As part of the Government's Antisocial Behaviour Action Plan, The Law Commission has announced that it will be reviewing part two of the Landlord and Tenant Act 1954 (the Act) this year, with a view to publishing a consultation paper by late 2023.
It has been nearly twenty years since this legislation, which potentially affects all commercial tenancies, was last reviewed and amended. We can thus expect the review to consider various aspects of the Act including:
- The continuation of business tenancies beyond their contractual term and a tenant's right to a new lease (security of tenure)
- Grounds under which a landlord can terminate a business lease, including the redevelopment ground
- Compensation payable when a business lease is not renewed
- The Court's process and considerations when settling the terms of a new business lease (for example term, rent and interim rent)
- The parties' ability to contact out of the Act.
The Law commission reports feedback that aspects of the law are unclear, out of date and that the law is preventing the commercial market to move at a rapid and efficient rate. Professor Nicholas Hopkins, the Law Commissioner for Property, Family and Trust Law comments:
“The right to a new lease has been available to many business tenants for over half a century. Whether they operate in shops, cafes, or factories, many businesses have been afforded the security of being able to continue in the same premises after their lease runs out (…) But it’s clear that the law is in need of modernisation. Parts of the current legislation are overly complex and bureaucratic, which is holding back businesses and the high streets and town centres they operate in".
The Law Commission's stated aim is thus to modernise commercial leasehold legislation, with an emphasis on the following points:
- Creating a legal framework that is widely used rather than opted out of
- Supporting efficient use of commercial premises taking into account agendas such as 'net zero' and 'levelling up'
- Encouraging a productive relationship between landlords and tenants.
Total abolition of the Act seems an unlikely option. Rather, the Law Commission's consultation paper (which is aimed to be published in late 2023) will likely propose amendments to the Act focussing on the facilitation of regeneration and industry co-operation on environmental and social improvement. At that point, all stakeholders in commercial property will be invited to comment, and, given the potential significance of reforms, would be encouraged to do so.