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Is This The End For Upward-Only Rent Reviews?

In a move that has caught the UK property industry by surprise, the UK Government has announced plans to ban upward-only rent reviews (UORRs) in commercial leases. According to the UK Government, this proposal, embedded within the English Devolution and Community Empowerment Bill (the “Bill”), aims to support small businesses, rejuvenate high streets, and rebalance power between landlords and tenants.

What Are Upward-Only Rent Reviews?

UORRs are provisions in a commercial lease that allow rents to increase–or remain static–at review intervals, but never decrease, even if market conditions deteriorate. These provisions have typically been favoured by landlords and institutional investors for providing predictable income streams and safeguarding property valuations.

However, the UK Government argues that UORRs trap tenants into paying above-market rents, especially during economic downturns, contributing to business closures and vacant retail units. It is this imbalance that the UK Government is attempting to address with the proposal although notably without any prior consultation with the UK property industry.

How Would The Ban Operate In Practice?

The ban would be introduced via a new Schedule 7A to the Landlord and Tenant Act 1954, as set out in Schedule 31 to the Bill. The key features are as follows:

• The ban would apply to any lease which is a business tenancy, regardless of whether it has been contracted out of the security of tenure rights under the Landlord and Tenant Act 1954
• The ban would be prospective in nature, meaning that it would only apply to leases granted after the new law comes into effect. It will not apply to existing leases but, importantly, will apply to renewal leases
• Any provision seeking to achieve an upwards only rent review by reference to a variable such as open market rent, inflation (or other form of indexation) or tenant’s turnover would be overridden and the rent would be able to go up or down at review
• Unlike the security of tenure provisions of the Landlord and Tenant Act 1954, there will be no ability for a landlord and tenant to mutually agree to exclude the provisions banning UORRs
• The legislation will also contain anti-avoidance provisions to prevent landlords from skipping a downward rent review. Tenants will be able to trigger reviews themselves in the event landlords do not act

Implications for Tenants

For tenants, the proposed ban will likely be largely welcome:

• Greater flexibility in lease negotiations
• Protection against market downturns (although, the rental market may adjust to reflect the ban, creating greater initial rents than under the current legislation)
• Potential improved survival rates, for instance, for high street businesses
• Potential for fairer rent structures, such as turnover-based or index-linked rents

However, the real-world impact may be limited. Lease lengths have shortened significantly in recent years, particularly in the retail sector, and many small tenants already favour flexible short-term leases without rent review mechanisms at all. As such, the ban may not deliver the regeneration impact the Government hopes for.

Implications for Landlords and Investors

The proposal has sparked concern among landlords, pension funds, and property investors who fear the implementation of the ban will trigger:

• Reduced income predictability, especially in volatile markets
• Potential impact on property valuations
• Challenges in securing financing, as lenders may view commercial properties as riskier investments
• Increased complexity in lease negotiations, with landlords possibly favouring shorter lease terms (to retain greater control over rent increases) or fixed/stepped rent increases (which would escape the ban)
• Income gaps could arise where landlords are exposed to UORRs under their own superior leases given the intended ban only applies to business tenancies

It could also be argued that it is not in the landlord’s interest to drive up rents to a point where it becomes unaffordable for its tenants and lose rental income. For institutional and overseas investors, fixed or increasing returns are a crucial factor when deciding to invest in the UK property sector and such a ban may deter investment, particularly when coupled with the current economic climate.

What Happens Next?

The proposed ban on upward-only rent reviews would mark a significant shift in the UK’s commercial property market. While it promises potential relief for tenants, it also introduces new risks and uncertainties for landlords and investors. The Bill, however, is still in its early stages and will move through the various parliamentary stages with a date for a second reading to be announced. Industry voices on both sides will likely engage heavily with the UK Government to refine the scope and implementation of the ban. In the meantime, both landlords and tenants are advised to:

• Review their leases and consider at a strategic level how the ban would impact their businesses
• Engage with agents and asset managers and seek legal advice before entering into new or renewal leases
• Monitor legislative progress and engage with industry representatives

Please get in touch with us should you have any questions or concerns in relation to the proposed ban on upward only rent reviews. At Quastels, we will be monitoring the Bill closely as it moves through Parliament and will publish any material updates as appropriate.

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Does the Authorising Officer Need to Be a Settled Worker? Understanding Key Personnel in Sponsor Licence Applications

At Quastels, we regularly advise businesses preparing to apply for a UK sponsor licence. One of the most common questions we receive is whether all key personnel, especially the Authorising Officer, must be settled workers. The short answer is not necessarily!

Understanding the roles and requirements of your key personnel is crucial to a smooth sponsor licence application process. Here’s what employers need to know.

Who are the Key Personnel?

When applying for a sponsor licence, your business must nominate three key personnel:

1. Authorising Officer – a senior person within your organisation who has overall responsibility for your activity as a licensed sponsor. This person should attend interviews requested by the Home Office during pre-licence assessments or post-licence compliance audits.
2. Key Contact – your main point of contact with UKVI.
3. Level 1 User – a person within your organisation who is responsible for your day-to-day activity as a licensed sponsor, including assigning and requesting Certificates of Sponsorship (CoS) and reporting worker activity or changes to your organisation.

While these roles can sometimes be held by the same person, each comes with its own eligibility criteria, especially regarding immigration status.

Must the Authorising Officer be a Settled Worker?

Your key personnel must usually be a paid member or an office holder from within your organisation. However, the Authorising Officer does not need to be a settled worker. In fact, this role can be filled by someone with a valid visa, such as an Innovator Founder or Global Talent visa, or other eligible immigration categories, such as a PBS dependent visa or spouse visa, provided they meet the suitability criteria and so not have a conflict of interest (e.g. being sponsored by the same company for which they will act).

However they must:

• Be based in the UK;
• Have sufficient authority to oversee the sponsorship process;
• Have a valid National Insurance Number (unless on exemption situation);
• Not be a contractor or consultant who is contracted for a specific purpose.

The Role That Must be a Settled Worker: Initial Level 1 User (exemption may apply)

The critical restriction lies with the Level 1 User at the time of application. UKVI requires the initial Level 1 User to be a settled worker. This individual manages the licence on the Sponsor Management System (SMS) and handles compliance reporting.

After the licence is granted, additional Level 1 and Level 2 Users can be appointed, and in some cases, may include those on visas.

However, the ‘settled worker’ requirement for the Initial Level User is exempt if your Authorising Officer has valid entry clearance or permission to stay in the UK as a certain visa category, such as Innovator Founder, Global Talent or UK Expansion worker. They are allowed to self-manage their sponsor licence as part of their business operations.

Get Expert Advice

The sponsor licence application process can be complex, particularly when it comes to structuring your team of key personnel. Making mistakes can lead to delays or even refusal.

If you need help with your sponsor licence application, or if you are unsure who can act as your Authorising Officer or Level 1 User, or which immigration status qualifies as ‘settled worker’, our expert immigration team is here to help.

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What Went Wrong? A Case Study in Employee-Manager Miscommunication

In this video, Employment Partner Dipti Shah examines a real-life breakdown in the employee-manager relationship, through a WhatsApp thread. With over 25 years of experience advising both businesses and individuals, Dipti has seen how common oversights such as insufficient training and inadequate support for managers, can escalate into avoidable conflict. In this case study, she dissects what went wrong at each stage of a workplace conversation and outlines what should have happened to preserve a productive and respectful working relationship.

The Retention Crisis

In the UK, nearly one in four workers is planning to quit in 2025. Staff retention is becoming an increasingly urgent issue, with workplace trends like “Revenge Quitting” and “Quiet Quitting” taking their toll on morale and continuity. The financial impact is significant: the average cost of turnover for an employee earning £25,000 or more £30,614, according to Oxford Economics. Poor management plays a central role in this trend. When employees have both a great manager and a great leader, their commitment to stay rises to 94%. But that figure drops sharply, to 35%, with a good manager and poor leader, and to just 19% when both leadership and management are lacking.

Case Study: What Went Wrong?

In the featured case study, a manager asked an employee to reschedule their annual leave at the last minute to attend a client meeting. The employee offered a compromise by suggesting they dial in remotely during their holiday, but the manager deemed this insufficient. What followed was a prolonged back-and-forth, culminating in the manager threatening repercussions for the employee’s career. This situation underscores the pressures that managers themselves face, but also highlights the importance of managing client expectations and ensuring clear communication throughout all levels of the business. Without proper guidance, even well-meaning managers can make decisions that damage trust and morale.

Key Takeaways

Managers need just as much support as the teams they lead. To prevent breakdowns like this one, it is essential that newly promoted managers receive thorough training, both on the responsibilities of their new role and on how company policies should inform their management style. Employees are entitled to disconnect during their annual leave, and penalising them for exercising this right is unacceptable. Ultimately, a well-supported manager is far more likely to foster a positive, engaged, and committed team.

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