On 19 November 2024, the Law Commission published a consultation paper examining whether the Landlord and Tenant Act 1954 remains effective in meeting the needs of today's commercial landlords and tenants.
Now over 70 years old, the 1954 Act has long been a cornerstone of commercial lease law in England and Wales, but there is growing concern that it may no longer reflect the realities of the modern property market.
What does the Landlord and Tenant Act 1954 currently say?
Under the current legislation, most business tenancies in England and Wales benefit from security of tenure, unless the lease has been contracted out of the Act or falls under a statutory exception. This legal protection gives commercial tenants the right to request a lease renewal when their term expires.
While landlords and tenants can agree to contract out of the Act, doing so requires following a formal procedure involving advance notices, declarations, and specific lease wording. Notably, it has been more than two decades since any substantial changes were made to the Act.
With recent shifts in the way businesses occupy and use commercial property—such as hybrid working and flexible leases—the Law Commission believes now is a critical time to evaluate the Act's relevance and functionality.
Is security of tenure still fit for purpose?
The Law Commission's first consultation paper raises the central question: Is the current model of security of tenure still appropriate for today's commercial property market?
Professor Nicholas Hopkins, Commissioner for Property, Family and Trust Law, commented:
"The existing model of security of tenure was introduced decades ago, when the commercial leasehold market looked very different from how it does today. In our first Consultation Paper, we ask whether the model is still fit for purpose, or if it's time for a change. We are keen to hear from all of those affected by the law."
What are the proposed models?
The Law Commission is exploring four potential approaches to reform:
- Retain the current 'contracting out' process
- This offers flexibility but can be administratively burdensome and legally complex.
- Introduce a 'contracting in' system
- Under this model, all tenancies would be excluded from security of tenure by default, with parties needing to opt in. This could significantly enhance a landlord's negotiating position.
- Make security of tenure mandatory
- This would provide strong protection for tenants but may limit flexibility for landlords.
- Abolish security of tenure altogether
- This radical option would remove automatic renewal rights, representing a major shift in commercial property law.
Additionally, the Commission is asking for feedback on which types of tenancies should continue to fall within the scope of the 1954 Act.
What happens next?
The consultation period closed on 19 February 2025. Once submissions are reviewed, the Law Commission is expected to release a second consultation paper. Any reforms that follow are likely to have a significant impact on commercial leases and the way business tenancies are negotiated and managed.
This information is for guidance purposes only and does not constitute legal advice. We recommend you seek legal advice before acting on any information given.
