… AN UPDATE ON THE LANDLORD AND TENANT ACT 1954 REFORM
A reminder
The Landlord and Tenant Act 1954 (“1954 Act”) provides a business tenant the right to a term known as “security of tenure”. Security of tenure is a right to: (a) remain in occupation of the property, even after contractual expiry of the lease, and (b) request a new lease of the property whilst the landlord is only able to object on very limited grounds.
Security of tenure is currently a fundamental part of commercial leases, but it has been heavily criticised by commercial landlords due to the protection offered to tenants whilst restricting landlords’ ability to use their property as they wish.
The Law Commission’s first Consultation Paper
In 2024, in response to the criticism, the Law Commission issued the first of two Consultation Papers which raised the following questions:
- Is the current “contracting out” procedure for security of tenure appropriate? If not, what model of security of tenure (if any) should be used?
- Are the current requirements for a lease to benefit from security of tenure fit for purpose? If not, how should they be changed?
- What duration of tenancy should benefit from security of tenure under the 1954 Act?
To review the first Consultation Paper, follow this link – https://lawcom.gov.uk/publication/business-tenancies-consultation-paper-1-and-summar/.
The first consultation ran from 19 November 2024 to 19 February 2025.
The Law Commission’s interim conclusions on the first Consultation Paper
On 4 June 2025, the Law Commission issued an interim statement on the direction of the 1954 Act reform. The statement sets out the Law Commissions “provisional conclusions” on the questions mentioned above. The provisional conclusions are set to shape the Law Commission’s second Consultation Paper. The main aim remains that the Law Commission wants to ensure the 70-year-old 1954 Act works for the ever-changing modern commercial leasehold market.
- Security of tenure
Provisionally, the current “contracting out” procedure is here to stay!
It has been said that the current model strikes the best balance between offering protection to commercial landlords and tenants whilst avoiding the significant disruption that would be caused to the commercial leasehold market if there was a change made to the well-established “contracting out” procedure.
- Types of tenancy benefitting from security of tenure
The 1954 Act sets out a list of tenancies that are automatically excluded from the 1954 Act and therefore do not benefit from security of tenure. This list includes mining leases and agricultural tenancies. The first Consultation Paper questioned whether the existing list of excluded tenancies was appropriate.
The consultation responses were generally in favour of keeping the current list and the Law Commission provisionally agreed to the same.
- Duration of tenancy benefitting from security of tenure
A tenancy of less than 6 months does not gain security of tenure under the 1954 Act. The first Consultation Paper raised the question of whether this was still appropriate.
This received the most mixed response out of the three questions but there was support shown to increasing the 6-month threshold to give greater flexibility in the short-term lettings market. The Law Commission has provisionally concluded that the 6-month threshold should be increased, and, in its second consultation paper, expects to consult on increasing the threshold to 2 years.
So, what now?
The provisional conclusions set out in this update will provide the basis for the Law Commission’s second Consultation Paper which is hoped to be published later this year.
The second Consultation Paper is set to focus primarily on the technical detail of how the 1954 Act might be reformed, including potential reform to the contracting-out procedure. The Law Commission’s final recommendations for reform will be set out in a report, following the second consultation.
Watch this space…
Laura.Salvati@tyrlaw.co.uk + 44 113 512 1046 + 44 7534 121 765
Sallyanne.Phillips@tyrlaw.co.uk + 44 113 323 7758 +44 7946 182 172
Eleanor.Tordoff@tyrlaw.co.uk +44 113 322 8240 +44 7908 190 547
