Is security of tenure ending?

Reforming a 70-year-old law

The Landlord and Tenant Act 1954 has been central to the UK’s commercial property market for seven decades. However, with the market evolving, the Law Commission is consulting on whether the Act remains fit for purpose. Alana Holden, solicitor at Clarke Willmott, explains: “The Act’s provisions, particularly on security of tenure, are now being questioned in light of modern business needs.”

A new Consultation Paper outlines four potential models for reform, each with distinct implications for landlords and tenants.

Four proposed models

1. No Security of Tenure: Tenants would lose the automatic right to renew. Graham McIntyre, partner at Clarke Willmott, highlights the risks:  “While this model offers landlords certainty, tenants could face losing goodwill built up over years.”
2. Contracting-In: Tenants would need landlords’ agreement to include security of tenure, reversing the current default position. McIntyre notes: “This change might simplify initial negotiations, but it places tenants in a weaker negotiating position.”
3. Contracting-Out: The current system remains, requiring tenants to formally opt out of protections to ensure flexibility. “This option balances flexibility and protection but involves time and costs,” says Holden.
4. Mandatory Security of Tenure: All tenancies would automatically include protection, which McIntyre describes as: “The strongest safeguard for tenants but potentially a disincentive for landlords to grant leases.”

Revising the Act's scope

The consultation also questions whether the scope of the Act should change to include or exclude specific tenancies. Holden emphasises: “Expanding the scope could resolve overlapping regimes but risks increased complexity and potential disputes.”

Call for consultation

The Law Commission invites feedback from stakeholders by 19th February 2025. A second Consultation Paper will then delve further into the proposals. McIntyre underscores the importance of participation: “Any reform could reshape the commercial leasehold market. Input from landlords and tenants is crucial.”

With its long-standing impact on business leasing, any changes to the Act will have wide-ranging implications for the UK’s commercial property sector.