When the Government introduced the English Devolution and Community Empowerment Bill on 10 July 2025, most attention focused on its plans for devolution within England. Hidden within its 329 pages, however, Clause 71 and Schedule 31 have generated significant debate across the property sector.

They propose banning upwards-only rent review clauses in commercial leases, a major policy shift that arrived without consultation and with no prior recommendation from the Law Commission. If passed, it would add new provisions to the Landlord and Tenant Act 1954, applying across England and Wales, and could take effect as early as 2027 or 2028.

A Surprising Development

The Law Commission’s recent review of the LTA 1954 did not suggest this reform. It recommended keeping the right to contract out and extending the qualifying period before the Act applies from six months to two years.

This new proposal represents a clear change in direction and could have wide-ranging implications for landlords, tenants, lenders and investors.

Scope and Timing

The ban will apply to business leases governed by the LTA 1954, including those that have been contracted out of security of tenure. In practice, that means any property occupied under a lease, rather than a licence, for business purposes.

It will not apply retrospectively. Only new leases granted after the law takes effect will be affected. Existing leases and agreements for lease made before the start date are excluded, but lease renewals, including statutory renewals under the 1954 Act, are likely to be caught. This could prompt some landlords to complete new lettings before the change takes effect.

How the Ban Would Operate

Under the proposed section 54A, any rent review clause that allows rent to vary during the term, where the amount cannot be calculated at the outset, will be prohibited if it operates on an upwards-only basis.

  • Leases with fixed or stepped increases will still be permitted, as those are predetermined.
  • Reviews based on market rent, inflation indices such as CPI or RPI, or turnover rent will be covered.
  • If the reviewed rent is lower than the current rent, the lower amount becomes payable.

Rent collars, which set a minimum rent, will also be invalid unless the Government introduces specific exceptions through later regulations.

Likely Market Impact

Tenants would gain limited new procedural rights, such as the ability to trigger a rent review if the landlord delays. However, since time limits are rarely “of the essence” in rent reviews, this is unlikely to have a major practical effect.

The wider impact is expected to be on lease structures and pricing. Landlords may turn to stepped or index-linked rents to maintain predictability. Others could increase starting rents or reduce incentives such as rent-free periods to balance potential losses.

Sector Response

The Government says the aim is to help high-street retailers by keeping rents affordable. However, the British Property Federation has noted that upwards-only rent reviews are already uncommon in the short leases typical of the high street. It has also warned that the change could discourage investment and lead to higher initial rents.

Many property professionals share concerns about the knock-on effects for valuation, lending and investment confidence. The lack of consultation has also raised questions about how these rules will interact with existing lease arrangements.

Next Steps

The detail of how this policy will be implemented remains to be seen. The Secretary of State will have power to make exceptions by regulation, and these could prove crucial in balancing the interests of landlords and tenants.

In the meantime, anyone involved in commercial leasing should review their portfolios and lease strategies. Understanding which arrangements might be affected will help avoid surprises when the new law takes effect.

Final Thoughts

The proposal to ban upwards-only rent reviews would mark the most significant change to commercial leasing practice since the Landlord and Tenant Act 1954 itself.

While the goal of supporting small businesses is clear, the wider implications for the commercial property market could be substantial. As the Bill progresses through Parliament, landlords, tenants and investors would be well advised to follow developments closely and prepare for a very different rent review landscape by 2027 or 2028.