Law Commission consults on The Landlord and Tenant Act 1954

In a previous blog I mentioned that the Law Commission had decided to look at whether the law relating to renewal of business tenancies should be reformed. The Landlord and Tenant Act 1954 (the Act) is more than 70 years old and we live now in very different times to post-War Britain.  The Commission have recently completed their stage one consultation and set out the parameters of what they are intending to look at.

The current position

As a refresher, currently under the Act all business tenants in England and Wales have the following rights: first, to seek renewal of their tenancy; secondly, to remain in occupation until the tenancy is renewed or ended by service of the relevant statutory notices (called security of tenure), unless the tenancy is excluded (an excluded tenancy) for one of the following reasons:

• it falls within one of the narrow exceptions (such as lettings of less than six months and tenancies at will); or
• the tenancy is governed by some other regime (such as communications masts under the Electronic Communications Code or farm business tenancies); or
• the Parties have completed a process of ‘contracting out’ of the security of tenure provisions set out in Part 2 of the Act, involving the landlord serving a warning notice on the tenant, who must then make a statutory declaration relinquishing their right to security of tenure prior to completing the lease.

Stage one consultation

At the end of the stage one consultation, the Law Commission have announced that they will be examining the broadest possible range of options for reform:

1. Mandatory security of tenure, which would require all relevant tenancies to be protected, with no option to ‘contract out’.
2. The complete abolition of security of tenure.
3. A new contracting-in model, which the Commission envisages would result in a default position where all relevant tenancies are granted without security of tenure, unless the parties agreed to take some positive step to ‘opt in’ to a statutory security of tenure scheme.
4. A contracting-out model, which is the basis of the current position of the Act, whereby all relevant tenancies by default have security of tenure and the parties would need to take positive steps to opt out.

The consultation further asks if the scope of the Act is appropriate and whether the existing excluded tenancy model should be extended and/or introduce other criteria for including/excluding business tenancies.

It also acknowledges that reforming the scope of the Act could avoid confusion where there are potentially overlapping statutory schemes and could remove tenancies for which security of tenure is not necessary.

Next steps

The second consultation and survey has recently closed and there will, in due course, be a further updated report. Unless the outcome of this consultation results in a conclusive recommendation to the Government, it is likely that there will be further consultations to consider other aspects of the Act.

The Government is not bound to accept all or any of the Law Commission’s ultimate recommendations, but it seems likely that at least some reform will be on the cards, given that the high street retail and office sectors in particular are now operating in a very different environment even to that which existed in 2003 when the Act was last substantially reformed.

Watch this space for further updates, once the Law Commission has published further consultations.