The Law Commission is undertaking a wide-ranging review of Part 2 of the Landlord and Tenant Act 1954 to see if it is still fit for purpose, heralding big changes for agents involved in managing commercial properties.

Part 2 of the Landlord and Tenant Act 1954 is what gives business tenants the right to renew their tenancies when they come to an end, allowing them to remain in their premises. This is normally referred to as “security of tenure”.

Contracting out

Currently, most business tenants automatically have the right to renew under the Act unless, in a process known as “contracting out”, they agree with their landlord that the right to renew should not apply.

The legal framework is now nearly 70 years old and although it has been amended in the past, it is around 20 years since the last significant changes were made.

The commercial leasehold market has altered beyond recognition since then and the original Act was conceived decades before the emergence of online retail.

 

"It is burdensome, unclear and out-of-date and it is standing in the way of modern commercial practices.”

 

Feedback received by the Law Commission suggests the Act now works for neither landlords nor tenants and that: “Aspects of it are burdensome, unclear and out-of-date and it is standing in the way of modern commercial practices, causing unnecessary cost and delay for both landlords and tenants and preventing commercial space, such as our high streets, from being occupied quickly and efficiently”.

The Commission also reports that landlords and tenants often decide to contract out of the Act, meaning that the tenants do not have the right to renew.

At this stage, the consultation is proposing four possible changes. These are:

1. Mandatory security of tenure
2. Abolishing the statutory security of tenure
3. Contracting-in –the tenancy only has statutory security of tenure if the parties opt-in.
4. Contracting-out – the tenancy has statutory security of tenure unless the parties opt-out (the current model).
5. You can access and respond to the survey yourself here. The consultation and survey both close on 19 February 2025.

 

via [The Negotiator]