Effect of abolishing upwards-only rent reviews in Ireland

The UK government introduced the Devolution and Community Empowerment Bill on 10 July 2025, which proposes abolishing upwards-only rent reviews in all business tenancies. Despite its stated aim to assist struggling retailers and help regenerate the UK's high streets, the bill will apply to all UK business tenancies.

In 2010, the Irish government abolished upwards-only rent reviews in all commercial leases entered into after 1 March 2010. The legislation outlawed any provision that had the effect of being upwards only.

Looking at the Irish experience 15 years' later, what lessons can be learned in England and Wales?

For example, landlords in Ireland successfully used landlord-only triggers to call for a rent review as this point was not addressed in the Irish legislation. This oversight allowed landlords to keep rent artificially high in a declining market.

While it is uncertain whether such clauses would withstand a court challenge for non-compliance, given that the wording of the Irish law bans any condition that effectively operates as an upwards-only clause, this point has been specifically addressed by the draft UK legislation under which landlord-only triggers will not be allowed.

Those tenants also got the benefit of open market rent reviews, whereas tenants on old leases were tied to rents set at the height of the market and to upwards-only provisions for three or four more rent review cycles.

Rather than help retailers, the legislation ended up putting those that already had a presence on the high street at a serious disadvantage. The position of tenants on old leases was not helped by the fact that the average lease duration at that time was 20 to 25 years, sometimes with a 15-year break but not always.

A notable effect of the legislative change in Ireland has been a shortening of typical lease durations. For example, retail leases now commonly last only five or ten years with a break option at year five.

Office and logistic leases have also reduced in duration to typically 15 years, but the longer lease terms in those sectors directly correlate with the significant development investment in Ireland in those sectors, whereas there is currently limited investment in retail.

Retail leases in the UK currently range from between four and seven years, so that a reduction in lease term should not cause a major impact on the retail sector at least.

However, it is possible that one effect of the change in the UK legislation will be a reduction in lease terms to five years, with tenants also contracting out under the Landlord and Tenant Act 1954, such that there will be no reviews at lease expiry.

Conversely, in the context of landlords' seeking a return on investment, it is possible that the trend towards shorter leases will be reversed, with landlords requiring a term certain and a guaranteed income.

The alternative mechanisms to upwards-only reviews, such as stepped rents, fixed rents, index-linked rent reviews and rent reviews subject to cap-and-collar adjustments would facilitate this guarantee on return and are permitted under the draft UK legislation.

In Ireland, there was an expectation that these alternative rent review mechanisms would be used to give landlords certainty on investment. However, other than consumer price index reviews, these alternative approaches remain relatively uncommon.

In an Irish context, the gap between publishing draft legislation and it becoming law was much shorter (three months) than the period anticipated for the UK legislation to be enacted, which is expected to receive Royal Assent in spring 2026. However, during that three-month period in Ireland, tenants behaved as if the draft law had already been enacted.

A major difference between the Irish legislation in 2010 and the draft UK legislation in 2025 is that Ireland was suffering from the severe effects of the 2008 global financial crash and market rents were at a historic low.

We have possibly not seen the true effect of the abolition of upwards-only rent review provisions in Ireland because rents have been gradually increasing since 2010. It remains to be seen how the Irish rental market will respond to any future economic downturn.

Despite initial fears of major market disruption, over the last 15 years Ireland's shift to open market rent reviews has not been as disruptive as anticipated and has become widely accepted, with the broader property sector ultimately embracing this model as the norm.