Proposed commercial rent control laws could have unintended consequences, according to Taylor Rose Law Firm.
The government is proposing a ban on only rising rent increases for commercial real estate, in an effort to support small businesses with costs.
Any ban would come from an amendment to England’s Devolution and Community Empowerment Bill, which is still being passed by parliament.
The legislation proposes to only abolish upward rent increases in new commercial leases covering high streets, offices and manufacturing in England and Wales.
Patrick Ansell, legal lead at law firm Taylor Rose, said: “Apart from the commercial implications for landlords and investors of a ban on only upward rent increases for commercial properties, the proposals could also have unintended consequences from a legal perspective.
“For example, landlords may seek to increase rent through alternative mechanisms, such as fixed periodic increases agreed at the start of the lease, rather than just upward rent reviews.
“It is also possible that landlords would be more inclined to insist on outsourcing security of tenure under the Landlord and Tenant Act 1954, to avoid being tied to a tenant indefinitely, with the risk of rents falling once it is in use.”
Other real estate professionals have warned that the proposed rent controls will “undermine real estate values”.