21 Nov The Law Commission Launches Consultation on Business Tenancies and the Right to Renew
On 19 November 2024, the Law Commission published a significant consultation paper, the first step in a two-part review of Part 2 of the Landlord and Tenant Act 1954 (LTA 1954). This review seeks to assess whether the current statutory framework for business tenancies—commonly known as “security of tenure”—remains fit for purpose in today’s commercial leasehold market.
Chris Hook, partner and solicitor at HRJ Foreman Laws Solicitors outlines the key elements of the consultation and what it could mean for landlords, tenants, and the wider property market.
What is security of tenure?
Under the LTA 1954, many business tenants enjoy a statutory right to continue occupying their premises after their lease ends, subject to specific grounds on which landlords can oppose renewal. This legal protection, known as security of tenure, ensures that tenants can obtain a new lease unless the landlord demonstrates valid opposition, such as plans to redevelop the property.
Importantly, landlords and tenants can agree to contract out of this protection by following a set statutory process before the lease begins.
Key questions of the consultation
The consultation paper raises fundamental questions about whether security of tenure should continue to operate in its current form. The Law Commission is seeking views on four potential models:
- No security of tenure:
The LTA 1954 would be abolished entirely, leaving lease renewals to market forces and negotiation. - Contracting-in regime:
Security of tenure would no longer be the default, but landlords and tenants could agree to opt in. - Contracting-out regime (current law):
Security of tenure remains the default, but parties can opt out through an agreed process. - Mandatory security of tenure:
Security of tenure would apply automatically to all business tenancies, with no option to contract out.
Scope of the review
The consultation also considers whether the scope of the LTA 1954 is appropriate. Should the protections apply to all types of business tenancies, or should certain types of agreements, such as very short-term or small-scale tenancies, be excluded?
What happens next?
This first consultation will help determine the direction of the second stage of the review:
- If the Law Commission recommends retaining security of tenure, the next paper will focus on how to modernize the LTA 1954. Topics could include dispute resolution mechanisms, grounds for opposing renewal, and how lease terms are set.
- If the recommendation is to abolish security of tenure, the second paper will examine how this could be achieved effectively.
Why does this matter?
The commercial leasehold market in England and Wales is vast, with over half of UK commercial properties rented, supporting businesses, employment, and communities. Reforming or abolishing the LTA 1954 could have far-reaching implications for landlords, tenants, and advisors across all sectors.
For landlords, the ability to regain control of their properties may provide greater flexibility, particularly in a dynamic market. For tenants, security of tenure often provides essential stability to operate and invest in their businesses.
How can you get involved?
The Law Commission is inviting feedback from landlords, tenants, property professionals, and other stakeholders. The consultation is open until 19 February 2025, and a survey has also been launched to gather insights into the current operation of the LTA 1954.
Contact us for legal advice.
- Email info@hrjforemanlaws.co.uk
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