The government's ban on upwards-only rent reviews (UORRs) could create a two-tier commercial property market, law firm Morr & Co warns, as newly re-appointed secretary of state for Housing, Communities and Local Government Angela Rayner faces industry calls to provide clarity on how and when the reforms will be implemented.
Commercial property partner Nick Leavey said landlords, tenants and business owners would find the value of their leases increasingly determined by when they were signed. The English Devolution and Community Empowerment Act 2026 received Royal Assent in April, but the government has yet to confirm when the ban will come into force or publish detailed guidance on how it will operate.
While the legislation aims to create a fairer balance between landlords and tenants by banning upwards-only rent reviews in new commercial leases, Nick said instead it could result in two very different types of lease operating side by side for years to come.
Existing leases containing traditional upwards-only rent review provisions will continue unaffected, while new leases are expected to rely on alternative arrangements such as:
- fixed annual increases
- index-linked reviews
"With the new government now in post, landlords and tenants need clarity on the implementation timetable and the detailed rules that will apply," said Nick Leavey, commercial property partner at Morr & Co (pictured).
"Decisions are being made about leases now, yet important questions remain unresolved, including the treatment of caps and collars."
Nick believes those differences could have implications beyond the amount of rent a business pays. "There will inevitably be a period where older leases and newer leases sit alongside each other, and they could become more or less valuable depending on what happens in the wider market," he said.
"If rents continue to rise strongly, a lease with fixed annual increases could prove to be a very good deal. Equally, if the market weakens or rental growth slows, an older lease linked to market conditions could become the more attractive option.
"It means we could see winners and losers on both sides of the market. I don't think it will simply be a case of landlords losing and tenants winning."
Nick said the changing value of lease structures could also affect businesses occupying commercial premises. "If a business comes to sell, the type of lease it occupies could become another factor influencing its value," he said.
"Two otherwise similar businesses could find their premises are viewed differently simply because of the way their rent reviews have been structured."
Nick pointed to Ireland, where similar reforms were introduced in 2010, as evidence that the commercial property market is more likely to adapt than fundamentally change. "The experience in Ireland suggests the market adjusts rather than grinds to a halt," he said.
"People find different ways of structuring leases and, over time, those become the new normal. I suspect we'll see the same happen here.
"The interesting question will be which lease structures prove to be the most valuable over time, because that will depend entirely on wider market conditions."
While Nick expects landlords and tenants to adapt, he believes businesses should be aware that the reforms are unlikely to produce clear-cut winners. "I don't think this will be black and white," he said.
"Some businesses will find the new arrangements work in their favour, others won't. Much will depend on when the lease was agreed and how the market performs over the years that follow."
