The UK Government has set out plans to ban upwards-only rent reviews in commercial property leases across England and Wales which is a potential game changer for the commercial lettings market. Under these new proposals, rent adjustments at lease renewal or re-letting would no longer be restricted to increases. Instead, rents could go up, stay the same, or even decrease, depending on market conditions.
Supporting high street recovery
This reform is part of a broader government initiative to support High Street recovery, particularly for independent retailers and small businesses, many of whom have been hit hard by inflation, rising operating costs, and shifting consumer behaviour.
Currently, upwards-only rent reviews are common in the commercial sector, often locking tenants into higher rents even when market conditions soften. For occupiers, this has created long-term financial strain and in some cases, contributed to business closures. The proposed changes aim to level the playing field and encourage greater flexibility and fairness in lease negotiations.
What happens to existing leases?
It’s important to note that any existing lease protected under the Landlord & Tenant Act 1954 will remain unchanged for the time being. These reforms would only apply upon lease renewal or when entering into a new letting. This gives landlords and tenants time to prepare and review their portfolios before the rules come into effect.
RPI rent reviews to be scrapped by 2030
Alongside the ban on upwards-only reviews, the Government has also proposed the abolition of RPI-linked rent reviews. By 2030, the Retail Price Index (RPI) is expected to be replaced with the Consumer Price Index (CPI) across all new commercial leases.
RPI often produces higher inflation figures than CPI, which can lead to above-market rent increases. Replacing it with CPI is intended to create a more accurate, fairer benchmark for rent adjustments, making leases more transparent and easier for tenants to manage financially.
This change will also have long-term implications for investment yield forecasts and asset valuations, especially for landlords who rely on predictable, inflation-linked rent uplifts.
What does this mean for tenants and landlords?
For landlords, these proposals represent a shift in how rental income might be managed and forecasted. There may be greater pressure to justify rent levels, particularly in markets where tenant demand is weakening. Proactive asset management and property maintenance will become even more critical to retain occupiers and sustain rental income.
For tenants, the reforms could open the door to more flexible and transparent leasing terms, potentially reducing overheads and creating stronger negotiating power during lease renewals.
Our local advice
At Whybrow, we’ve been working closely with both landlords and occupiers across Essex on lease renewals, rent reviews, and broader landlord-tenant negotiations. Our local market knowledge and practical experience allow us to provide strategic, tailored advice to help our clients navigate upcoming legislation and ensure their lease agreements remain robust.
Whether you’re a landlord reviewing your portfolio or a tenant looking to negotiate fairer terms, we’re here to support you every step of the way.
Ready to discuss further? Contact us today or call 01206 577 667.
