Questions landlords might have about the ban on upwards only rent reviews proposed

The proposed ban is provided for in Schedule 31 of the English Devolution and Community Empowerment Bill, which was introduced into the UK parliament on 10 July 2025. The government has said a ban is necessary because upwards only rent review clauses lead to artificially high rents during economic downturns resulting in lower profits for tenants and higher prices for consumers. However, the ban is not limited to the retail sector – it will apply to all business leases.

The government’s aim in introducing the ban is to “ensure high street rents are set more efficiently, and stimulate economic growth”. However, many investors, including many pension funds, are concerned about the uncertainty that upwards and downwards rent reviews would bring. They believe it risks stifling investment, adversely impacting returns for pension schemes especially smaller SIPPs where a tenanted property may be the principal source of income.

There have been a number of failed private members bills seeking to ban upwards only rent review in the past. However, this Bill is different because it has government support. While the terms of the Bill could change as it passes through parliament, below we take a look at how the proposals could impact if they are implemented.

Which leases would the ban affect?

It would only apply to leases where there is a tenant occupier “and are so occupied for the purposes of a business carried on by him or for those and other purposes”. ‘A business’ includes not for profit businesses such as sports clubs. The ban would specifically apply to licensed premises, although it wouldn’t extend to agricultural or mining leases.

If the Bill is passed, will the ban apply to existing leases?

No. Rent review clauses in leases granted before the ban come into force will not be affected. Equally, leases granted pursuant to a contract in place before the ban comes into force will not be affected. Where a lease is renewed using the procedure in Part 2 of the Landlord and Tenant Act 1954, that new lease will be subject to the ban.

Would an option to take a lease be a contract for these purposes?

Probably yes. Section 1(3) of the Leasehold Reform (Ground Rent) Act 2022 specifically states, for the purpose of that Act, that a contract excludes options and rights of first refusal. In this Bill where the term contract is not defined, the implication must be that a contract does include a put option, a call option and a right of first refusal.  

Will the ban apply to a rent review in a side agreement?

Yes.

What sort of rent reviews would be subject to the ban?

The ban would apply to

• traditional open market rent reviews;
• rent reviews linked to inflation or other index or multiplier;
• rents linked to turnover,

if the rent payable after the review date is unknown and couldn’t be ascertained when the lease is entered into.

Does that mean a stepped rent would be OK?

Yes, a stepped rent – for example, £50,000 per annum in the first three years and then £75,000 in years four and five – would be unaffected by the ban. Equally, a rent subject to a fixed increase of 3% pa – so, a multiplier of 1.03 – would be unaffected as that is ascertainable when the lease is granted.  

Given that inflation very rarely falls, will landlords switch to index linked rent reviews?

This must be a real possibility and means that rent will be linked to the increase in the value of money rather than the value of property, which seems at odds with the government’s intended aims.

Would an increase based on CPI+1% or similar be OK?

With uncertainty around the future of RPI, we are seeing CPI + 1% as an alternative to RPI being applied in the market. As currently drafted, the ban doesn’t appear to prevent increases linked to such a “manipulated” inflation figure. A figure of, for example, RPI + 4% would make it unlikely that that the rent would ever go down, but it is questionable whether a tenant agree to a rent review on that basis.

For complex properties we have rent review which is to the higher of open market value or increase in RPI. Would that still be OK?

This doesn’t seem to be banned by the Bill provided that if both the open market value and indexed rent are both lower than the passing rent, the rent would go down. If market rents fall but inflations rise, you would be able to take the RPI increase.

Could I have a rent review which, for example, is the higher of RPI and a multiplier of 1.02?

This is essentially an RPI increase subject to a collar of 2%, which is against the spirit of the Bill.

Could I get round the ban by saying that the rent review can only be triggered by the landlord?

No. If a review only takes place if triggered, the tenant would be allowed to trigger the review even if this is not provided for in the lease.

Could I get round the ban by having a five-year lease with a put option requiring the tenant to take a new lease at the higher of the rent passing and the open market rent?

No. The Bill contains specific anti-avoidance provisions so that the initial rent in the new lease would be the market rent even if this were lower than the passing rent.

Could I include a provision so that the rent couldn’t fall by more than say 10%? The rent review would be upwards and downwards but couldn’t go into free fall.

No. This would be covered by the ban.

Could I have an upwards and downwards rent review but with a provision that, if the rent goes down the tenant pays an additional sum equal to the fall in the rent?

No. This avoidance tactic is specifically dealt with in the Bill.

As a landlord, could I charge more for the initial rent on the basis that the rent might go down after the review date?

Yes, if the tenant is prepared to pay this.

As a landlord, should I consider granting five-year leases excluded from the security of tenure provisions of the Landlord and Tenant Act 1954 without a rent review?

The Irish government introduced a similar ban in 2010. According to our Pinsent Masons colleagues in Dublin, there was a short term period of uncertainty whilst the market adjusted to that ban. Granting short term leases during this initial period of instability is definitely something which should be considered. Whilst if the market rent falls you won’t get an uplift in the rent, you would gain the flexibility of negotiating more favourable terms either with the current tenant, who may be reluctant to leave, or a new tenant. 

As a landlord, would my existing leases with an upwards only rent review be more valuable to investors?

Over the years there have been a number of shifts which commentators have suggested would result in a two-tier market. On the whole, this has not come to pass. In Ireland, there was a rush to complete leases before the ban came into place in sectors where the letting market was buoyant. However, the experience there was that the ban has not resulted in a two-tier market and that the market quickly adapted.