Upward-only Rent Review Ban Likely to have Minimal Impact on High Street

Posted by Colliers on 30th September 2025 -

As the English Devolution and Community Empowerment Bill has moved to committee stage this month its surprise announcement to ban “upwards-only rent reviews” is finally receiving some well needed scrutiny.

The Government’s intention with this measure is to prevent the closure of high street stores due to rising rents, helping to secure the local town centre economies. However, due to little or no prior consultation, a number of potential unintended consequences arise that could impact commercial real estate.

 

Minimal impact for high street tenants
Any disruption to established leasing practices will carry risks of unforeseen costs and impacts. However, it is important to recognise that the sector has already evolved significantly over recent decades. Long lease rents today tend to be much closer to market levels given that tenant demand for flexibility has driven a market led decline in lease lengths. Between 2010 and 2014, the average lease length across all asset classes was around 11 years but between 2020 and 2024 this fell to 9 years. Such patterns have been pronounced on regional high streets and at central London shops.

Although volatile, in the period 2020 to 2024, high street shops already have some of the shortest leases in the market, suggesting that their rents are the most closely aligned with open market levels. For example, a five year lease often includes a three year break clause, while a ten year lease typically features a five year break. In contrast supermarkets (15.1 years), leisure assets (13.2), distribution warehouses (11.2 years), and retail warehouses (9.7 years), all have typically much longer lease structures. This might suggest that introducing UORRs to deal with high street malaise is unlikely to have the desired impact and more likely to have a greater impact on non-high street assets with longer leases.

Any historic benefit from UORR may well have been largely eroded. Following years of retail rental re basing—driven by oversupply, structural change, and the rise of e commerce, punctuated by the pandemic—upward only clauses are increasingly less relevant to high street retail, certainly less relevant than increases in national insurance, national minimum wage, elimination of tax-free shopping and increases in business rates.

 

Impact on investors and developers
For valuers and investment professionals, removal of UORRs will shift risk profiles and yields. Investors may demand higher initial rents and offer shorter rent free periods to compensate for reduced income certainty. Developers are also likely to seek more forward commitments and avoid speculative development if funding models become uneconomic as lenders debt pricing includes greater risk premiums.

For the lease advisory business generally, the change may accelerate the trend towards frequent reviews and flexible structures, bringing leasing practice closer to continental European models.

A skilled and diverse talent pool
The social demographic of Hammersmith is a magnet for employers. With a young, multicultural population and a high concentration of professionals in tech, media, education, and healthcare, businesses have access to a rich talent pool.

The area’s appeal to international professionals also means companies benefit from multilingual capabilities and global perspectives, essential ingredients for innovation and expansion.

 

Ban is unlikely to achieve the intended outcome
The practical question is whether prohibiting UORRs will genuinely support the Government’s objective of strengthening high streets. Evidence suggests that structural changes—consumer behaviour, online retail growth, and surplus retail space—play a much larger role than rent review mechanics. An intervention narrowly targeted at retail high streets risks distorting wider market dynamics without delivering material benefits.

The rationale presented by the Ministry of Housing, Communities and Local Government press release is that upwards only reviews: “pit landlords against business and can make rents unaffordable and cause shops to shut”. Such a pejorative comment fails to recognise the complex ecosystem of stakeholders whose mutual interests may be best served by the present system of private negotiation. In the end, tenants and the performance of their businesses might reasonably be viewed as the ultimate source of value up and down the property supply chain. This is never far from view by all real estate stakeholders. The comment also fails to recognise that all elements of the real estate supply chain add value and enable growth by providing space to accommodate existing business, as well as expansion space for new businesses models requiring new formats to house new technologies. What successive governments fail to recognise in their search for economic growth is that growth requires fit for purpose expansion space which at present is very limited.

The Bill could remain in committee stage until November 12. Now is the time for the commercial real estate sector to share their views of the real impacts of the ban on tenants, landlords, and investors.

Given the breadth of material I track as an economist at Colliers, banning upward only rent reviews looks more cosmetic than therapeutic. The lack of prior consultation reinforces the perception that UK commercial property remains an afterthought in the thinking of successive Governments.

The new provisions though come as an unwelcome distraction from serious reforms that are necessary including a revisitation of recent Budget items that have done far more to constrain high street businesses than retail rents. Should it pass unrevised it will have varying impacts across a diversity of sectors ranging well beyond the stated target - retail high streets which counterintuitively seem set to benefit least. Markets always adapt to new legislation and judging by informed opinion within Colliers there is little to suggest this episode is any different.

This article originally appeared in CoStar