Long-overdue reform for 70-year-old business leasehold legislation

In March 2023, the Law Commission announced that it will review the Landlord and Tenant Act 1954 (the Act). The mainspring of the Act is security of tenure: the right for eligible commercial tenants to remain in their premises.

The Act was introduced following the Second World War to protect business tenants from paying rent over the market rate and/or forcing them to leave their premises. Whilst the premise of the Act is relatively simple, it is notoriously badly drafted.  The mechanics and processes are complex, have been amended over time and supplemented with an ever-growing body of case law. At the time of announcing the review, the Law Commission commented, “those who rely on the Act report that it is inflexible, bureaucratic and out of date, causing extra cost and delay for both landlords and tenants resulting in empty properties that cannot be quickly re-let.”

The retail sector has undergone vast change since the Act was introduced, and many feel there is now need for reform to reflect these changes. Parts of the Act were initially scheduled to be reviewed in 2020 but the onset of the Covid-19 pandemic meant it was put on the backburner. The Pandemic, and the associated rise of online retailing, has further shifted business needs away from the high street, reinforcing the need for commercial lease renewal laws to be modernised.

The one specific discussion point the Commission have flagged for review is the requirement for landlords, and tenants to “contract out” of the Act. At present, the procedure for contracting out requires the landlord to serve a warning notice on the tenant and the tenant must then make a declaration confirming they are giving up their right to security of tenure before completion of the lease. The process in inefficient and any procedural errors leave landlords susceptible to a security of tenure claim down the line.

The review of the Act was announced in Spring 2023, with a consultation paper setting out issues and possible solutions expected in December of last year. It has been delayed twice since then and the review is now anticipated to arrive this Autumn. It is unclear whether the delays speak to the scale of the proposed reform at the moment.

I intend to provide a further update once the Law Commission have published their consultation.

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