Concept for - Commercial landlords

What is the Landlord and Tenant Act 1954 and why does it matter?

The Landlord and Tenant Act 1954 provides security of tenure to commercial tenants, allowing them to continue to operate their business without having to leave the premises on the expiry of their tenancy. Before this, landlords had complete control over lease renewals, leaving tenants facing potential business disruption and uncertainty.

In order for a lease to be protected by the Act, the requirements are:

  • The property must be used for the tenant’s business;
  • The tenant must be in occupation of the property;
  • The lease must be for more than 6 months.

The Law Commission is currently reviewing the Act and further consultation on reform is taking place.

What is the Landlord and Tenant Act 1954 and why does it matter?

The Law Commission has provisionally concluded that the current Act is unclear, outdated and causes additional delays.

The first consultation paper addressed the following:

  1. Whether the current “contracting-out” model of security of tenure should be retained, or a different model be adopted.
  2. What types of tenancy should benefit from security of tenure under the 1954 Act.
  3. What duration of tenancy should benefit from security of tenure under the 1954 Act. The Law Commission is considering 1 to 5 years.

What is the Law Commission’s conclusions?

  1. The existing “contracting-out” model is the right model.
  2. The existing types of tenancy excluded from the protection of the Act should remain outside the protection of the 1954 Act.
  3. The duration of tenancy that can benefit from security of tenure under the 1954 Act (currently those of more than 6 months) should be extended.

What should landlords and tenants do in the meantime?

Both landlords and tenants should bear in mind that procedural changes are likely to follow from the reform. Whilst this could improve the administrative burden that the current contracting out procedure has, both parties should allow time to follow the new procedure in the future.

What happens next?

The position remains largely unchanged for now.

The Law Commission will publish a second consultation paper shortly with a final report to follow and we will provide another update in due course.

This article was jointly written by Charles Hodder and Ella Taylor. If you wish to discuss this further please contact our Real Estate team or call 0345 540 5558.