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D3
Upward-Only vs Indexed Rent Review
A rent review can be open-market upward-only or linked to an index. One protects income in falling markets; the other gives predictability. And a ban is coming.
Compare your options
Upward-only open market
Pros
- Rent cannot fall below the passing rent
- Captures market growth
- Valued by investors for secure income
Cons
- Ban legislated (Act 2026), not yet in force
- Unpopular with tenants
- Outcome depends on the market
Best for: Core investment on long leases, while upward-only remains lawful.
Index-linked (RPI or CPI)
Pros
- Predictable, known basis
- Can include a collar and cap
- Not affected by the upward-only ban
Cons
- Rent can fall if the index does (without a collar)
- May lag or outrun the real market
- Tenants prefer CPI over RPI
Best for: Shorter leases, smaller occupiers, and planning certainty.
Worked scenarios
New 15-year institutional lease
| Option | Outcome |
|---|---|
| Upward-only | Still lawful and valued, but track the ban's commencement. |
| Indexed | Increasingly used, often collared, to sidestep the coming ban. |
Decision checklist
- Check where the upward-only ban stands before drafting a new lease.
- If indexed, agree the index (CPI vs RPI), frequency, and any collar and cap.
- Model the rent under each basis over the term.
- Take advice on drafting and the review mechanism.
Relevant tools
Related guides
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