An important date looms on the horizon for the commercial property market: February 2030.

For decades, the Retail Price Index (RPI) has been the cornerstone of rent review mechanisms. But come February 2030, the methodology behind RPI is getting a fundamental overhaul to align with the Consumer Price Index including owner occupiers’ housing costs (CPIH).

If you are granting a lease today with a term longer than five years, your standard rent review is going to land right in the middle of this transition. And, just to keep things interesting, the government is simultaneously proposing a ban on upward-only rent reviews.

The commercial leasing landscape is facing its most significant transformation in a generation.  Here is what landlords and tenants need to know before signing on the dotted line.

RPI is “Changing” Not Leaving

In November 2020, the government admitted what many economists had been politely suggesting for years: RPI is flawed and uses outdated calculation methods.

Rather than scrapping it completely, RPI will continue to be published as a separate index, but the methodology used to calculate it will be aligned with the Consumer Price Index including owner occupiers’ housing costs (CPIH).

This matters because historically CPIH runs about 0.75% – 1% lower per year than RPI, while CPI has generally tracked modestly below CPIH.

Whilst that sounds small, on a £100,000 annual rent, the different between the old RPI and the new CPIH-based calculation could exceed £5,000 per annum after just one review cycle. For considerable property portfolios, the cumulative impact could run into significant numbers.

The Alternative Indices: CPI vs CPIH

With RPI’s transformation, commercial property owners and occupiers need to understand the available alternatives:

Consumer Price Index (CPI): The Bank of England’s target. It tracks around 650 goods and services but excludes housing costs entirely and usually runs about 0.5%-1% lower than RPI.

Consumer Price Index with Housing Costs (CPIH): This is the ONS’s preferred measure. It tracks the same basket of goods as CPI but includes housing costs and council tax.

Because CPI excludes housing, it is generally the lowest of the three measures. Naturally, tenants will push for CPI, while landlords will argue that CPIH is the “fairer” equivalent to the old RPI.

From a landlord’s perspective, the step from RPI to CPIH represents a material reduction in anticipated rental growth and investment returns. For tenants, particularly those in long-term leases with RPI-linked reviews, the change offers potential relief from higher rent increases.

The “Drafting Problem”

Any commercial lease granted in 2026 or beyond with a term longer than five years faces a fundamental challenge: if it includes a standard five-year rent review, that review will occur after February 2030. This creates immediate practical and legal issues.

A lot of commercial leases have rent review clauses linked to RPI. When these were drafted, RPI reforms felt like a distant, abstract concept. As a result, the provisions for what happens if RPI changes are often vague or entirely inadequate.

They create several problems:

1. Triggering uncertainty: Will RPI technically “cease to exist” or merely have its methodology changed? If the latter, then this may not trigger an index substitution clause (if one exists in the lease).
2. Definition disputes: What constitutes a “reasonable alternative” or “equivalent index”? Landlords and tenants will naturally disagree. Should it be CPIH, CPI (the lower alternative), or something else entirely?
3. Negotiation impasse: Without a predetermined alternative, parties may reach stalemate, requiring expensive dispute resolution or arbitration.

Even where a substitution clause exist, many fail to specify which index should replace RPI. This creates a negotiation challenge where:

• Landlords will naturally seek indices that maintain or increase growth rates (CPIH + 1% or + 2%, or argue for CPIH as the closest equivalent to RPI)
• Tenants will argue for straight CPIH or, more aggressively, CPI without housing costs, which would result in even lower increases

The Curveball: No More Upward-Only Reviews?

To complicate things even further, in July 2025, the government introduced the English Devolution and Community Empowerment Bill. While the bill is still making its way through Parliament and remains subject to amendment, current drafts indicate a clear policy direction away from upward-only rent review mechanisms in new business tenancies.

The End of Upwards Only?

For decades, landlords have relied on rent review that can only go one way: up.

If the new legislation passes as expected, upward-only rent review clauses will become unenforceable in all new business tenancies in England and Wales, including:

• Open market rent reviews that prevent rent from decreasing below the passing rent
• Index-linked reviews where the rent can only stay the same or increase
• Turnover-based rent structures that include minimum or protected rent levels, depending on how the legislation is ultimately framed
• Renewal leases granted after the ban comes into effect, even if the original lease contained an upward-only rent review

Crucially, you won’t be able to contract out of this via the Landlord and Tenant Act 1954.

Are there exceptions?

Currently, yes. The proposals suggest exceptions for fixed or “stepped” rent increases agreed at the start of the lease, as well as certain existing leases and agreements for lease entered into before the ban takes effect.

Caps (dictating the maximum increase) and collars (dictating the minimum increase) may be allowed within specified parameters, although the final position on collars remains uncertain.

A Double Whammy: The Intersection of RPI Changes and upward-only rent review ban

As currently drafted, the proposed legislation appears intended to capture index-linked rent review provisions where the mechanism prevents rent from falling. If enacted in its present form, this would mean that traditional upward-only index-linked reviews may no longer be enforceable in new leases, requiring indexation mechanisms to permit downward movement as well as increases. This means that:

• Traditional RPI-linked reviews where rent can only stay the same or increase will be prohibited
• Post-2030, CPIH-linked reviews will also need to allow for downward movement

Ultimately, Landlords face a lower index (CPIH) plus the new legal reality that the rent could actually go down. This fundamentally changes the investment profile of commercial property. Landlords may respond by demanding shorter lease terms or higher initial rents to account for  the risk. We may be more likely to see an increase in fixed stepped rents or potentially annual/biennial rent reviews to reduce the impact of any single review.

Practical Steps: Don’t Wait Until 2029

The five-year window that seems comfortable today will close faster than expected. If everyone waits until 2029 to renegotiate, the market will be hopelessly congested.

Here is your immediate checklist:

New Leases:

• Do not rely on generic substitution clauses. Instead, explicitly state which index will apply from February 2030.
• Tenants should resist upward-only rent reviews as they may soon be prohibited.
• Landlords should consider whether alternative structures such as fixed increases or shorter terms better suit their investment strategy.

Audit Your Portfolio: Landlords and tenants should systematically review all leases with terms or review dates beyond 2030 to:

• Identify which leases use RPI or supplementary RPI indices
• Assess the adequacy of existing substitution clauses
• Quantify the potential financial impact of the RPI transition
• Prioritise high-value or strategically important leases for renegotiation

Document any agreed changes in a formal Deed of Variation

Watch the Caps:

• Service charge caps linked to RPI are a hidden risk. Landlords, if your costs rise by true inflation but your cap only rises by the lower CPIH, you will be funding the shortfall
• Start Talking: Don’t wait until 2029 to address this issue. Opening dialogue now offers several advantages:
• Time to gather comparative index data over multiple years
• Opportunity to link RPI renegotiation with other lease amendments both parties desire
• Ability to reach agreement before the issue becomes contentious
• Potential to avoid the market becoming saturated with similar renegotiations in 2029