Occupier Insights: Landlord and Tenant Act 1954 - the future of business tenancies in England and Wales

Business tenants in England and Wales benefit from "security of tenure" under the current provisions of the Landlord and Tenant Act 1954 ("1954 Act"), allowing them to obtain another tenancy when their existing tenancy ends, subject to the landlord being able to oppose on a limited number of grounds. The landlord and tenant can agree to exclude security of tenure by "contracting out" of the provisions, and this is a very common practice particularly for shorter term or lower rent leases. 

The Law Commission's consultation forms the first part of a two stage review of the 1954 Act. Its terms of reference are to conduct a wider review of the 1954 Act, with a view to “fostering a productive and beneficial commercial leasing relationship between landlords and tenants”. 

The first step the consultation takes is to ask questions about the pros and cons of the different models of security of tenure. In particular it seeks to establish its consultees preferred model:

• No security of tenure 
• Mandatory security of tenure (any exclusions, for example where a tenant is in default, would be considered in the second stage of consultation)
• A contracting out regime – i.e. the current regime 
• A contracting in regime

The consultation then looks to the scope of the 1954 Act and asks what tenancies should be protected. Under the current model, almost all business tenancies are within the scope of the 1954 Act. Only certain types of tenancies are excluded such as agricultural tenancies and tenancies granted for six months or less. However, the consultation asks for views on whether there should be further exclusions, for example by excluding tenancies based on the use of the property, the rent payable or the location of the property. The Law Commission believes that some of the themes raised in considering changes to the model of security of tenure will also be relevant to consideration of the scope of the 1954 Act. 

The consultation wants responses from as many businesses as possible and will run for 3 months, closing on 19 February 2025. 

After the responses to the initial consultation have been reviewed, the Law Commission will then publish a second, detailed technical consultation paper to draw conclusions regarding the preferred model of security of tenure and changes that may be made to the existing law. 

If you have any questions or would like to discuss what this may mean for you and your business, please get in touch with our corporate occupier and real estate experts.

Authors: Elizabeth Riddles, Jim Murphy