The government plans to ban upward-only rent reviews for commercial leases, a practice where rent is guaranteed to increase on review.
The government said such clauses “pit landlords against businesses and can make rents unaffordable and cause shops to shut”.
It claimed a ban would “help keep small businesses running, boost local economies and job opportunities and help end the blight of vacant high streets and the unacceptable anti-social behaviour that comes with them”.
The measures to ban upward-only rent reviews are contained in the English Devolution and Community Empowerment Bill.
Nick Mattison, managing director of Mattison Public Relations, said: “Government plans to ban upward only rent reviews (UORR) are a blast from the past.
“Property landlords, including pension funds, will argue that banning UORR will undermine the value of that property and make it harder to secure lending to finance new commercial property developments.”
“Banning UORR changes a commercial property from being a secure fixed income style investment to one where the cashflows are much more volatile.
“Last time this was tried the property industry managed to kick the proposals into the long grass.
“This will be a test of the lobbying power of the pensions industry and property landlords versus retailers.”
He added the government should share the research they are using to justify this ban.
Upward-only rent reviews in commercial leases apply to England and Wales.
Scott Goldstein, partner at law firm Payne Hicks Beach, said: “This proposal seems to have come from nowhere. Although it will doubtless give some commercial tenants cause to celebrate, it is concerning that the proposal appears to have been developed in isolation from the work that the Law Commission is doing to amend the 1954 Act.
“It would have been better for all proposals relating to commercial tenancies to be considered at the same time, so that an assessment could be made of the impact that each could have on the other.”
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