In a consultative paper released last week, the Office of the Deputy Prime Minister (ODPM) addressed options for legislating against upward only rent review (UORR) clauses in commercial property leases. At this stage, it is not entirely clear how modified lease arrangements will affect CMBS structures, though market sources are confident that the impact, if any, will be minimal.
The legislators are making good on their stated commitment to promote more choice and flexibility in the commercial property leasing market. In the consultative paper, they cite the current UORR clause as a "source of grievance" to many in the commercial property market. Although the ODPM aims to review several options, its findings at this initial stage do not necessarily imply a change in legislation will follow. The consultation period is expected to extend into the third quarter of this year, followed by a final release thereafter, which would detail any definitive change in the legislative stance, market sources said.