Upward-Only Rent Reviews & the English Devolution Bill

Find out the latest on upward-only rent reviews and the wider English Devolution and Community Empowerment Bill in the latest blog from our Director of Policy Ion Fletcher:

🖊️ This week, the House of Lords had the Second Reading of the English Devolution and Community Empowerment Bill, which contains, very much tangentially to the main purpose of the Bill, the proposal to ban upward-only rent reviews in all new commercial tenancies. 
 
The BPF has made it clear to Government that we do not support this blanket ban, particularly the way it was introduced – without warning, consultation or, it seems, much of an evidence base or real understanding of the potential impacts. 
 
1️⃣ Firstly, the ban doesn’t address the stated problem that it is trying to fix, namely struggling high streets with vacant shop units. It’s hard to imagine that upward-only rent reviews are really a significant barrier for businesses looking to take space on high streets when they’ve got crushing business rates bills to think about. 
 
2️⃣ Secondly, there’s a risk to investment. For both fiduciary and regulatory reasons, investors like pension funds and insurance companies need predictable long-term income streams from which to pay their predictable long-term liabilities. When you make the income from an investment less predictable (as the blanket ban does), it becomes harder for these investors to put money into our towns and cities, which runs counter to one of the main things the Government is trying to achieve through pension reform. 
 
3️⃣ Thirdly, predictable income doesn’t just benefit investment into standing assets, it also de-risks new development and refurbishment activity. The ban is therefore unlikely to do wonders for UK commercial construction activity, which recently posted an eleven-year low. 
 
A proper consultation would have flushed all of this out and allowed for a proper debate between property owners, occupiers and Government around a sensible scope for any ban. 

There’s still time for that to happen, and we're working with Peers from across the House of Lords to amend the Bill so that future secondary legislation can target the measure to address the issue that it perceives exists, but without causing unnecessary adverse harm to wider property investment and development. The issue will be discussed in Committee by Peers in January. 
 
➡️ Getting Government to agree to amend its own legislation is a challenge, but we continue to press the case with officials, Peers, Ministers and MPs.