On 19 November the Law Commission published the long awaited consultation on the right to renew business tenancies, as set out in Part 2 of the Landlord and Tenant Act 1954 (“security of tenure”), how it is working and whether it meets the needs of business tenants and landlords. 

A summary of the consultation paper is available here and the full consultation paper is available here.

The current law framework of 1954 is now nearly 70 years old with the most recent significant changes made around 20 years ago (this allowed tenants to contract out of the right). A lot has changed in that time with there now being around 5 million businesses in England and Wales. The consultation states that “commercial property in the UK is thought to be worth nearly £900 billion, with more than half of it being rented” - with varying positions on whether the provisions of the 1954 Act are still fit for commercial purpose.

The consultation puts forward four models for consideration:

• Mandatory - i.e. the old position, no option to contract out

• Contracting out - effectively the current position, reformed, but default is statutory security of tenure

• Contracting in - new proposal, where default would be no security of tenure, option for parties to contract in if desired

• No security of tenure - rights under LTA 1954 abolished, no statutory right to renew, with potential to have a contractual option between parties if agreed.

Respondents are asked at Consultation Question 2 as to which model of statutory security of tenure they consider should operate, along with the reasons for their choice of model.

Question 3 relates to the impact a change to the model of security of tenure will have:

• on the parties to tenancies and their advisors; and
• on the commercial leasehold market.

Question 4 relates to the type of tenancies that should be covered by the 1954 Act? (Chapter 4), Question 5 asks about whether the “assessment of the potential benefits and disadvantages of reforming the scope of the 1954 Act is correct.”

Question 6 relates to impact of change on the parties to tenancies and their advisors; and on the commercial leasehold market. 

Lastly, respondents are asked at Question 7 about advantages or disadvantages to certain groups or to individuals based on certain characteristics (with particular attention to age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex, and sexual orientation).

Responses are invited from individuals and businesses who fall into the following categories:

• a landlord (or predominantly a landlord)
• a tenant (or predominantly a tenant)
• both a landlord and a tenant
• a professional (legal, property or other professional)
• a representative organisation

The consultation is open until 19 February 2025, after which The Law Commission then expects to publish a second consultation paper – timing to be confirmed – based on the responses received to the first consultation and the conclusions reached.