Government plans to ban upward-only rent reviews

UKHospitality has welcomed the government’s commitment to ban upward-only rent reviews (UORR) clauses in commercial leases across England and Wales.

It comes after the English Devolution and Community Empowerment Bill was introduced to Parliament yesterday (10 July), which will seek to limit the number of restaurants, bars and shops closing due to unaffordable rents.

The bill also includes plans to make local ownership of pubs, shops and social hubs easier through a new Community Right to Buy scheme, which will give communities the first opportunity to take up local assets. They will also be given an extended 12-month period to raise funds.

The proposed changes to the UORR clauses will not impact existing contracts.

Kate Nicholls, chair of UKHospitality, said: “Unjust upward-only rent review clauses have been hitting hospitality businesses for decades, making rents unnecessarily expensive. They have been punishing the high street and constraining investment, and it’s the right move for the government to ban them completely.

“UKHospitality has been calling for a ban for decades and I’m very pleased that it is now being implemented.”

The commitment comes amid a challenging time for the industry. A Conservative MP recently described hospitality as being “taxed out of existence” during a debate in Parliament.

Nicholls added: “This ban, alongside business rates reform and efforts to simplify licensing, are critical to cutting costs and red tape for businesses, and allow hospitality to drive high street regeneration.

“It’s positive that the bill doesn’t include any future tourist tax in England. The government made clear to us that it has no plans to introduce a tax and it was critical they followed through on that promise. We expect that commitment to remain throughout the passage of this legislation.

“The government should take this pragmatic approach at the budget and introduce measures to lower business rates, fix NICs and cut VAT for hospitality. Our businesses are being taxed out and we need to see action at the budget that allows hospitality to create places where people want to live, work and invest.”

The UORR clauses date back to the 1960s and essentially prohibited rents from ever going down.

MPs have called for this clause to be abolished since the 1990s as a result of the growing disparity between the rate of rents increasing and the retail price index.