Law Commission announces likely reforms to business tenancies

The UK Government’s body for law reform, the Law Commission, has now announced the likely changes that it will recommend are made to the main legislation governing business tenancies in England and Wales.

In my first and second blogs on this topic, I explained that events over the last 20 or so years, such as the explosion of internet shipping, the 2008 global financial crash and the Covid-19 pandemic, had accelerated the need to modernise law made in a different time and context over half a century ago.

The ‘provisional conclusions’ of the Law Commission are that:

• it will not recommend extending the scope of the Landlord and Tenant Act 1954 to include other types of business-related tenancy (e.g. farm business tenancies);
• it will continue to recommend the ‘contracting-out’ model for the right to renew a business tenancy (referred to as ‘security of tenure’) over the other three models that it was looking at; but
• it will look to alter the length of time a tenant can occupy without the landlord being caught by the security of tenure provisions. 

Currently, tenancies of six months or less are automatically excluded from security of tenure, unless they are (i) renewable, or (ii) extendable, or (iii) the tenant (along with any predecessor carrying on the same business) has occupied for more than 12 months.  The Law Commission has recommended that this threshold should be increased in order to give greater flexibility to, and thereby bolster, the short-term lettings market.  The Commission has decided that, in its second consultation, it is likely to look at the feasibility of extending this 6-month period by up to two years.

Also in the second consultation, the Commission will look at reform of the technical detail in the notoriously complex Landlord and Tenant Act 1954, including the contracting-out procedure which was previously substantially reformed in 2003.  Presently there is no anticipated date for the Commission’s further report following the end of the second consultation, but I would expect that it is unlikely to publish before 2026.

I will be following the twists and turns of the reforms package and posting periodic updates and commentary on it from both landlord and tenant perspectives, and so please do continue to watch this space.