The Downfall Of Upward-Only Rent Reviews Could Be The Change The Market Has Been Waiting For

For the first time in decades, the UK government has disrupted the fundamentals of commercial leasing. July’s surprise ban on upward-only rent reviews — absent from the Labour party’s manifesto — has shaken a market long accustomed to predictability. 

While investors have rushed to warn of damage to confidence and capital flows, there is danger the industry is missing the point, said Re:sustain Chief Business Officer Katie Whipp. It is, in effect, reform without consultation, and many see it as a blunt political move, she said, but it could be the jolt the sector has needed.

“For years, landlords have relied on formulaic rent escalations that have worked for years. Now they will have to earn them,” she said. “They will have to do more work around asset management strategies and engage with tenants differently, thinking harder about meeting needs. The result could be optimised, sustainable properties.”

The government frames the change as removing abnormal profits that landlords have enjoyed for decades. In reality, the reform flips the landlord-tenant dynamic from rent extraction to value creation, Whipp said. 

To justify rental uplifts, landlords will need to prove they are delivering a better experience and higher-performing buildings, she said. That means talking to tenants in ways many have resisted since the rise of hybrid working, being transparent about building performance and deploying capital more quickly into retrofits and improvements. 

“Landlords will have to move faster — but speed alone is not the answer,” she said. “Only retrofitting done accurately, with data at the centre and stakeholders aligned, can deliver the right results. Crucially, smart carbon reduction should not come at the expense of performance or revenue generation. The two must and can go hand in hand.”

With UK buildings wasting up to 60% of their energy and stricter performance targets on the horizon, such as achieving an energy performance certificate rating of B by 2030, optimisation has shifted from optional to essential, Whipp said.

The cost of inefficiency is evident in tenant bills, as office occupiers now spend nearly a third of their service charge on utilities alone, a direct pressure point in lease negotiations, she said.

“Optimisation, done well, is essentially a low-to-zero-capex way to unlock value in commercial real estate,” Whipp said. “Crucially, it allows landlords to share that benefit with tenants through savings, aligning financial performance with occupier experience.”

One of the key industry concerns about the ban focuses on the risk of damaging investor confidence. British Land CEO Simon Carter wrote a letter to Deputy Prime Minister Angela Rayner criticising the measure, which he said was based on the “assertions of unnamed stakeholders” rather than quantitative data.

He said the government’s move risked undermining the real estate market’s efforts to attract private capital to deliver economic growth.

But worries such as these may be short-lived, Whipp said. In reality, far greater forces are shaping capital allocation in commercial real estate, including the cost of debt, the scale of retrofit required to meet climate targets, and the growing gap between prime and secondary assets. 

“Against those headwinds, the end of upward-only rent reviews is unlikely to be the deciding factor for investors,” she said. “What will matter is how landlords respond — whether they double down on protecting outdated models or adapt by improving buildings, strengthening tenant relationships and proving performance.”

Whipp said that although the ban was “not in the script,” the disruption it will bring could be the catalyst for overdue change. Landlords that adapt by engaging more deeply with tenants, being transparent about performance and optimising their buildings will not just protect returns but will lead the industry.

“The next step is recognising that tenants are no longer passive in this equation,” she said. “Some will demand evidence before accepting rent uplifts. Others may even look to co-invest in building upgrades where their own operating costs and ESG goals are at stake. The new superpower is buildings that tenants actively choose to stay in because both sides can see and share the value being created.”

This article was produced in collaboration between Re:sustain and Studio B. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.