"From the perspective of tenants, lower and more predictable rents could encourage small businesses and entrepreneurs, who have previously been priced out, to take on commercial premises or expand into additional space."
- Holly Andrews - KisFinance
The UK government proposed banning upward-only rent review clauses in new commercial leases under the English Devolution and Community Empowerment Bill, introduced to Parliament in July 2025.
The measure aims to support struggling high street businesses by ensuring rents can adjust downward during economic downturns rather than continuing to rise regardless of market conditions.
While supporters view the ban as vital for reviving high streets, landlords and investors have raised concerns about the impact on property valuations and investment appetite. The Bill is currently at committee stage in the House of Lords, with no implementation date set, though current indications suggest the ban will not take effect before 2027.
Holly Andrews, director and loans manager at KisFinance, comments on how the policy could affect commercial rents, investment appetite and access to commercial mortgages, particularly for small businesses and start-ups navigating an already challenging funding environment.
"The proposed ban on upward-only rent reviews represents government intervention in the natural supply-and-demand dynamics of the commercial property market, and is likely to have several knock-on effects," she explained.
"From the perspective of tenants, lower and more predictable rents could encourage small businesses and entrepreneurs, who have previously been priced out, to take on commercial premises or expand into additional space."
"In the short term, this could therefore increase demand for rental properties and support business growth."
"Having said that, from landlord and investor perspectives, the inability to rely on upward-only rent reviews reduces long-term income certainty. This is likely to discourage investment in commercial property, particularly for investors who rely on predictable rental growth, to justify borrowing and returns. Over time, reduced investment could lead to a contraction in supply, leading to shortages of suitable commercial premises."
"With rising demand and falling supply, landlords may respond by setting higher initial rents to compensate for the lack of future rental uplifts. This could offset some of the intended benefit for tenants and may still leave affordability challenges for new or smaller businesses, in particular in the early days of the business when cash flow is often at its tightest."
She added, "A shortage of rental stock and higher starting rents could push more businesses toward purchasing their own premises, rather than renting. While ownership may be attractive in the long term, it can place significant pressure on cash flow, especially for start-ups, mostly due to higher upfront capital requirements with purchasing deposits, and associated higher costs and expenses. This may prevent some potential businesses from entering the market altogether."
Impact on commercial mortgages and lender appetite
For lenders, reduced rental income certainty may result in:
More cautious underwriting
Lower loan-to-value criteria
Greater emphasis on borrower strength, business performance, and alternative income metrics
Reduced appetite for investor-led commercial lending, particularly where rental income is the primary repayment source
Owner-occupier lending may remain more resilient, but lenders may still price in additional risk where future rental flexibility is restricted
"Therefore, I see that it will make obtaining commercial mortgages more difficult," she said.
Impact on advice
For advisers, this change would increase the importance of:
Stress-testing affordability under more conservative income assumptions
Exploring ownership versus leasing at an earlier stage
Advising clients on longer-term cash flow implications
Managing expectations around lending terms, pricing, and deposit requirements
Holly concluded, "While the policy aims to support small businesses, it may unintentionally tighten lending criteria and increase the complexity of advice, particularly for landlords and start-up businesses seeking finance."
