Law Commission kicks off review of Landlord and Tenant Act 1954

Potential reform of one of the most fundamentally important pieces of legislation for commercial property has moved a step closer, as the Law Commission launched its initial consultation on the Landlord and Tenant Act 1954. This is the first in a two-stage process in which the Law Commission seeks the views of a wide range of stakeholders on the future of the 70-year old legislation and the important issue of security of tenure for commercial tenants. The commission has published its consultation paper considering how the right to renew business tenancies, set out in Part 2 of the 1954 Act, is currently working and whether legislation introduced shortly after the Second World War still meets the needs of business tenants and landlords in the 21st century. See also: Shaping the future of the 1954 Act The current law gives business tenants the right to renew their tenancies when they expire, under certain conditions. While the law has been updated in the past – notably to allow tenants to “contract out” of the right when the tenancy is granted – it is now around 20 years since the last significant updates were made. The Commissioner for Property, Family and Trusts, Professor Nicholas Hopkins said: “The existing model of security of tenure was introduced decades ago, when the commercial leasehold market looked very different from how it does today. In our first consultation paper, we ask whether the model is still fit for purpose, or if it’s time for a change. We are keen to hear from all of those affected by the law.” The consultation will consider: The pros and cons of the current “contracting-out” model of security of tenure, and compare it with three alternative models: mandatory security of tenure; abolition of security of tenure; and a “contracting-in” model. Whether the types of business tenancy which can benefit from security of tenure are the right ones. Welcoming the launch of the consultation, minister for local growth, Alex Norris said: “We want to give local businesses the tools they need to breathe new life into our high streets and town centres. “That is why we have asked the Law Commission to carry out this important work so we can bring forward a legal framework that is fit for purpose, boosting economic growth and productivity while making sure small businesses can occupy property more quickly and better understand their rights.” Commenting on the consultation, Paul Tonkin, real estate disputes partner at Hogan Lovells International LLP and chair of the Property Litigation Association’s Law Reform Committee, said: “With the Act celebrating its 75th anniversary this year and having last been subject to comprehensive review over 20 years ago, the consultation provides an ideal industry for stakeholders from across the industry to have their say on whether the Act is still fit for purpose in today’s very different market. “While feedback from PLA members is clear that, overall, the Act continues to fulfil a valuable function, there are many ways in which it could be improved, ranging from contracting out to dispute resolution processes to grounds for opposing renewal. We are looking forward responding to the consultation on behalf of our members and I would encourage others to do the same.” Guy Fetherstonhaugh KC, barrister at Falcon Chambers added: “For many years now, some sectors of the commercial property market have been urging revision or repeal of Part II of the Landlord and Tenant Act 1954 – legislation designed for the post-war era of scarce property and exploited tenants.  “Is security of tenure really paramount in days when so much of the high street is vacant that the government is bringing in the next fortnight compulsory vacant property rental auctions? And even if our legislators shrink from total repeal, there is much that can be done to oil some of the creaking machinery of the Act. We look forward to the careful and wise consideration the Law Commission will give to these fundamental questions.” Melanie Leech, chief executive of the British Property Federation, said: “The Act reflects the post-war market conditions when there was very little commercial space available, and leases were typically much longer and less flexible. “Today, market dynamics are very different and overlaying this is the urgent need to invest to decarbonise the built environment to meet the UK’s net-zero targets. For example the stipulation that vacant possession can only be sought for redevelopment does not reflect the fact that today retrofit or refurbishment is often the best and most sustainable approach for modernising and repurposing buildings. “We look forward to working with members and the Law Commission to present our ideas for how the Act can be modernised to provide a better framework for property owners and occupiers to work together and accelerate investment into towns and cities.” The consultation is open until 19 February 2025, following which the Law Commission will consider responses. The Law Commission then expects to publish a second consultation paper which will consider technical aspects relating to the operation of the Act, based on the responses and the conclusions it reaches in respect of the first consultation. Full details of the consultation, survey and how to respond are available on the Law Commission website: https://lawcom.gov.uk/project/business-tenancies-the-right-to-renew/ Photo © Tingey Injury Law Firm/Unsplash