Why is the Landlord and Tenant Act 1954 being reviewed?
Under the LTA, business tenants currently have an automatic right to renew their business tenancies when the contractual term of the tenancy comes to an end, or they can remain in the premises under the same terms of their tenancy until the landlord or tenant completes one of the statutory procedures to bring it to an end or renew it. Currently, the landlord can only attempt to terminate a protected tenancy, without offering a new one, under a limited number of statutory grounds.
The Law Commission is consulting on the LTA because it has been around 70 years since it was first enacted, and around 20 years since the Act was last looked at by Parliament. In that time, a great deal has changed about how businesses operate and how consumers purchase their goods and services. The aim is, therefore, to ensure that the LTA is fit for purpose in the present-day business market.
What does the consultation paper recommend?
This first consultation paper raises four alternative recommendations for potential reform:
- Abolish security of tenure – this would offer tenants the least security and landlords the greatest degree of control. The complexities of dealing with security of tenure would be avoided and associated legal and professional costs reduced.
- A ‘contracting in’ regime – essentially the opposite to the current system, whereby the default position would be that a business tenant will need to vacate at the end of the term, unless they contract their tenancy in to security of tenure or negotiate a new arrangement with the landlord.
- Mandatory security of tenure – every business tenancy has security of tenure. This would simplify the legal process and documentation requirements but would no doubt lead landlords to looking for alternative ways to circumvent the effect of the change, which may lead to unexpected downsides for tenants.
- Keep the same system as we have now, i.e. a ‘contracting out’ regime, likely with some smaller scale amendments to the statutory mechanisms to bring it up to date.
What next?
Besides the option of keeping things as they are, any of the alternative options, if enacted by Parliament, would bring about significant change for the business tenancy market – hopefully for the better of the majority of those affected.
The consultation runs for the next three months, ending on 19 February 2025. During that period, the Law Commission will be holding events and inviting responses for anyone affected or interested in the legislation, particularly landlords, tenants, professionals such as lawyers, surveyors, agents, and academics. For further details of the consultation, please visit the Law Commission’s website.
TWM has a wide range of specialists dealing with business tenancies, including renewal and termination – please get in contact if you have any queries, or require any assistance relating to your business tenancy.