On 10 July 2025, the UK Government introduced the English Devolution and Community Empowerment Bill, designed to transfer more powers to local authorities. Embedded within it is a proposal with significant ramifications: Schedule 31, which seeks to ban upward-only rent reviews (UORRs) in new commercial leases. While the intention is to support small businesses by enabling rents to reflect market downturns, the implications for the industrial and logistics sector—covering warehouses, distribution hubs and data centres—could be considerable.
UORRs are clauses that prevent rents from decreasing at review intervals, typically every three to five years, regardless of market conditions. Within the industrial and logistics sector, these provisions have provided predictable income for landlords and institutional investors—often critical for securing development finance. However, critics of UORRs argue that they impose undue pressure on tenants during economic downturns by preventing rental adjustments in line with falling values, making such leases less flexible and, at times, unsustainable.
Under the new proposals, any rent review clause that operates on an upward-only basis will be deemed void in new leases. This includes index-linked reviews (such as RPI or CPI), open market assessments, and turnover-based mechanisms. Notably, the legislation gives tenants the right to trigger reviews even if the lease does not expressly allow it, and prohibits landlords from using put options to maintain upward-only outcomes. Call options—where tenants initiate new leases—are excluded, despite similar effects. The ban will not apply retrospectively, so existing leases will remain unaffected, potentially creating a dual market with divergent rental structures. Legal guidance, including from BCLP, confirms the rules will apply across all commercial property types, including logistics, and extend to renewals under the 1954 Act, though not to leases arising from pre-existing agreements for lease.
Download the PDF to learn more about the UK’s move to ban upward-only rent reviews in new commercial leases.
