Commercial Real Estate
Owner Managed Businesses

Louisa Hartley
November 2025

The UK Government is shaking up commercial leasing. As part of the English Devolution and Community Empowerment Bill, Upward-Only Rent Review (UORR) clauses will be banned in new commercial leases, a move designed to support small businesses and revitalise high streets.

If you’re a business owner negotiating a lease, here’s what you need to know.

What’s Changing?

From the moment this legislation takes effect, any clause in a new or renewal lease that prevents rent from decreasing will be unenforceable. This applies whether or not the lease is contracted out of the Landlord and Tenant Act 1954.

Existing leases won’t be affected, but going forward, landlords won’t be able to lock tenants into rent levels that only go up where, at the start of the lease, that level of rent is not known and cannot be determined.

Why It Matters to You

If you’re running a business from leased premises, this is a significant shift. UORRs have long been a thorn in the side of tenants, especially independents and SMEs, who’ve found themselves stuck paying above-market rents during downturns.

This reform transfers risk from tenant to landlord, meaning landlords are likely to follow the approach outlined below. You may however have more flexibility to negotiate rent based on market conditions when agreeing a new or renewal lease.

What Landlords Might Do Next

Landlords won’t take this lying down. Expect to see:

  • More aggressive initial rent negotiations to offset future uncertainty.
  • Shorter lease terms, often contracted out of the 1954 Act, which could mean more frequent relocations or renegotiations for tenants.
  • Pre-agreed stepped rents, where rent increases are fixed from the outset, as these won’t be caught by the ban.
  • Index-linked reviews replacing upwards only open market reviews, offering predictability but potentially less room for negotiation.

Also, don’t be surprised if tenant-friendly perks like break clauses or rent-free periods become harder to secure.

What You Should Do

If you’re entering into a new lease or renewing an existing one:

  • Review the rent review clause carefully, make sure it allows for downward adjustments.
  • Consider stepped or indexed rent structures if they offer better predictability.
  • Negotiate hard at the outset, landlords may front-load rent to hedge against future drops.
  • Get advice, a good commercial property solicitor can help you navigate the new landscape.

Final Thought

This reform is a win for business owners, but it’s not without trade-offs. As the market adjusts, lease negotiations may become more complex. The key is to stay informed, negotiate smart, and structure leases that support your business’s long-term viability.

If you’d like to talk through how this change might affect your next lease negotiation, our Commercial Real Estate team is here to help.