BPF Spotlight: The Latest on Upward Only Rent Reviews
💡 What’s behind all the recent talk about Upward Only Rent Reviews (UORRs)? Our latest BPF Spotlight breaks it down!
We sat down with our Head of Communications Dominic Curran to get the lowdown on what UORRs actually are, why the Government wants to ban them, what the unintended consequences could be and how we’re responding. Over to you, Dominic:
âť“ First off, what exactly are UORRs and why are they used?
🗣️ Good start! They’re a clause in commercial leases that require that, as they say on the tin, rent goes up when it’s reviewed during the tenancy. They started in the 1950’s as a hedge against inflation and as a way to secure a stable and predictable income for investors.
âť“ Why do you think the Government has banned them?
🗣️ They claim that it’s to help high streets, but UORRs aren’t really used in retail tenancies anymore, and leases have got so short that they often don’t have a rent review within them.
Government didn’t consult or engage with the industry in advance so it’s hard to know exactly why they’re proposing this, especially in a Bill about English local government reorganisation, but presumably they don’t like the idea of rent always going up.
âť“ What kind of impact could this have on the property sector?
🗣️ On the face of it, it’s to argue that rent should always rise, but the reality of it is that it creates more investment for regeneration and property improvements, and is also used by tenants and property owners as a trade-off for other things like rent-free periods.
They don’t happen in isolation to broader tenancy negotiations. Suddenly announcing the ban has made investors nervous and is already hampering live leasing discussions, and could risk business planning, raise borrowing costs and further damage development viability - which is already pretty tenuous in many areas of the country.
âť“ How are we responding to the changes, and what happens next?
🗣️ We’ve spoken out about this in the media and have written to the Deputy Prime Minister, Angela Rayner, setting out the industry’s concern at the way this was announced and the potential impact on investor sentiment.
We’re now bringing together a range of BPF members to help shape our response and are surveying members to get the granular evidence base sorely lacking from Government ahead of the Bill’s Second Reading on 2 September.
