Rules around security of tenure for commercial tenants set to change
Nearly 70 years ago the UK Government recognised the imbalance of power between commercial landlords and tenants and passed the Landlord and Tenant Act 1954, giving most commercial tenants a right of security of tenure.
From time to time the Law Commission has reviewed the Act but its framework has remained largely untouched. The last significant change was made 20 years ago when the requirement for a court order to exclude security rights was replaced by a requirement for a declaration instead, designed to reduce cost and delay. Changes were also made to the rent payable between the contractual end of an existing lease and the start of a renewed one, intended to make the position more flexible and fair.
We now live in a world that is almost unrecognisable from the one in which the 1954 Act was granted. The internet, Covid and sustainability are just a handful of the factors that have changed the way we live our lives and run our businesses. Offices and high streets are trying to adapt to our "new normal". What was a helpful framework in the post-Second World War landscape is seen as a drag on the ability of businesses to develop positively to today's market needs. Many landlords and tenants want to be able to choose to utilise short-term occupational arrangements with increased flexibility and leases are generally much shorter today, with the parties opting out of the Act.
With this in mind, the Law Commission has announced a consultation to look at modernising the law. The emphasis is on creating something fit for today's market and reflecting wider Government policies around "levelling up" and "net zero". A consultation paper is expected by late 2023.
The mood music suggests the changes that are to be considered will go much wider further than tinkering around the edges of the 1954, so whether the Government's stated aim of keeping things clear and simple will be achievable remains to be seen. So watch this space and make sure you respond to the consultation so that your voice is heard.
The Law Commission of England and Wales has announced it will review part of the “inflexible, bureaucratic and out of date” Landlord and Tenant Act 1954.
The 1954 Act gives businesses the right to acquire a new lease of their premises after their existing one has run out – known as “security of tenure”.
