The removal of upward-only rent reviews will require secondary legislation before it can be enacted. The proposals represent a major intervention in the commercial property market, and without detailed consultation, robust impact assessment, and a clear implementation plan, there is a risk that the reforms could weaken investment, reduce transparency, and make commercial leasing more complex.
Propertymark will continue to use evidence from members to inform our engagement with government as the legislation is developed.
Concerns over investment in high streets
Long-term investors, including family trusts and pension funds, have traditionally relied on predictable rental income to support investment decisions, refurbishment plans and maintenance of commercial property.
Without that certainty, there is a risk that investment could move away from retail and high street property into sectors seen as more stable. This could make it harder to regenerate town centres that are already facing pressure from changing shopping habits, higher operating costs and shifting demand for commercial space.
Mixed-use buildings could face added pressure
In many cases, income from the ground-floor commercial unit helps support the wider building. If commercial rents become more volatile, this could affect the financial sustainability of the whole property, particularly for smaller landlords who own local parades, town centre buildings, or mixed-use assets.
Reduced commercial income could limit the funds available for maintenance and improvement works, with possible consequences for both commercial occupiers and residential residents.
Risk of distorted rent review evidence
Propertymark members also highlighted concerns that tenants in neighbouring units, such as those in retail parades or leisure parks, could create lower comparable rental evidence that could influence future reviews across a wider scheme. This could put more pressure on surveyors and make rent review negotiations more complex.
The current upward-only framework is seen by some commercial agents as providing a level of stability and reducing the opportunity for coordinated downward pressure on rents.
Side letters and turnover rents may become more common
Landlords and tenants may respond to the ban by making greater use of side letters or informal agreements. For example, a lease could record a lower headline rent, while a separate agreement requires the tenant to pay a higher actual rent.
This could reduce transparency in the market, distort comparable rental evidence, and increase legal complexity. It could also make disputes harder to resolve.
Landlords may also make more use of turnover-based rents, where rent is linked to the performance of the business occupying the premises. While this may suit larger national operators with strong accounting systems, smaller independent businesses may struggle with the added reporting and administrative requirements.
Index-linked reviews may not solve affordability concerns
Rent reviews tied to the Retail Price Index or Consumer Price Index may be relied on more heavily under the proposed system. However, they do not always reflect local market conditions and can still result in rent increases even where a tenant’s trading performance is weak, potentially undermining the UK Government’s aim of improving affordability and flexibility for occupiers.
Business rates impact must be assessed
Commercial rents are often reviewed every four or five years. If more frequent downward rent adjustments lead to lower rateable values over time, this could affect income for local authorities and the Treasury.
Members questioned how quickly the Valuation Office Agency would respond to changing rental values and whether reductions would feed through into business rates liabilities. This needs to be fully assessed before secondary legislation is introduced.
Propertymark calls for phased implementation
The UK Government should rethink or modify the proposal to avoid destabilising commercial property markets. Our members remain clear that any changes must be introduced carefully and with proper sector engagement.
The measures are unlikely to come into force before 2027 and Propertymark is calling for a full consultation with commercial property professionals, landlords, tenants, investors, lenders and valuers before the detail is finalised.
