Ros Monk, partner in our land and property dispute resolution team summarises the Law
Commission’s consultation paper on the Landlord and Tenant Act 1954.
The Landlord and Tenant Act 1954 (“the Act”) came into force over 70 years ago and was last reformed in 2003.
Whilst it is one of the key pieces of legislation affecting commercial leases, it is criticised for being bureaucratic, out of date and inflexible.
The Act came into being to help the economy by giving commercial occupiers security of tenure and giving them the stability to focus on their business.
However, as the world in 2024 is very different to that of 1954, as are the legal documents and the operation of the commercial leasehold market.
Recently, government lockdowns and the ever-increasing significance of environmental/energy issues have highlighted the need for lease terms to change and evolve, something that can be difficult in the context of a renewal of a protected tenancy.
In addition, the significant pressures faced in the County Court can make the court process difficult and protracted even in the most straightforward of matters.
Reform of the Act has long been discussed, and in March 2023 the Law Commission announced that it would review the Act.
Review
After several missed deadlines, the 108-page long Consultation Paper was eventually published on 19 November 2024.
In short:
- This is the first step in a two- part review of the Act.
- The first step is to conduct a wholesale review of the purpose of the Act.
- As part of this, the Law Commission is considering 4 different models:
- Mandatory statutory security of tenure;
- No security of tenure i.e. abolish the Act;
- Contracting -in regime; or
- Contracting out regime i.e. preserve the status quo.
- The Paper discusses each of the models in detail and sets out the arguments for and against each model.
- The Law Commission will also consider whether a new model should apply to all types of tenancies, for example should a certain size of property or a certain type of commercial use, be excluded.
- The Law Commission state that it is open minded and does not favour any particular model. The Law Commission is keen to gather as much evidence as possible in its review.
- The Paper attaches a survey that it asks landlord/ tenants/professional advisors to complete.
The Survey
One of the points flagged in the Consultation Paper is there is little data as to how many tenancies are protected by the Act. The first part of the Survey seeks information from the respondents on the respondents themselves and their property experience.
The Survey asks for information on the respondents, being:
- Whether they are landlord, tenant or professional advisor;
- The size of their business;
- The type of business the tenant operates from the property;
- How many tenancies they hold and the proportion that are protected by the Act;
- Where in England and Wales those tenancies are located;
- The length of the tenancies;
- The impact of the Act on rent; and
- The costs and timescale of the process of renewal or opposition.
The Survey then asks for the views of the respondents on reform, specifically:
- Their experiences relevant to considering potential reform of the Act;
- Which of the 4 models are preferred and why;
- The impact that changes to the Act will make to them and to the wider market; and
- Their views on the potential benefits and disadvantages of reform.
The survey closes on 19 February 2025.
What happens after the Survey closes?
The Law Commission will review the responses to the survey and consider whether it thinks the law should change and if so, how. It will then publish a second consultation paper setting out the details of those proposals.
Assuming that the outcome of the first consultation is that some form of security of tenure should be retained then the second consultation paper will then focus on the processes involved and the practicalities of that security, for example the forum in which disputes are heard, the grounds of opposition and the terms of the new lease.
The Law Commission also recognises that any change may cause complexity to existing arrangements, and it will consider this as part of its second paper.
After the second consultation paper has closed and the Law Commission has considered the responses, it will prepare a final report which will put forward its recommendations for reform to the Government.
As such it is likely to take some time for any change to happen, if it ever does.
Final thoughts
Over half of commercial property in the UK is thought to be rented. Almost every commercial tenant will either have a lease protected by the Act or else will have contracted out of the Act.
Reform of the Act is therefore likely to have a significant impact on both the commercial property market but also the wider economy.
The Law Commission recognises this and expressly states that any significant change to the law will require evidence to support that change.
Given the likely significance of any changes, it is important that as many interested parties as possible complete the Survey. You have until 19 February 2025 to do so.
If you would like to speak with one of our lawyers, then please get in touch with our land & property dispute resolution team on 01772 258321.