The Law Commission has initiated a comprehensive review of Part 2 of the Landlord and Tenant Act 1954 (LTA 1954).
Part 2 of the LTA 1954 gives business tenants the statutory right to remain in occupation and the right to renew their tenancy when their existing tenancy comes to an end. This legal right to a new tenancy is more often referred to as “security of tenure”.
This legislation, introduced shortly after the Second World War, has been largely unchanged for almost 70 years. Whilst there have been some updates to the Act to improve its flexibility, it has been some 20 years since any significant updates were made.
During the last 20 years, the commercial landscape has changed drastically. There has been a global pandemic and a significant increase in online sales and services. This has prompted the need for further modernisation of the Act.
On 19 November 2024, the Law Commission published its first consultation paper, which sought input on four potential models for reforming security of tenure:
- No security of tenure: Abolishing the LTA 1954 entirely, removing the automatic right to lease renewal;
- Contracting-in regime: Making the default position no security of tenure, but allowing the parties to opt in;
- Current contracting-out regime: Retaining the existing system where security of tenure is the default position, with the option to opt out; and,
- Mandatory security of tenure: Compulsory security of tenure with no option to contract out.
The first option favours landlords and offers minimal protection to tenants whereas option four offers the maximum tenant protection.
The consultation also explores whether certain types of tenancies should be excluded from the Act based on factors such as property use, lease duration or other characteristics such as floor space, rent payable and location.
The consultation period for the first Consultation Paper runs for a period of 3 months and closes on 19 February 2025. During that period, legal professionals, stakeholders including landlords and tenants are encouraged to submit their views.
Once the Law Commission has analysed the responses from the first consultation, it will then publish a second consultation paper and will detail how the recommended model and any change in scope will work. The final stage will be to consider the responses to that second paper and for the Law Commission to make its final recommendations to the government.
For any questions regarding commercial lease renewals, or the implications of the reforms for your, please contact our Property Litigation Team on [email protected] or on 0121 233 4333.
