Last November, we looked at the Law Commission's initial consultation on the right to renew business tenancies under the Landlord and Tenant Act 1954. Options included complete abolition, substantial reform or no change at all.
The Commission has now published its provisional conclusion. It recommends that the Act should stay.
Background – last year's consultation
The November 2024 consultation asked the fundamental question – keep the Act or not? Four options were set out:
- keep the 1954 Act, but abolish contracting out (so all tenancies would be protected)
- abolish the Act entirely (no tenancies would be protected)
- keep the Act, but with contracting in instead of contracting out
- stick with the current position (keep the Act, with contracting out permitted)
The Commission also asked the industry whether the current list of excluded tenancies (e.g. six-month fixed term tenancies, agricultural tenancies) should be changed.
June 2025 – provisional conclusion on the key issue
In its statement on 4 June 2025, the Law Commission said it would be recommending that Parliament should:
- stick with the current position (keep the Act, with contracting out permitted); and
- stick with the current list of excluded tenancies (don't limit application of the Act by reference to size/location of premises, rent payable or sector e.g. retail).
The Commission will, however, consult on increasing the minimum fixed term for security of tenure from the current six months to two years. This would be a positive change for both landlords and tenants. Leases of under two years are never contracted in, except by mistake. The need for a contracting-out process increases friction and delays transactions for tenants anxious to move in and start trading.
Next steps
A second consultation paper will consider possible changes to landlords' grounds for opposing a renewal, and smoothing out the lengthy and expensive litigation process. Terms of renewal leases will also be under the microscope, perhaps with power for courts to impose turnover rent and energy improvement clauses.
This second consultation will also look at the contracting out procedure, which we think is well-intentioned but too cumbersome. The current formal warning notice and statutory declaration should be replaced with a simpler procedure.
We don't know yet when the second consultation will be published, but we are hoping this will be in autumn 2025. Many industry figures have commented that the Act requires significant reform, but it is likely to be some time before any changes become law.