Why offices should be exempt from the upward-only rent review ban

Government needs to exempt offices from the upward-only rent review ban if it wants to keep the UK attractive to overseas investors and deliver real growth. That was the message from a BCO panel, kindly hosted by Savills.

Geoff Scodie, head of City asset management at British Land, Will Densham, partner and head of real estate litigation at Eversheds Sutherland and Tom Whalley, director of lease consultancy at Savills, joined BCO chief executive Samantha McClary, for a debate about what the UORR ban really means for the office sector.

A ban nobody seems to be talking about

The ban sits in the English Devolution and Community Empowerment Act 2026 and has Royal Assent but is not yet in force. A consultation on caps and collars and the secondary legislation are still to come. Some expect that consultation next summer, others think it will be kicked down the road until 2028. Others hope it just quietly goes away.

After the initial outrage that the ban was introduced with no consultation, the delay in its implementation appears to have bred complacency.

“The ban was something everyone panicked about for about four weeks and then started ignoring,” said British Land’s Scodie. Evershed Sutherland’s Densham was a bit more blunt. Too many people still assume it will never happen, he said, adding that it was “matter of when, not if”.

Densham also shot down hopes of a collar being agreed, even alongside a cap, as government will only see a it as a restriction on downward movement by another name, he said.

The overseas investor impact

Upward-only reviews are one of the key pillars that make UK property investable, particularly for overseas capital. And while the ban is hard to separate from the multitude of other issues affecting the office investment market today, there is concern it will ultimately turn investors away from the UK office sector which, despite its challenges, remains the biggest and most valuable part of the commercial market.

Stephen Down, chairman of central London & international investment at Savills, has spent more than 40 years in the market and was frustrated at how little push back there had been to the ban. 

He relayed a meeting with some investors planning substantial investment in London offices, who told him plainly that if downward reviews arrive, they would likely invest less. He warned that the hit to values would be “potentially significant” and that some REITs’ discounts to NAV could widen further.

“Acceptance is not an option,” he said.

BL’s Scodie countered with a more positive experience, explaining how German funders – widely recognised as some of the most risk-averse players in the market – seemed relatively relaxed and were still writing five-year refinancings on office assets.

The real problem is the gap between headline and net

The panel agreed that current rent review mechanisms are significantly influenced by market incentives. Large incentives create a gap of around 20% between headline and net-effective rents. In the City, 24 months’ rent-free on a 10-year term is not unusual. A review that can go down risks resetting rents to that discounted level, even in a rising market.

Scodie called this his “ongoing pain” with rent reviews. He sees a chance to design mechanisms that “move up and down with the market rather than at a 20% discount to it”. Savills’ Whalley is already working with clients on potential solutions: measure the net-effective rent at the start of the lease and again at review, then apply the percentage change to the passing rent.

Deals are already bending around the ban

And he’s not the only one. Despite the quiet around the ban, the market is starting to adapt, particularly with the threat that agreements for renewal leases entered into after 17 March 2026 can be caught retrospectively.

Whalley described situations where tenants are seeking an Agreement for Lease on existing space and, with the ban, landlords are seeking indexation, which projects around 20% growth over five years – likely to be far more than would be payable under an upward-only review. Such deals often reach a stalemate and are being rescued only by restructuring to sit outside the retrospective rules.

After the ban, the panel expects to see more stepped rents and indexation on larger deals, with shorter leases on smaller space. Leases will also sit outside the 1954 Act, so landlords can reach their reversion sooner.

Indexation is not the answer either

One audience member asked whether the industry should scrap market reviews altogether and move to CPI. Offices, they argued, are competing for capital with data centres and industrial assets that offer simple indexed growth.

Scodie wasn’t convinced. If property returns become an index, he mooted, investors could buy that index elsewhere without the risks of real estate. The “hope of value creation” is what makes offices worth owning, and that depends on genuine reversionary events. The better outcome, the panel agreed, is simpler structures that properly price risk and give both parties choice.

Offices should be exempt

While the panel’s practical advice was to draft as if the Act was already in force, to know which words would be struck out and agree a commercial position that still works without them, the group unanimously believed that offices should be exempt from the ban.

Offices draw in international capital, provide the workspace businesses need to grow and support jobs in every part of the UK. Getting this wrong would put all of that at risk, just when growth matters most.

While it may have Royal Assent, how it is implemented is still open to consultation. That is why evidence matters now. The BCO wants to hear from occupiers, investors, developers and advisers about the real impact of applying the ban to office deals: on international investment, on the delivery of the workspace businesses need and on the UK’s appeal as a place to build a business.

Good policy depends on good evidence, and the BCO is here to provide it, giving government a clear and balanced picture of how the office market really works.

If you would like to take part, email us at mail@bco.org.uk with the subject line UORR.