Overview

This bill aims to ban upward-only rent review clauses in commercial leases in England and Wales. This means landlords can no longer increase rent without the possibility of a decrease, protecting tenants from unfair rent hikes. Existing clauses of this type would be nullified.

Description

The Commercial Rent (Prohibition of Upward-Only Reviews) Bill prohibits the use of upward-only rent review clauses in commercial lease agreements in England and Wales. This means that any clause in a lease that only allows for rent increases, and not decreases, is void.

Key Provisions:

• Prohibition of Upward-Only Reviews: New commercial leases cannot include clauses allowing only rent increases.
• Nullification of Existing Clauses: Existing leases with such clauses will have those clauses rendered void.
• Exception: The bill allows upward-only rent reviews only if the current rent is below the initial rent agreed upon in the contract, with the maximum permitted rent being the initial agreed upon rent.
• Definition of Commercial Rent Agreement: The bill defines a "commercial rent agreement" as a tenancy governed by Part 2 of the Landlord and Tenant Act 1954.
• Commencement: The Act will come into force six months after it is passed.
• Geographic Scope: The Act applies only to England and Wales.

Government Spending

The bill is not expected to directly increase or decrease government spending. The impact on government finances would be indirect and dependent on the wider economic consequences of the changes to commercial lease agreements. No specific figures are provided in the bill text.

Groups Affected

The bill will primarily affect:

• Commercial tenants: These individuals or businesses will benefit from greater protection against excessive rent increases.
• Commercial landlords: These individuals or businesses will face restrictions on their ability to increase rents unilaterally.

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