Our readers might recall that the consultation period for the first of the Law Commission's two Consultation Papers considering how the Landlord & Tenant Act 1954 might be reformed to reflect a modern commercial leasehold market closed earlier this year, on 19 February 2025.
The Consultation Paper addressed a number of key areas of potential reform, including :
- Whether the current contracting-out model of security of tenure should be retained or whether one of 3 alternative models presented might be more appropriate.
- What types of tenancy should benefit from security of tenure under the Act.
- What duration of tenancy should benefit from security under the Act.
Having received and reviewed the wide range of responses to the Consultation Paper, the Law Commission has recently published an interim statement setting out its provisional conclusions on the 3 areas specified above. Dealing with each in turn :
- Model of security of tenure. The Law Commission is of the view that the current contracting out model (which involves the completion of either the statutory declaration procedure or the advance notice procedure prior to the parties becoming contractually bound) remains the right model. To quote from the statement : 'the arguments in favour of retaining this model were powerful and it received the broadest support from consultees'. Based on consultees' feedback, there is a perception that the current model 'strikes the best balance between landlords and tenants' and a change in the model would cause 'unwarranted disruption to the commercial leasehold market'.
- Types of tenancy benefitting from security of tenure. The Consultation Paper asked whether the existing list of excluded tenancies (e.g. agricultural/mining leases) should be reduced or extended. The Law Commission agrees with the consultees' general consensus that the existing list should be retained as is.
- Duration of tenancy benefitting from security of tenure. Unlike the above two areas, the Law Commission provisionally recommends material change to the Act. As currently drafted, the Act excludes from security of tenure tenancies granted for a term not exceeding 6 months. While consultees' views were mixed on this subject, the Law Commission notes support for increasing the 6-month period 'to provide greater flexibility in the short-term lettings market'. It therefore expects to consult on increasing the 6-month threshold to 2 years. If the suggested reform were enacted in due course, it would mean that a business tenancy granted for a fixed term of 2 years or less would not benefit from security of tenure under the Act.
So what next ? The Law Commission's above provisional findings will form the basis of its second Consultation Paper which, according to the interim statement, will focus on the 'technical detail of how the Act might be reformed including potential reform to the contracting out procedure'. No timescale is given as to when the second Consultation Paper might be published. Based on the detail of the first Consultation Paper, we might expect the technical detail under review in the second Consultation Paper also to include specific lease renewal issues such as how and in what forum disputes should be resolved; the grounds on which a landlord can oppose renewal ; statutory disturbance compensation and the terms of the renewal lease and the rent payable.
We await all further developments relating to the reform of the Act with great interest.
