NSIA: Changes on the Horizon

The National Security and Investment Act 2021 (the “Act”) came into force on 4 January 2022 and was met with mixed responses. Since its implementation, the Act has been criticised for its vague definitions and occasionally conflicting guidance, impact on deal timetables, and even cited as a contributing factor in why the UK is not appealing for foreign investment (alongside the majority of the UK’s regulatory framework).

In an effort to refine the investment security regime, the Government launched a consultation on 22 July 2025, which proposes a number of amendments to the National Security and Investment Act (Specification of Qualifying Entities) Regulations 2021 (the “Regulations”).

How could it impact your business?

The consultation proposes a number of changes to the 17 sectors specified under the Regulations:

1. Introducing a new mandatory notification sector - Water. It is more surprising that Water was not previously caught by the Regulations, particularly given its incorporation as a mandatory notification sector by other Foreign Direct Investment regimes around the world and the recent scrutiny of private sector water companies in the UK. This development is therefore not altogether unexpected. The proposed amendments to the regulations would make notification mandatory for companies that have statutory powers and duties to supply water and/or sewerage services to premises within a specified geographical area by virtue of an appointment under section 6 of the Water Industry Act 1991.

2. Creating new standalone mandatory notification areas for sectors already covered elsewhere in the regulations - Critical Minerals and Semiconductors. The consultation proposes splitting Critical Minerals from its current home under the definition of Advanced Materials, and Semiconductors (currently incorporated into the definition of Computing Hardware) will also become a standalone sector (incorporating within its definition the rest of those activities currently under the definition of Computing Hardware).

3. Updating the definitions of a number of the sectors, most notably:

   • Artificial Intelligence: expanding the definition to require mandatory notification for organisations involved in the development of AI systems when this “results in either the technology not being available for consumers, creates or improves the capabilities of AI, or increases the speed of computation”. Interestingly, the consultation document proposes that this amendment to the definition (alongside a minor clarification regarding off-the-shelf AI solutions used purely for internal processes) will reduce the number of notifications and business in scope. Whilst only time will tell, given the potentially broad scope of this amendment it appears unlikely that this would ultimately reduce notification;

   • Suppliers to the Emergency Services: expanding the scope to include immediate subcontractors requiring security clearance at Non-Police Personnel Vetting (NPPV) Level 2 or above;

   • Data Infrastructure: extending the definition to include all third-party operated data centres alongside certain Cloud Service Providers (CSPs) and Managed Service Providers (MSPs); and

   • Critical Suppliers to Government: adding in a new ground for notification for actual or potential access to OFFICIAL and SENSITIVE information.

In addition to the proposed changes to the Regulations, Cabinet Office also announced that it intends to minimise the scope of transactions that may be caught under the definition of trigger event, carving out certain types of internal reorganisations or appointing liquidators, special administrators and official receivers.

What steps should you take?

The proposed changes to the Regulations emphasise the wide scope of transactions that may be caught under the NSIA regime, and the importance of seeking advice early in the lifecycle of a transaction.

Unlike many other regulatory notifications, an NSIA notification can take place prior to exchange, often as early as the signing of heads of terms, to prevent delays in the deal timetable. Failure to notify a transaction subject to mandatory notification can result in a void transaction, fines and criminal sanctions for those involved – including up to 5 years imprisonment. Our Competition and Consumer Team have extensive experience advising on NSIA filings, if you have any questions on the amendments to the NSIA regime or the existing scope of the NSIA, our team would be happy to help.

The move to digital share certificates for PLCs

On 15 July 2025, the Digitisation Taskforce published its final report regarding reforms to the UK's shareholding framework, recommending a three-step roadmap to phase out paper share certificates and transitioning to a fully intermediated digital system for public limited companies (the "Report").

The Digitisation Taskforce was established in 2022 with the aim of considering digitising and reforming the UK shareholding ownership framework. A public limited company (PLC) is a type of company that can offer its shares to the general public. This is different from a private limited company whose ownership is restricted as it cannot offer its shares to the general public.

The Report recommends a three-stage transition:

1. Removal of paper shares and establishment of digitised registers.

2. Preparing for a fully intermediated system.

3. All shares transition into the intermediated securities chain.

How could it impact your business?

Under step 1, a digitised register of the shares held in a PLC would replace a physical paper version as evidence of a person’s title to shares. The Report proposes a deadline for implementation prior to the end of 2027.

Step 2 explores ways to prepare and achieve a fully intermediated system. The Report anticipates that the deadline for this will be by 2029. Such preparation includes:

• Amending legislation to make it easier for PLCs to communicate with shareholders digitally; and

• The default position being that PLCs make payments to shareholders electronically (although alternative payment methods can be agreed).

The transition concludes at step 3 where all shares will exist solely within the intermediated system, meaning no physical share certificates held by the shareholders themselves. A person who holds digital shares following step 1 above will be able to move those shares out of the temporary digital shareholder register and to a chosen nominee in the intermediated chain like a broker or nominee company, who are recorded as the shareholder on the company’s register instead of the owner and their ownership interests will be reflected through the intermediary.

Any shares left on digital registers would be forcibly moved into the intermediated chain at a date to be decided. A “Technical Group” is to be appointed to oversee the implementation of the steps.

What steps should you take?

No immediate action is required. The challenge that will be faced by many PLCs will be tracing its shareholders, who may be hard to contact or trace.

When the time comes, as outlined in the Report, PLCs will be required to provide regular notice to their shareholders to make them aware of the digitisation process and how it affects them. Shareholders should be made aware of the measures that may be taken to transition shares into the intermediated securities chain and provided with an explanation of how they can exercise their rights through the intermediated system.

It is important to remember that the above only effects PLCs. Private limited companies need not brace for changes to their physical paper registers, although with the ever-growing technological advances and dependencies, the Report’s recommendations could be a sign of things to come.

Greater protection of personal information on Companies House

Individuals may now apply to Companies House to protect certain personal information from being made available, or continuing to be made available, for public inspection. On 18 July 2025, the Protection and Disclosure of Personal Information (Amendment) Regulations 2025 were published (the "Regulations”) containing details of the extended information that can now be concealed.

Previously, a director of a company could apply to remove their address from their listing on Companies House and/or prevent it from being disclosed to credit reference agencies, but would need to justify doing so, or meet qualifying criteria (such as they are at risk of violence or intimidation).

The Regulations now:

• remove such qualifying criteria;

• provide that individuals may apply for the “day” aspect of their date of birth, their signature and, in the case of directors of companies, their business occupation to be protected from public inspection; and

• amend the Companies (Disclosure of Address) Regulations 2009 to widen the protection of the usual residential address regime to allow any individual to apply to have their usual residential address made unavailable for public inspection.

There are a few exceptions, such as where the residential address is also the registered office address of an active company or forms part of a company’s name. Additionally, information contained within certain filings related to charges cannot be protected.

How could it impact your business?

The Economic Crime and Corporate Transparency Act 2023 introduced significant reforms to the powers of the Registrar of Companies aimed at improving corporate transparency and combatting economic crime. However, the Regulations have expanded this to prevent abuse of the personal information made available to the public. It is treading the fine line between the need for transparency, accountability and protecting individuals.

Published along side the Regulations when they were drafted was a memorandum explaining that “It is an individual’s absolute right to have their residential address, signature, day of date of birth, and business occupation protected”.

What steps should you take?

The Regulations apply to companies, unregistered companies and LLPs and covers England, Wales, Northern Ireland and Scotland. This article covers the changes in England and Wales, therefore advice should be sought in each jurisdiction about the specific amendments the Regulations have introduced in each area.

‘Consent or pay’ models

Many businesses use cookies and similar technologies on their websites to build a picture of the user’s interests and preferences, enabling the delivery of targeted advertisements based on browsing behaviour. The law requires businesses to obtain consent before deploying such cookies, which raises a critical question: can businesses charge a fee to users who refuse consent to personalised advertisements?

Perhaps surprisingly, the answer is yes, but not without adequate safeguards being in place. The legal and reputational risks of failing to comply with data protection and e-privacy laws can be severe, so getting these safeguards right is paramount.

The Information Commissioner’s Office (ICO) has issued guidance on these so-called ‘Consent or Pay’ models, following public consultation. This guidance provides a framework in which businesses can safely implement a ‘consent or pay’ model, where users either agree to data processing in relation to personalised ads or pay a fee to access the service without tracking.

How could it impact your business?

Ensuring users have a genuine choice, and ‘freely give’ consent for their data to be processed, is core to ensuring a ‘consent or pay’ model is legally compliant. Issues arise when the legitimacy of this choice is eroded. A model that pressures users into consenting, by offering no viable alternative or charging a disproportionately high fee, risks invalidating that consent.

It is therefore necessary for any business seeking to implement such a model to conduct a data protection impact assessment (DPIA) in connection. The aim of the DPIA should be to identify any risks arising from the proposed model and how these can be mitigated in its design, in line with the UK GDPR’s concept of ‘privacy by design’. The DPIA process should include an assessment of whether user demographics, the market position of the business and/or the proposed fee could impinge the concept of ‘consent’ in the business’ specific context.

What steps should you take?

Any business looking to implement a ‘consent or pay’ model must ensure there is no undue ‘power imbalance’ between the business and the users. Such imbalance could occur, for example, where the business is dominant in their field or where usage of the service is compulsory.

The business must also consider what level of fee is appropriate to ensure that the cost does not outweigh the service provided, which could pressure users to consent. Additionally, the model deployer must ensure that both the paid service and the consent-based service are materially the same, again representing freedom of choice.

In summary, the success of ‘consent or pay’ models hinge on careful balance between the commercial interests of the deploying business and the fundamental privacy rights of the user. By prioritising transparency, fairness, and genuine user choice, businesses can confidently navigate this complex regulatory landscape. Whereas, implementing a model which fails to meet these standards leaves the business exposed to regulatory enforcement action, eroded customer trust and/or complaints from users, and reputational harm.

The Arbitration Act 2025

The Arbitration Act 2025, is coming into force in England and Wales on 1 August 2025; it represents a significant update to the Arbitration Act 1996.

The Act aims to modernise arbitration law in line with current business practices and international standards. Among the key changes are clearer rules on determining the law that governs arbitration agreements, which should reduce uncertainty in cross-border disputes. Arbitrators will now be subject to new disclosure obligations, enhancing transparency and trust in the process. The Act also introduces stronger legal protections for arbitrators, helping to safeguard their independence. Tribunals will have the power to summarily dismiss weak claims at an early stage, improving efficiency. Additionally, decisions made by emergency arbitrators will be enforceable by the courts, and courts will be able to issue orders against third parties to support arbitration. Finally, the process for challenging an arbitrator’s jurisdiction has been streamlined.

How could it impact your business?

For businesses that rely on arbitration to resolve disputes, particularly those involving contractual agreements, these changes could have a meaningful impact.

The ability to dismiss weak claims early may lead to faster and more cost-effective dispute resolution than traditional litigation. Clearer rules on the governing law of arbitration agreements will provide greater legal certainty, especially in international contracts. The enforceability of emergency arbitrator decisions will be particularly useful in urgent situations, offering stronger interim relief options.

Importantly, the new rules will apply to any arbitration or arbitration related court proceedings initiated on or after 1 August 2025. This means that even existing contracts could be affected if a dispute arises after that date.

What steps should you take?

For businesses currently engaged in, or utilising arbitration, it is essential to review the arbitration clauses in both existing and future contracts to ensure alignment with the new legal framework. Internal policies should also be updated, and commercial teams fully briefed on the forthcoming changes. Seeking legal advice is strongly recommended, particularly where there are ongoing or anticipated disputes that may fall within the scope of the new regime.

For businesses not currently using arbitration, it may be worthwhile to seek legal advice to assess whether arbitration could serve as a viable alternative to traditional litigation, especially in the context of contractual disputes.

Employment Rights Bill – Implementation Roadmap

The Government has recently published an Employment Rights Bill (ERB) roadmap which sets out the phased delivery of the upcoming changes. Some of the changes will happen immediately (subject to Royal Assent) and others will be phased over the next two years. We have set out a summary below.

Immediate (awaiting Royal Assent)

• Repeal of the Strikes (Minimum Service Levels) Act 2023 and major parts of the Trade Union Act 2016 (For TUA, some provisions will be repealed via commencement order at a later date); and

• New protections preventing dismissal for participating in industrial action.

From April 2026

• Statutory Sick Pay (removal of lower earnings limit and waiting period);

• Enhanced whistleblower protections;

• Simplification of the trade union recognition process and digital/workplace balloting systems;

• Fair Work Agency establishment;

• Protective award for collective redundancies (maximum award doubled); and

• Day one paternity leave and unpaid parental leave.

From October 2026

• The ban of fire and rehire practices;

• Bringing forward regulations to establish the Fair Pay Agreement Adult Social Care Negotiating Body;

• Stronger tipping laws;

• ‘All reasonable steps’ requirement for employers to prevent sexual harassment;

• Introducing an obligation on employers not to permit the harassment of their employees by third parties;

• New rights and protections for trade union reps;

• The strengthening of trade unions’ right of access;

• Extending protections against detriments for taking industrial action; and

• Employment tribunal time limits to be adjusted.

From 2027

• Gender pay gap and menopause action plans (voluntary from April 2026);

• New rights for pregnant workers;

• Introducing a power to enable regulations to specify steps that are to be regarded as “reasonable” when determining whether an employer has taken all reasonable steps to prevent sexual harassment;

• Regulation of umbrella companies;

• ‘Day 1’ right – protection from unfair dismissal (Consultations will begin this summer and continue into early 2026);

• Flexible working rights to be strengthened;

• New statutory entitlement to bereavement leave to be introduced;

• Collective consultation threshold changes;

• Banning exploitative zero hours contracts; and

• Further reforms to unfair dismissal law.

How could it impact your business?

The Employment Rights Bill (ERB) has already undergone several rounds of amendments, and further changes are expected. In addition, many key elements of the ERB will be shaped by secondary legislation, which will provide further clarity and detail in due course.

While some specifics remain uncertain, the current roadmap offers valuable guidance on the anticipated timeline, enabling businesses to plan and prepare effectively.

The reforms introduced by the ERB will have wide-reaching implications for all employers - particularly in areas such as unfair dismissal rights, family leave rights and collective consultation obligations.

What steps should you take?

In addition to monitoring the anticipated changes under the Employment Rights Bill, now may be an opportune time to take proactive steps. Employers might consider initiating employee change or harmonisation processes to align terms and conditions across the workforce. Carrying out a legal and risk audit to understand what areas of the ERB proposals will impact your business is also sensible.

This transitional period also presents a valuable opportunity to review and revise employment contracts - particularly to introduce greater flexibility that can accommodate future legislative developments.

Non-disclosure agreement ban

A whole new section has been added to the Employment Rights Bill (ERB) in relation to non-disclosure agreements (NDAs) which bans NDAs relating to harassment or discrimination.

The accompanying government press release states, “If passed, these rules will mean that any confidentiality clauses in settlement agreements or other agreements that seek to prevent a worker speaking about an allegation of harassment or discrimination will be null and void. This will allow victims to speak freely about their experiences and their employer able to support them publicly.”

However, there is power to make regulations on “excepted agreements” where the ban does not apply. Currently we do not know what agreements may be “excepted”. However, we anticipate that it might cover where an employee asks for confidentiality provisions to be included, provided they have taken independent legal advice.

How could it impact your business?

The proposed NDA restrictions could significantly reshape how employers handle harassment and discrimination claims. Key impacts include:

• Settlement strategy: Without confidentiality protections, employers may be less inclined to settle such claims, particularly where the employer has a strong position.

• Contract Review: Existing agreements and policies will need updating to comply with the new rules.

• Reputation & Culture: Greater transparency may expose businesses to reputational risks but also encourage a healthier workplace culture.

• Legal Compliance: Employers will need clear legal guidance to navigate what confidentiality is still legally permissible.

What steps should you take?

At this stage you don’t need to take any specific action, however, as this topic progresses you will need to review your settlement strategy and documents.

Grounds for strike out - Forrest v Amazon Web Services

Striking out a claim is an attractive approach to a case for Respondents, where they consider that a claim has little prospect of success. However, the recent case of Forrest v Amazon Web Services offers some useful guidance on when an application for strike out should be considered by a Tribunal.

Strike-out can be applied for in limited circumstances, and one or more of the following needs to be established:

• The claim is scandalous or vexatious or has no reasonable prospect of success;

• A party’s conduct has been scandalous, unreasonable or vexatious;

• Non-compliance with tribunal rules or orders;

• The claim or response has not been actively pursued; and/or

• It is no longer possible to have a fair hearing.

If one of the above conditions are established, the Tribunal will assess whether to strike out all or part of the claim or consider whether a less draconian method is appropriate.

Forrest v Amazon Web Services

In this case, the Claimant was an unrepresented neurodivergent litigant in person who brought various discrimination and whistleblowing claims. When bringing his claim, he failed to complete a list of issues and disclose his medical notes, despite the Employment Tribunal ordering him to do so. The Tribunal confirmed to the parties (when making the orders) that non-compliance with the orders would result in a strike-out. Following the Claimant’s failure to comply with the Employment Tribunal Orders, the Respondent made an application for strike out and the Tribunal struck out the entire claim. The Claimant appealed to the Employment Appeal Tribunal (EAT).

The EAT upheld the Claimant’s appeal and disagreed with the decision of the Employment Tribunal, finding that the decision to strike out the claim was inappropriate in the circumstances. The EAT confirmed that Tribunal’s should strike out in limited circumstances and where there had been failings to comply with case management orders the Tribunal should assess whether a fair trial is still possible. Unless Orders, which are an order given by Tribunal’s to warn against inaction, should be used initially and would have been appropriate in this case.

How could it impact your business?

Whilst applying for strike-out is an attractive option in cases where the Claimant has failed to comply with Tribunal directions, the case confirms that strike-out should be a last resort. Tribunals will continue to be wary of accepting such an application and, in the event they do, depending on the circumstances, it may be subject to an appeal.

When does a legally binding employment contract begin – McMillan v Beacon Education MAT [2025]

In the recently decided case of McMillan v Beacon Education MAT [2025] the Tribunal provided a useful reminder on when an employment contract begins and accordingly, when an offer can be revoked.

Background

Mr McMillan was a teacher and after working in Vietnam for 8 years, with stints in Kazakhstan, Dubai and Abu Dhabi, he applied for a role at a school in Minehead. When making his application, he explained to the school that verifying his references would be difficult as he had worked in various countries over the years. He was verbally offered a role subject to and conditional on:

• Successful DBS clearance;

• Successful medical health checks; and

• Two satisfactory references (to come directly from the referee and not addressed ‘to whom it may concern’).

Mr McMillan failed to complete his DBS check as he did not provide the necessary documents and he could only submit a ‘to whom it may concern’ letter dated 2017 from an education centre in Vietnam. The job offer was subsequently withdrawn. Mr McMillan claimed that a contract was in place and subsequently brought a claim for breach of contract and direct discrimination by association, alleging the decision to revoke the offer was made because his wife and children are Vietnamese.

Breach of Contract Claim

The claim was rejected by the Tribunal, on the basis that the offer had clearly been made subject to conditions which were not satisfied. The breach of contract claim therefore fell away.

Direct Discrimination

Under section 13 of the Equality Act 2010, direct discrimination occurs when an individual is treated less favourably because of a protected characteristic. This claim can also be brought by an individual who does not possess the protected characteristic themselves but is associated with someone who does. In this case Mr McMillan brought a claim of direct race discrimination because his wife and children are Vietnamese. This was also rejected by the Tribunal because the offer came after Mr McMillan had made the school aware he was married to a Vietnamese woman and also because the offer was withdrawn because of lack of satisfactory references and not because of his association with this wife and children. The discrimination claim also failed.

How could it impact your business?

This case demonstrates the importance of making job offers which are subject to necessary requirements conditional on meeting those requirements. Making a job offer subject to conditions means the employment contract is not valid unless those requirements are met and you can withdraw the offer of employment with very limited risk of a breach of contract claim. Typical conditions include clear DBS checks, specific qualifications, satisfactory references and proof of a right to work in the UK. It is only once these conditions are satisfied that a contract becomes binding. At that point, if you wish to end the arrangement, even before the employee starts work, you must give proper notice.

What steps should you take?

If you have roles which are subject to certain requirements it is important that you make job offers conditional on meeting those requirements and you are clear and careful with the wording of the conditions.

It goes without saying, but it is also important to demonstrate that a decision to revoke an offer of employment is free from any form of discrimination and you can suitably evidence the decision-making process.

Consultation on UK Sustainability Reporting Standards

The UK Government’s November 2024 Mansion House package outlined plans for a sustainable finance framework based on new UK Sustainability Reporting Standards (UK SRS). The UK SRS are mostly based on IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures. A consultation is now running seeking feedback on six relative minor UK-specific amendments to the international base standards, together with evidence on costs and benefits to inform future corporate reporting reforms and sustainability assurance oversight.

How could it impact your business?

The UK SRS aim to improve sustainability-related financial disclosures. Large companies will be most affected, needing to align governance, strategy and risk processes with the new standards, potentially overhauling data systems and reporting practices. Medium-sized firms may face indirect pressure from stakeholders and need to begin tracking sustainability metrics. Small businesses are unlikely to be directly impacted but may experience supply chain expectations.

Currently, the standards are voluntary, with no penalties for non-compliance. However, future regulations may introduce mandatory reporting and enforcement mechanisms, especially for large entities. The Government is consulting on the costs and benefits to inform future decisions.

What steps should you take?

Companies should assess their readiness, particularly in data collection, internal controls and ESG governance. While small firms may not need immediate action, medium and large companies should begin aligning policies and processes with the UK SRS framework to stay ahead of potential regulatory changes.

Companies wishing to participate in the consultation have until 17 September 2025 to do so. More information can be found here. 

Discontinuation of Series Marks at the UK Intellectual Property Office

This Autumn, as part of the UK Intellectual Property Office’s (UK IPO) digital transformation consultation, we expect to see changes to UK trade mark services, including the discontinuation of series mark applications for trade marks. Under the current system, if you have different variations of your trade mark then they may qualify as a ‘series mark’ - a series of trade marks consisting of up to 6 marks in a single application which look, sound or are conceptually the same with only minor differences.

As indicated in our April Horizon Scanning, the UK IPO is seeking to remove the option to allow future series mark applications from Autumn 2025 (date to be confirmed). This is due to the fact that a high percentage of unrepresented applicants who applied for a series mark had their application objected to for not meeting the requirements for a series mark, resulting in applicants paying for additional trade mark applications unnecessarily. Where an applicant is represented and advised by an experienced professional, this risk is alleviated.

How could it impact your business?

If you have any existing series mark registrations, these will remain valid and will not be impacted by this change. The series marks service will only be discontinued for new applications when the new digital trade marks service is launched.

Filing a series mark is currently more cost effective than filing separate applications which incur a filing fee of £170 (plus £50 for each additional class) per application. Instead, a series mark incurs a fee of £170 for two marks and £50 for each additional mark (up to 6 marks). As an example, under the current rules, if an applicant registers 6 marks as a series mark in 1 class, there would be a saving of £700 in filing fees.

Therefore, if you have not yet applied for registration of your trade mark and would be looking to take advantage of the option to file a series mark, it would be prudent to do so before series marks are discontinued by the UK IPO.

What steps should you take?

If your business has not yet registered its trade marks, you should contact a trade mark specialist for a review of your portfolio to seek advice as to whether you should be looking to apply for a series mark before the service is discontinued.

Government announces plans to ban “upward-only” rent reviews in commercial leases

To the surprise of the property community, draft legislation was quietly introduced in Parliament on 10 July 2025 which aims to restrict the commercial freedom which landlords and tenants presently have to agree how rents may be reviewed in business leases in England and Wales. The legislation is Schedule 31 to the English Devolution and Community Empowerment Bill (the "Bill”), which will add new Schedules to the Landlord and Tenant Act 1954 (the "1954 Act”).

It is currently standard practice for leases over a certain length (typically longer than 5 years) to include rent review provisions in one of two basic forms (with the first being by far the most common):

1. At each review date the rent increases in line with the market, or if the market value has decreased, the rent stays at the level it was before the review date (the “Ratchet Review”); or

2. At each review date the rent may increase or decrease in line with the market, but never goes below a stated figure (the “Threshold Review”).

On the one hand these types of review give property investors and their lenders certainty (subject to other commercial factors) as to the rents which will be achieved. On the other they are arguably unfair to tenants, who can find themselves paying rents which are above the market level.

If passed in its current form what would be banned?

• The Bill will prevent both Ratchet and Threshold Reviews, whether the review is based on an open market assessment, a measure of inflation (such as an index), or tenant turnover.

• The Bill applies to ‘business’ leases as defined by the 1954 Act. Broadly speaking this means a lease where the tenant occupies the property in a commercial capacity. However, the 1954 Act also applies to organisations which are not intended to be profit making, such as charities or clubs.

• Only leases granted after the Bill comes into force (and not pursuant to an agreement for lease entered before then) will be affected.

• However, this includes renewals of leases granted pre-Bill, whether the new leases are entered voluntarily or pursuant to the 1954 Act’s procedures.

• Agreements for lease or put options aimed at increasing the rent above market levels will also be caught.

What will still be allowed:

• Leases with fixed rental uplifts (stepped rents). Only leases under which the future rent is not known at commencement are affected.

• Index-linked rent reviews without caps or collars.

• This might include those based on a non-standard index, e.g. RPI + 2%, though this is contrary to the spirit of the Bill.

Other provisions:

• Any provisions in leases which are drafted so that only a landlord can manage the review process will be amended to allow tenants to start a rent review or indeed manage the process.

• The Bill includes anti avoidance provisions which will override express provisions in lease agreements.

How could it impact your business?

The change will impact all leases to which the 1954 Act applies (regardless of whether those leases have been excluded from the security of tenure provisions). Residential leases will accordingly not be impacted. The proposals are not retrospective and accordingly only impact new arrangements.

Upwards only reviews are the cornerstone of how property assets are valued and, if implemented, the proposals will change the complexion of the property investment market. While the Government’s intentions appear to be limited to trying to address the vacant town centre retail market, the impact of proposals will be far more widespread covering sectors other than just retail.

A likely consequence will be shorter leases without the ability for the tenant to renew pursuant to the 1954 Act, as that would effectively bypass the need for reviews. We suspect that there will be a knock-on impact on other commercial terms in such arrangements.

Litigation over the Bill to test its bounds is to be expected, which would create some uncertainty in the interim.

What steps should you take?

The legislation is currently at its first reading stage and has already set alarm bells going on both sides of the market. We can expect a significant amount of lobbying and accordingly for now it’s a case of watch this space.