The Law Commission published two consultation papers on 16 June 2026, focusing on long-standing aspects of landlord and tenant law that are widely regarded as being in need of modernisation.
The consultations close on 16 September 2026, with final recommendations expected to follow.
Key areas under review
The consultations focus on three key areas that could affect commercial landlords, tenants and investors:
- Security of tenure for commercial tenants
- The right of first refusal under the Landlord and Tenant Act 1987
- Anti-avoidance provisions in the Landlord and Tenant (Covenants) Act 1995.
Proposed reforms to the Landlord and Tenant Act 1954
Under the Landlord and Tenant Act 1954, many business tenants have a legal right to remain in occupation and apply for a new lease when their existing lease expires.
The 1954 Act generally excludes short fixed-term leases of six months or less from protection. The Law Commission is now asking whether that threshold should be raised.
New leases
Two options are being considered:
- Option A – only fixed-term leases of more than two years would be protected.
- Option B – only fixed-term leases of more than one year would be protected.
Under both options, rolling month-to-month leases would lose protection entirely.
Renewal leases
- Under Option A, renewals of more than two years would be protected, with some weight given to how long the tenant has already been in occupation.
- Under Option B, renewals of more than one year would be protected, though prior occupation would not factor in.
Under both options, a rolling renewal lease is only protected if the tenant was already protected under their previous lease.
Tenants simply ‘holding over’ (staying informally without a new lease being agreed) would be unprotected under either option.
A simpler ‘contracting out’ process
The Law Commission also proposed to streamline the current process for excluding security of tenure.
Currently, where the parties agree to exclude security of tenure, the landlord's solicitor serves a warning notice on the tenant. The tenant then needs to swear a statutory declaration before an independent solicitor confirming they understand the rights they are giving up.
The proposed reform would:
- Incorporate the warning notice and tenant declaration directly within the lease
- Abolish statutory declarations and the need for an independent solicitor entirely.
The right of first refusal – Landlord and Tenant Act 1987
Where a landlord wants to sell a property that has residential leaseholders, the 1987 Act requires them to offer that interest to those leaseholders before selling to a third party. The position becomes more complicated where buildings contain both residential and commercial premises.
Currently, if more than 50% of a building's floor area is residential, a landlord cannot grant a new commercial lease of a vacant unit without first offering it to the residential leaseholders.
Feedback to the Law Commission suggests that residential leaseholders are rarely interested in taking on commercial leases.
The Law Commission provisionally proposes that:
- The grant of a lease of purely commercial parts should no longer trigger the right of first refusal
- The requirement would be retained only where the premises are shared with or ancillary to residential use.
This proposal reflects concerns that the current regime can delay lettings for landlords and rarely results in residential tenants exercising their rights in practice.
The anti-avoidance provisions – Landlord and Tenant (Covenants) Act 1995
Finally, the consultation addresses the anti-avoidance provisions in the 1995 Act, which were designed to prevent parties from contracting out of the statutory release of tenant liability on assignment.
In practice, however, one anti-avoidance provision has unintentionally caught a number of legitimate commercial arrangements.
In particular, it has been causing real difficulties for:
- Assignments and guarantees within groups of companies
- Reorganisations within partnerships
- Assignments from a tenant directly to their own guarantor.
The Law Commission provisionally proposes that all three of these should be expressly permitted under the Act.
For landlords, this brings flexibility when a tenant undergoes a corporate restructuring. For tenants, particularly those operating through group structures or partnerships, it removes barriers to internal reorganisation and saves costs.
If adopted, these reforms would simplify several areas of commercial landlord and tenant law while giving landlords and tenants greater flexibility in common leasing arrangements. Businesses with existing lease portfolios or plans to grant or renew commercial leases may wish to monitor the outcome of the consultation.
The consultations close on 16 September 2026.
How TWM can help
We are monitoring the consultation closely and will keep clients updated as the proposals develop. If you are a landlord, tenant or investor and would like to discuss how the proposed reforms might affect your property interests or future leasing arrangements, please get in touch with our Commercial Property team.