The Law Commission's Review of The Landlord and Tenant Act 1954

In November 2024, the Law Commission launched a public consultation to examine the future of the Landlord and Tenant Act 1954, which grants business tenants the right to renew their leases. The consultation is considering various options, from complete abolition of the Act to maintaining the status quo, as the rental market has undergone significant changes since the legislation was first introduced.

Background
The Landlord and Tenant Act 1954 was introduced about a year after World War 2 and has largely remained the same, with only a few tweaks over the years. However, since then, businesses have changed and evolved, particular with events such as the boom of e-commerce, the global financial crisis and COVID-19.

Consultation Proposals
The Law Commission's consultation document outlines four primary options for the future of the Act:

1. Retain the 1954 Act but prohibit the ability to contract out of its protections, making all business tenancies subject to its provisions.
2. Repeal the Act entirely.
3. Maintain the Act but allow tenants to opt in to its protections, rather than the current system of contracting out.
4. Keep the existing framework of the Act, with the option to contract out.

The consultation also explores the possibility of limiting the scope of the Act, potentially by excluding certain types of tenancies based on factors such as duration, property use, or other characteristics.

The document also examines how other jurisdictions, including Scotland, Northern Ireland, the Republic of Ireland, New Zealand, the Netherlands, and France, approach the issue of business tenancy protection.

Next Steps
Following the initial consultation, the Law Commission plans to publish a second consultation in 2025, which will focus on potential changes to the grounds for opposing a lease renewal, the terms of renewed leases, and streamlining the litigation process. The contracting out procedure may also be revisited during the second phase of the consultation.

While many industry stakeholders have called for significant reform of the 1954 Act, any changes are likely to take time to be implemented into law. Propertymark has recently called for change so the act aligns better with modern business needs and fairer lease agreements. The British Property Federation have recommended moving from a "opt out" approach to an "opt in" approach.

Our View

We welcome the review of the LTA 1954 and acknowledge that, while it has proven to be effective over the years, no legislation from 1954 can fully meet the needs of today's landscape after more than 70 years. Similar to the stance of the BPF, we believe that an "opt-in" approach would better serve modern UK businesses. It is essential for landlords and tenants to engage in discussions during the initial negotiations, ensuring both parties are clear on expectations and requirements. Additionally, we support Propertymark's recommendation that commercial landlords should conduct an inventory and schedule of condition at the beginning of a tenancy to avoid unjust dilapidation claims at the end of a business tenancy.