The UK Government’s proposal to ban upwards-only rent reviews in new commercial leases risks triggering a wave of unintended consequences across the commercial property sector, according to commercial property adviser and financier, Rangewell.
Far from helping small businesses, Rangewell says the reforms could shorten lease lengths, drive up initial rents, and reduce tenant renewal protections, creating greater instability for occupiers and trigger more shop closures and job losses on the high street.
The English Devolution and Community Empowerment Bill, introduced to Parliament in July 2025, unexpectedly includes provisions prohibiting upwards-only rent review clauses and minimum uplift mechanisms in new commercial leases in England and Wales. For decades, these clauses have been a central feature of the market, providing landlords with certainty of income and underpinning long-term investment models.
Market response: uncertainty and unintended consequences
Intended as a move to support small business tenants, the policy is expected instead to reduce their security. Rangewell says landlords are already preparing to shorten lease terms to three to five years, a sharp reduction from the traditional ten to fifteen-year agreements that underpin business planning and stability.
Most importantly, more leases may also be contracted out of the Landlord and Tenant Act 1954, stripping commercial tenants in shops of automatic lease renewal rights.
Fixed uplifts of 2-4%, or index-linked clauses tied to RPI or CPI, are also predicted to replace open-market reviews, increasing overall rent costs in the medium term, while many landlords are expected to front-load rents at inception to offset the loss of growth potential.
Incentives such as rent-free periods and fit-out contributions may also be reduced, creating a harsher leasing environment for occupiers - and making it more expensive for new tenants on the typical high street being able to fund new shop openings.
Investor and development impact
Commercial property investors rely on predictable, inflation-beating income from commercial property. Rangewell believes removing upwards-only reviews threatens this stability, undermining investor appetite, particularly in secondary locations. At the same time, development funding becomes more challenging without secure long-term rental growth, jeopardising regeneration projects and slowing the renewal of high streets and commercial centres.
In the retail sector, more landlords are expected to pivot to turnover-based rents, adding complexity and reducing income predictability for tenants. Legal disputes over the interpretation of existing versus future leases may also proliferate, while early tenant exits could further disrupt income streams relied upon by both landlords and lenders - as well as leading to further shop closures on the high street.
Rangewell believes that any reform should recognise the differences between retail, office, and industrial leasing models, and that exemptions for small businesses based on unit size or turnover thresholds would better target support where it is most needed.
Alasdair McPherson, head of commercial property finance at Rangewell, commented: “This policy risks weakening investment, shortening leases, and driving up initial rents, all of which could leave small businesses worse off, not better.
"If the government wants to support small occupiers, it needs a smarter solution, not a blunt instrument - which seems to have been released with very little consultation of forethought.
"From a commercial property finance perspective, the sector urgently requires a more nuanced approach, with exemptions for smaller occupiers, sector-specific frameworks, and full consultation with lenders, investors and commercial landlord bodies before any such change is implemented.”
