road for upwards-only rent reviews

Leases of commercial property in England & Wales often contain upwards-only rent review clauses. Currently, where rent is reviewed based on external metrics such as inflation or market prices, the rent can go up in line with that metric, or stay the same, but cannot go down. Draft legislation banning these provisions was announced earlier in the summer and on 20 August 2025, a briefing update was published by the UK Parliament.

The Proposal

A new provision is intended to be inserted at section 54A of the Landlord and Tenant Act 1954 (LTA 1954) prohibiting upward-only terms:

• In rent reviews that happen during tenancies; and

• In arrangements under which a landlord can require a tenant to take a new tenancy after the conclusion of their initial tenancy – a “put option”.

A rent review provision which adjusts rent by inflation will not be within the scope of the new law. However, a rent review provision which increases rent by inflation but does not decrease rent if inflation turns negative, will fall within its scope.

Relevant Tenancies

The prohibition is intended to apply to all business tenancies protected by the LTA 1954 and old pub tenancies. Tenancies excluded from the ban are: agricultural tenancies, farm business tenancies, mining tenancies, tenancies granted by reason that the tenant was the holder of an office and so the tenancy exists only so long as the tenant holds that office, tenancies under six months and some tenancies necessary for electronic communications providers.

Other Changes

A business tenant will also be entitled to trigger a rent review; and, to operate the rent review procedure without its landlord’s co-operation. Any provision requiring a tenant to cover a shortfall had an upward-only rent review term been in place is to be banned.

By its own admission, the UK Government says its move to ban these terms came as a surprise to industry. The policy had not been included in the Labour Party’s 2024 general election manifesto, nor had it been trailed prior to publication of the draft legislation. Following publication, the RICS highlighted the need for certainty for business confidence; and the BPF said the changes risk investor confidence at a time when development viability is already seriously challenged.

If you are a commercial landlord or investor dealing with rent reviews or you have any concerns or questions about the impact changes to the legislation may have on you or your business, please do not hesitate to get in touch with our Real Estate Disputes team or your usual Brodies contact.