The Law Commission has recently published a consultation paper proposing potential changes to the Landlord and Tenant Act 1954, which affects business tenants’ right to security of tenure. This right allows tenants to automatically renew their leases when they end, with some exceptions for landlords to oppose the renewal.

The consultation explores whether the current system of automatically providing business tenants with security of tenure, while allowing parties to opt out, is still the right approach.

The Law Commission is considering four options:

1. No security of tenure – Completely remove the right for tenants to automatically renew their leases
2. Contracting-in – Tenants would not automatically have the right to renew their leases; but landlords and tenants could agree to opt in when the lease is signed
3. Contracting-out – Tenants would automatically have the right to renew their leases, but landlords and tenants could agree to opt out when the lease is signed (the current system)
4. Mandatory security of tenure – All business tenants would have the right to security of tenure, with no option to opt out

What is the impact?

If the law changes to mandatory security of tenure, landlords may face greater difficulty in ending leases, as they would only ever be able to remove tenants under very limited circumstances. There would be no option for the parties to agree that a lease will only run for the fixed term with the tenant being obliged to leave the premises at the end of the lease. If the landlord is unable to remove the tenant under the limited circumstances, and the tenant wishes to stay, whether by holding over under the current lease or entering into a renewal lease, then the landlord will have no choice in this.

To the contrary, if security of tenure is abolished, tenants will be forced to leave their premises if no new tenancy has been agreed with the landlord by the end of the term. This will leave tenants who have been in premises for many years, potentially following numerous renewals of their tenancies, with much less security on their position at the end of the lease term when under the current laws, they would ordinarily have agreed with the landlord to include security of tenure provisions in their leases.

Have your say

The Law Commission is asking for feedback on these proposals, and the consultation survey is open until February 19, 2025. View here Business Tenancies Survey – Ministry of Justice – Citizen Space

The Law Commission will only make recommendations to the government to reform the law on this matter. It is important to note that recommendations may be made and no action taken by the government. It is however important that such recommendations are formed based on an accurate reflection of those impacted by the laws themselves.

We can help you

We can advise you on how these potential changes may affect your business. If you have concerns or want advice, we’re here to help, contact Lois Smith at loissmith@schofieldsweeney.co.uk or 0113 849 4024