Interim results of the consultation on reforming the Landlord and Tenant Act 1954 confirm that no significant change to the existing law will be forthcoming.
The Consultation
From 19 November 2024 to 19 February 2025, the Law Commission ran a significant consultation on whether business tenancies in England and Wales should continue to benefit from security of tenure. Security of tenure is a right under the Landlord and Tenant Act 1954 (the “1954 Act“) which gives business tenants the option to renew their lease, or the capacity to be financially compensated where this is not possible.
The initial results are in, and the Law Commission has posted its interim statement, addressing the direction the consultation and any resulting reform is likely to take.
The current system is an opt-out model, where business leases automatically include this right to renew, unless it is expressly excluded from the lease.
The Options for Reform
The models of security of tenure proposed in the consultation were:
- No reform, retaining the current opt-out model; or
- Reversing the current model and opt-in; or
- Abolishing security of tenure; or
- Mandatory security of tenure.
The Law Commission has provisionally concluded that the existing ‘contracting-out’ model is the correct approach. The arguments in favour of retaining this were convincing and received the broadest support among consultees.
Many consultees expressed a view that the current model achieves the optimal balance between landlords and tenants. Many also voiced concerns that altering the model could lead to unnecessary disruption in the commercial leasehold market.
Other Key Issues Addressed in the Statement
Excluded tenancies
The 1954 Act currently excludes certain types of tenancies, for instance, agricultural tenancies, and the consultation asked whether the current list of excluded tenancies is still appropriate. The consultees were in favour of the current law and the Law Commission provisionally agrees.
Duration of Tenancies
The 1954 Act also excludes short tenancies of up to 6 months, and this was also consulted on. Views were mixed, but consensus seemed to favour increasing the threshold to 2 years, to give more flexibility to the short-term lettings market. The Law Commission provisionally agrees.
The Future
Substantial changes to the doctrine of security of tenure would have created uncertainty for both existing business leases and those under negotiation at the time of reform.
Property owners and developers value flexibility, which explains the limited appetite for sweeping changes to the current framework.
While often regarded as an administrative burden, with the high thresholds for landlords to establish grounds (f) and (g) remaining a source of frustration, the current model has been rigorously tested, and continues to evolve through case law.
Ultimately, the Law Commission’s final report will present recommendations for reform based on the consultees’ feedback. Any legislative reform will still need to be implemented in the usual way, passing through and receiving Parliamentary approval.
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