A draft of the English Devolution and Community Empowerment Bill, published on 10 July 2025, proposes a ban on Upwards-Only Rent Review clauses (UORR) in all new and renewed commercial leases. The inclusion of this provision - within a bill focused on regional governance - has generated discussion within the commercial property sector, given its potential impact on established landlord-tenant arrangements.

UORR clauses are long-established features of commercial leases in England and Wales, designed to provide income stability and protect investment returns for landlords. These provisions allow for periodic rent adjustments - typically at five-year intervals - by reference to the open market rental value at the review date. Under such clauses, the rent may increase or remain unchanged but cannot be reduced, irrespective of any decline in market rental values.

Application and scope of the provision ban

The proposed prohibition on UORR clauses would apply to new and renewed commercial leases granted to tenants in business occupation within the meaning of Part II of the Landlord and Tenant Act 1954. The ban, if passed, would apply to leases where the tenant is operating a business, including not-for-profit organisations such as sports clubs, and would cover all business leases, excluding agricultural or mining leases. The ban would not affect existing leases granted before the law comes into force.

The ban would cover traditional open market rent reviews, rent reviews tied to inflation, turnover-linked rents, and any rent review where the new rent is unknown at the time the lease is signed. Importantly, stepped rents or fixed rent increases would not be impacted, as these are considered ascertainable at the time of the lease agreement. Rent review mechanisms would continue to be permitted where they are:

1. based on open market rent, subject to a cap at the prevailing market level;
2. where they are index-linked, provided that rents may move both upwards and downwards.

To ensure compliance, the Bill incorporates a series of anti-avoidance provisions, including a right for tenants to initiate rent reviews where landlords fail to do so, and the invalidation of any arrangement designed to offset rent reductions through compensatory payments.

The government’s rationale

The proposed ban on UORR clauses in the English Devolution and Community Empowerment Bill forms part of the government’s wider strategy, expressed in the English Devolution White Paper (December 2024), aimed at empowering local communities and supporting small businesses. The government’s objective is to remove a “toxic mechanism” that prevents rent decreases, despite market realities, artificially inflating commercial rents and ultimately pricing out small businesses from town centres. As noted by Andrew Goodacre, Chief Executive of the British Independent Retailers Association, at a Committee session in September, such clauses “shield landlords from market fluctuations and expose tenants to ever-increasing costs with no power to change.”

The reform is therefore intended to promote balance between landlords and tenants, and, by ensuring that commercial rents more accurately reflect prevailing market conditions, enhance local economic resilience. The position of the legislators is that more sensible and mature conversation between landlords and commercial tenants will allow greater scope for negotiation.

Implications for key stakeholders

Tenants are expected to benefit from the proposed ban on UORR clauses, as it would allow rents to adjust downward in response to market conditions or periods of low inflation, thereby easing financial pressures during economic downturns. By making rents more market-responsive, the reform is anticipated to help revitalise high streets through lower vacancy rates and improved business sustainability. Tenants will also gain a stronger negotiating position. However, they should be prepared for more complex negotiations, as landlords may seek to offset the removal of UORR clauses by setting higher initial rents or incorporating stepped rent structures to mitigate perceived risks.

Landlords are likely to face several challenges arising from the proposed ban on UORR clauses. The removal of guaranteed upward-only rent increases may reduce income stability and overall investment yields, introducing greater uncertainty into long-term revenue projections. Lease negotiations are expected to become more complex, with landlords potentially seeking alternative mechanisms such as stepped rents, index-linked reviews with fixed parameters, or shorter lease terms to manage risk. The transition may also trigger an increase in disputes over lease renewals, transitional provisions, and side agreements. Consequently, landlords may need to reassess their investment strategies and focus on assets or sectors less exposed to the impact of the ban.

Investors have voiced concerns that the proposed ban could introduce greater uncertainty into the commercial property market, reducing the predictability of rental income and, in turn, property valuations. This may make investment less attractive, particularly for institutional investors and pension funds that depend on stable, inflation-linked returns, and could dampen appetite for speculative developments as lenders tighten financing terms or require additional security.

What's next

The Bill is still at an early stage of the legislative process, currently undergoing Committee sessions following its first reading in the House. Several further sessions are scheduled for October, and amendments to the Bill appear highly likely. Industry bodies are expected to lobby for changes, particularly concerning the scope of the proposed ban, with the British Property Federation (BPF) already voicing concerns over the lack of consultation and the potential disruption to long-established commercial leasing practices.

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