Law Commission Consultation: Interim Statement on Business Tenancies

Following its first consultation on the future of security of tenure for business tenants under the Landlord and Tenant Act 1954 (“Act”), the Law Commission has issued an interim statement, indicating that only limited reforms are currently being proposed.

In its statement, the Commission has provisionally concluded that the current system enabling parties to “contract out” of the Act remains suitable. It reported strong, widespread support for preserving this arrangement, with many respondents warning that altering the model could lead to unnecessary disruption in the commercial leasehold market. The Commission also noted broad agreement among respondents that exclusions for certain types of tenancies (such as agricultural tenancies) should be retained. The Commission has provisionally endorsed this view. In addition, there was support for raising the duration of tenancy that can benefit from the Act – which currently excludes tenancies of six months or less from gaining security of tenure – to provide greater flexibility in the short-term lettings market.

The Commission’s measured approach is unsurprising. It avoids the legal and logistical difficulties associated with expanding or contracting the scope of the Act. It also eliminates the need for complex transitional provisions. Landlords and tenants alike are likely to value the continued stability of a well-established legal framework, which has been shaped and clarified by decades of case law.

These initial conclusions will shape the next phase, with a second consultation paper set to examine more technical matters (such as potential refinements to the contracting-out process). The Commission will present its final recommendations after that second consultation.