The Law Commission has published proposals to reform security of tenure for commercial tenancies under the Landlord and Tenant Act 1954 (“1954 Act”). This is the most significant review of the Act in over 70 years. The consultation closes on 16 September 2026, and nothing has been finalised yet, but landlords should understand the direction the proposals are taking as it will impact on plans they may have for their properties going forwards.
Background
Under the 1954 Act, business tenants can remain in occupation and renew their lease when it ends, unless the landlord opposes renewal on limited specified grounds. The Law Commission has already confirmed that this basic model of security and contracting out should remain in place. However, this further consultation addresses how the regime should operate going forwards in practice.
The Proposals
The consultation proposes that the qualifying threshold for security of tenure would rise from the current six months to either one or two years, taking a greater proportion of shorter lettings outside the protected regime, and new periodic tenancies would be excluded from protection entirely. Contracting out would also be simplified. Rather than the current notice and declaration procedure, the lease itself would carry a prescribed warning and tenant declaration, and any written tenancy, including a renewal tenancy, could be contracted out, which is not currently permitted in all cases.
The terms of a renewal tenancy are also under review, including whether the court should be able to take environmental matters into account when setting them. On rent, the Commission is proposing to put beyond doubt that the court can grant a renewal tenancy on a turnover rent, and to improve the process for setting interim rent while a renewal is being negotiated.
Further proposals may affect how landlords recover possession and what it costs them to do so. Ground (f), the redevelopment ground, may be widened to cover modern construction methods and energy efficiency works, or replaced with a broader substantial works test. Compensation on a successful no fault opposition may also change, with the Commission considering whether it should continue to be based on rateable value and whether the 14 year threshold for the higher rate should be replaced with a sliding scale.
The consultation also considers whether disputes should move away from the County Court to the High Court or the Tribunal to be dealt with more efficiently. It also suggests that Alternative Dispute Resolution could have a greater role in resolving disputes.
Next Steps
The Law Commission will review consultation responses before deciding whether to recommend legislation to the Government. Landlords with portfolios of shorter lettings, or with redevelopment plans that depend on ending protected tenancies, have a direct interest in how these proposals develop. More information on the consultation and how to provide feedback on the proposals can be found here: https://lawcom.gov.uk/project/business-tenancies-the-right-to-renew/
The Law Commission is also holding an online consultation event on 9 September 2026, from 12:00pm to 1:15pm.
For assistance in managing the renewal or termination of a Commercial Lease under the 1954 Act framework, please contact Claire-Elaine Arthurs at cearthurs@excellolaw.co.uk
