In this episode of Real Estate Rundown, our Commercial Real Estate experts, David Slade and Andrew Jones, discuss the Landlord and Tenant Act 1954 and the significant changes proposed by the Law Commission in their recent consultation paper.
The engaging conversation explores:
- The background and key provisions of the Landlord and Tenant Act 1954.
- The proposed amendments and what they mean for landlords and tenants.
- Practical implications for the future of commercial leasing.
Whether you are a landlord, tenant, or industry professional, this episode provides valuable insights into one of the most important legal frameworks governing commercial real estate in the UK.
Law Commission Consultation on the Landlord and Tenant Act 1954
The Law Commission has initiated the first stage of an intended two part consultation on Part 2 of the Landlord and Tenant Act 1954, focusing on the concept of security of tenure - the right for tenants occupying premises for the purposes of their business to a renewal tenancy on expiry of the contractual term.
On the issue of security of tenure, the 1954 Act has broadly lived through three different phases up to now:
- 1954 -1969 compulsory security of tenure
- 1969 – 2003 ability to contract out of statutory security of tenure by court order
- 2003 – 2025 ability to contract out of statutory security of tenure by landlord’s notice and tenant’s declaration (or statutory declaration)
The fundamental question for the first stage of the consultation is whether business tenants should have security of tenure, and, if so, how it should operate. The Commission has presented four models for consideration:
- No security of tenure: abolishing the Act (a return to the pre-1954 position), leaving tenancy renewals to market forces, and thus leaving renewal negotiation to the parties (suggesting tenants might seek options to renew in their leases).
- Contracting in: no automatic statutory security of tenure but tenants can negotiate inclusion with their landlords.
- Contracting out: a continuation of the current regime; tenants have statutory security of tenure unless they agree to opt out.
- Mandatory security of tenure: all business tenancies have compulsory security of tenure without the option to opt out (a return to the 1954-1969 position).
The consultation seeks to determine which model best serves the current market, balancing flexibility and protection for both landlords and tenants.
As a secondary issue, responders are asked to consider whether the scope of the Act should change. Currently certain types of tenancies are excluded automatically from the security of tenure regime, such as:
- Agricultural tenancies.
- Tenancies granted for a term of six months or less.
The first consultation will consider whether tenancies should be automatically excluded from the Act based a widening of the existing criteria (such as a term of more than six months) or other factors such as use, floor space, location, and level of rent.
Responses to the consultation are to be submitted by 19 February 2025 and the Law Commission’s recommendations following the initial responses will guide the questions to be asked during the planned second stage of the consultation:
- If the recommendation is that security of tenure be retained in some form, the second consultation will consider the detailed operation of that scheme.
- If the recommendation is that security of tenure be abolished, the second consultation will consider how that might best be achieved.
The Law Commission is an advisory body and the ultimate recommendations will need to be passed onto the statute books in Parliament so it remains to be seen whether there will be changes radical enough to move the Act to a fourth phase.
It is hard to envisage a return to mandatory security of tenure and our suspicion is that landlords will engage more with the consultation than tenants and that optional security of tenure will be retained under either the second or third model above. Our view is that the post-2003 system of notices and declarations generally works well.
Please do listen to Wright Hassall commercial real estate partners David Slade and Andrew Jones discussing the consultation further in our “Real Estate Rundown” podcast on the Landlord and Tenant Act 1954.
Disclaimer: This podcast contains material for general information purposes only and does not constitute legal or other professional advice. Every effort is made to ensure that the content is accurate and up to date but users should always seek specific legal advice before taking, or refraining from, an action or relying on the legal information given here.
Although Wright Hassall can assist with a number of legal matters, individuals should visit the firm's website or make direct contact to confirm whether the legal advice or service required is provided.
