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The Law Commission is reviewing the Landlord and Tenant Act 1954. Discover the proposed changes and implications for commercial leases.
The Law Commission is currently reviewing Part II of the Landlord and Tenant Act 1954 (the Act), which governs security of tenure for business tenants in England and Wales. Security of tenure gives qualifying business tenants the right to remain in occupation and request a new lease on similar terms when their current tenancy comes to an end, unless the landlord can establish one of the statutory grounds for opposition.
Why is the Act Being Reviewed?
The legislation is now more than 70 years old and was last subject to significant reform some 20 years ago. In that time, the commercial property market has evolved considerably through the rise of online retail, flexible working arrangements and changing occupier requirements, it stands to reason why the Law Commission have sought to review Part II to determine whether it remains suitable for the modern commercial property market.
Security of Tenure to Remain?
One of the key questions considered during the first consultation was whether the current security of tenure regime should be retained at all.
On 16 June 2026, the Law Commission published its second consultation paper into Part II of the Act, provisionally concluding that the existing “contracting-out” model remains the most appropriate framework. This means that business tenants will continue to benefit from security of tenure by default, whilst landlords and tenants will retain the ability to agree, before a lease is granted, that the protection will not apply.
Key Proposed Changes
Whilst the overall framework appears likely to remain, the Law Commission is considering several reforms designed to modernise the operation of the Act.
| Topic | Current Position | Proposed Reform | Potential Impact |
|---|---|---|---|
| Short-Term Leases | Most fixed-term business tenancies of six months or less fall outside the protection of the Act. | The Law Commission is considering increasing this threshold to either one year or two years. | – More short-term commercial leases would fall outside the security of tenure regime. – Landlords could benefit from greater flexibility when granting temporary occupation arrangements, pop-up retail units and short-term workspace agreements. – Tenants taking shorter leases may have less certainty about their ability to remain in occupation once their lease expires. |
| Contracting-out Procedure | Landlords must serve prescribed notices and tenants must complete a declaration before a lease can be validly contracted out of the Act. | The consultation proposes incorporating the relevant warnings and declarations directly into the lease documentation. | – A simpler and more streamlined process. – Reduced administration and transaction costs. – Fewer delays and procedural errors during lease completion. |
| Lease Renewals | The court’s flexibility when determining the terms of a renewal lease is limited. | The Law Commission is considering whether courts should have wider powers when setting renewal terms, including the ability to grant leases containing turnover-based rent provisions where appropriate. | Renewal leases could better reflect modern leasing practices and commercial realities, particularly within the retail sector where turnover rents are increasingly common. |
| Redevelopment Grounds | Landlords can oppose lease renewals on redevelopment grounds where certain statutory requirements are met. | The consultation considers whether environmental improvement works and minimum energy efficiency requirements should be taken into account when assessing redevelopment grounds. | Landlords seeking to improve the environmental performance of their properties (and satisfy their statutory Energy Performance Certificate requirements) may have greater scope to rely on redevelopment grounds in the future. |
What Could the Proposed Changes Mean for Landlords and Tenants?
Whilst the Law Commission’s proposals do not currently form part of the law, they provide a useful indication of the direction of travel for commercial leasing in England and Wales.
For landlords, the proposed reforms could offer greater flexibility when granting short-term occupational arrangements. If the exemption period for security of tenure is extended, landlords may find it easier to accommodate pop-up retail units, short-term workspace providers and temporary occupiers without the need to consider renewal rights under the Act.
The proposed simplification of the contracting-out procedure could also help reduce administrative burdens and minimise the risk of procedural errors, making transactions more efficient for both parties.
For tenants, the reforms may present a mixed picture. Whilst security of tenure is likely to remain a core feature of the regime, those entering into shorter-term leases may have fewer statutory protections if the exemption threshold is increased. Businesses may therefore need to consider more carefully the duration of their lease term and whether contractual protections should be negotiated.
Changes to the court’s powers when determining renewal lease terms could also lead to outcomes that better reflect modern commercial leasing practices, particularly in sectors where turnover-based rent arrangements are becoming more common.
Although the proposals remain subject to consultation, landlords and tenants may wish to monitor developments closely and consider how any future reforms could affect their leasing strategy and property interests.
What Happens Next?
The Law Commission’s second consultation paper remains open for responses until September 2026. The Commission will then consider the feedback received before making its final recommendations to the Government.
For now, the review suggests evolution rather than revolution. Whilst security of tenure appears likely to remain a fundamental feature of commercial leasing, the proposed reforms could have important practical implications for landlords and tenants, particularly in relation to short-term lettings.
Frequently Asked Questions
What is security of tenure under the Landlord and Tenant Act 1954?
Security of tenure gives qualifying business tenants in England and Wales the right to remain in occupation and request a new lease when their existing lease expires, unless the landlord can successfully oppose renewal on one of the statutory grounds.
Will the Landlord and Tenant Act 1954 be abolished?
Based on the Law Commission’s provisional conclusions, the existing security of tenure regime is expected to remain in place. The current proposals focus on modernising the legislation rather than removing it entirely.
How could the reforms affect short-term commercial leases?
The Law Commission is considering increasing the length of tenancy that falls outside the protection of the Act. If implemented, more short-term business leases could be excluded from security of tenure rights.
What should landlords and tenants do while the reforms are being considered?
The proposals are still subject to consultation and have not been implemented. Landlords and tenants should continue to comply with the current legal framework but may wish to seek advice on how potential changes could affect future leasing arrangements.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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