The Law Commission issued an interim statement in June 2025 following their consultation on the future of Security of Tenure for business tenants under the Landlord and Tenant Act 1954.
Many will recall how completion of Landlord and Tenant transactions were often delayed because a Court Order was required, albeit in standard format, and dealt with by post and email, to contract out of the Security of Tenure provisions.
This was then changed so that the contracting out was dealt once a lease was agreed and before it was completed, by way of a clause in the Lease, which was confirmation that a Notice in statutory form had been served under the Act, and then a Statutory or Simple declaration was made by a representative of the Tenants, confirming that they understood the nature and effects of the contracting out notice.
The Law Commission has provisionally concluded that the existing contracting out model set out in the preceding paragraph is the right model, and this has received the broad support during the consultation period (November 2024 to February 2025).
Their interim report states that 'a significant number of consultees told us that the current model strikes the best balance between Landlords and Tenants. Notable numbers of consultees were also concerned that a change in model would cause unwarranted disruption to the commercial Leasehold market'.
Having to obtain a Court Order was stressful and took time, delaying completion of a Lease, whereas the current procedure of Notice, Declaration, and completion of the relevant clause in a Lease can take place as soon as the Lease is agreed.
However, there was support for increasing the six-month threshold which would give greater flexibility in the short-term lettings market, and the Commission has provisionally concluded that the six-month threshold should be increased, and the consultation paper is expected to be consulting on increasing the threshold to two years.
The next steps are that this report will then provide the basis of the Commission's next consultation paper which will focus on the technical detail of how the 1954 Act might be reformed, and then the Commission's final recommendations for reform will be set out following this second consultation. No timing has yet been given for this consultation.
We will provide further updates once that happens. My view from the interim statement is that reforms to the 1954 Act will not be the wholesale overhaul that some people had been hoping for but rather will be adjustments to the current procedure.
It seems that Security of Tenure for commercial Tenants will not be abolished, but it is more likely that the Security of Tenure system will be updated to reflect the market.
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