Reforming the Landlord and Tenant Act 1954: A Review for a Modern Commercial Leasing Landscape

The Landlord and Tenant Act 1954 is a key piece of legislation that governs the rights of business tenants in England and Wales. Part two of the Act provides security of tenure to commercial tenants, ensuring they have the right to renew their lease when it expires, unless there are specific legal grounds for the landlord to refuse renewal on.

The Law commission is undertaking a comprehensive review of Part two of the 1954 Act to assess whether it remains fit for purpose in the current commercial leasehold market. The Act is now 70 years old and has no significant reform in the past 20 years, therefore with the changes to the retail trends, economic landscape and the shift to e-commerce, many believe that the current system is outdated, unclear and inefficient.

Key issues identified with the act

• The Act is seen as burdensome for both landlord and tenants, which creates unnecessary costs and delays in leasing commercial properties.
• Many landlords and tenants chose to contract out of the Act to avoid complexities.
• Concerns that the act may hinder modern commercial leasing properties, particularly in high streets and town centres.
• The legal framework needs to better align with governmental priorities, including net zero and the ‘levelling up’ programme.

Objectives of the review

The law commission aims to modernise the Act by:

• Making it more widely used rather than frequently opted out of.
• Ensuring clarity and efficiency, so that businesses can quickly and easily lease properties.
• Supporting the better use of commercial space, especially in town centres.
• Creating a balanced relationship between landlord and tenants.

The First Consultation Paper (November 2024 – February 2025)

The First consultation gathered views on potential alternative model for security of tenure, including:

• Mandatory security of tenure – tenants having automatic renewal rights.
• Abolition of security of tenure – removing automatic renewal rights.
• A ‘’contracting in’ model – tenants must explicitly opt in for renewal rights.
• They also collected feedback on the scope of the act, meaning the types of business that qualify for renewal rights should be revised.

Next steps – the second consultation paper

The law commission are currently analysing the response from the first consultation. The second consultation paper will:

• Recommend a preferred model for security of tenure.
• Outline how the proposed change would work in practice.
• Consider any adjustments to the scope of the act.

The second consultation timing depends on the findings of the first. The goal of this review is to ensure a modern framework exists that will support businesses and landlords more effectively. As the Law Commission proceeds with more reviews and recommendations, the commercial property market may see  significant legislative changes in the coming years.

How Pinney Talfourd can help

If you need any help or advice regarding the potential impact of these changes on your business or property or how the current legislation applies to you, please do not hesitate to contact a member of the commercial property team.