Finding common ground on reform of the 1954 Act

The Landlord and Tenant Act 1954 (the 1954 Act) remains one of the most debated pieces of property legislation in England and Wales. It provides almost all business tenants with security of tenure, allowing them to remain in occupation at lease expiry and giving both parties access to a statutory renewal process. With the Law Commission now reviewing the regime, reform is firmly back on the agenda.

The current framework

Where a tenancy benefits from the 1954 Act, the tenant is generally entitled to a new lease at market rent on broadly similar terms unless the landlord can establish one of the limited statutory grounds of opposition. If renewal is resisted on a “no‑fault” basis, such as redevelopment or owner occupation, the tenant receives statutory compensation.

Security of tenure can be excluded by an "opt out" process, involving the landlord serving a prescribed notice and the tenant giving a responding declaration. If that process is not properly completed, the tenancy automatically falls within the Act.

Diverging perspectives

Landlords often argue that the Act restricts active asset management and future investment. Obtaining vacant possession from a protected tenant can be slow, costly and uncertain, requiring detailed evidence of genuine redevelopment intentions and payment of compensation. Even where both parties are happy to renew, the renewal process itself can also be costly, lengthy and open to tactical delay by either party.

For tenants, however, the Act plays a vital role. It was designed to protect business occupiers and encourage investment, and many tenants have told us that security of tenure is fundamental to their property portfolio.

In the retail and hospitality sector, security of tenure underpins store investment decisions. Retailers frequently reassess the viability of locations within a few years, particularly given rising operating costs and challenges facing the high street. According to evidence compiled by the British Retail Consortium (the leading trade association for UK retailers, representing over 200 major retailers and thousands of smaller, independent ones ) the ability to renew, or to receive compensation if renewal is opposed, can be critical to supporting investment in new or emerging locations.

Why reform?

The 1954 Act has been considered for review on multiple occasions but this particular review was prompted by a combination of policy concerns about high street decline, perceived under‑use of the Act, and a view that the legislation is inflexible and outdated for the modern market. The Law Commission’s first consultation sought evidence on how the Act operates in practice and whether its scope or structure should change.

In its provisional conclusions published in 2025, the Law Commission noted widespread concern about unnecessary disruption to the commercial property market. Retaining the existing “contracting out” model received the broadest support. While views were mixed on excluding short‑term leases, the provisional recommendation is to retain the current framework, with further consultation on whether the minimum qualifying term should increase from six months to two years.

The second technical consultation is anticipated in Spring 2026 and Womble Bond Dickinson have already met with the Law Commission alongside representative organisations to offer industry views on where this consultation should focus.

Areas of general consensus

Despite longstanding tensions between landlord and tenant interests, there is broad agreement that the current regime could work better with targeted reform. Five potential areas for improvement stand out:

1. Cost and delay – The renewal process is often slow and expensive, for both parties. A specialist forum for 1954 Act disputes, similar to the Covid‑19 rent arbitration scheme, could provide a more efficient alternative to the County Courts.
2. Notices and declarations – the prescribed forms could be improved to remove inherent uncertainties (often exacerbated where staged leases are involved in a transaction) and the Act amended to bring greater clarity on points such as validity of service and when notices can reliably be served during lease negotiations.
3. Competent landlord and tenant – Uncertainty over who is legally entitled to deal with the renewal increases professional costs and causes delay, often compounded by current delays in land registration.
4. Grounds of opposition – Clear terms for disclosure of redevelopment or occupation intentions, together with greater clarity on the requisite timings for intentions, could assist both parties to reduce unnecessary disputes and costs.
5. Environmental objectives – Clearer guidance on green lease provisions and the fair apportionment of environmental obligations would support sustainability goals, with the current legislative and market drivers towards green leases often clashing with 1954 Act tests for introducing new terms.

The second Law Commission consultation will be critical in shaping the future of the 1954 Act. While radical reform appears unlikely, the direction of travel points towards incremental change aimed at reducing cost, delay and uncertainty, while preserving the core protections on which many businesses continue to rely.

The debate continues, but for perhaps the first time in decades - on some points at least - landlords and tenants appear closer to common ground than the rhetoric might suggest.

This article was also authored by Kate Easton, Managing Associate at Womble Bond Dickinson.