Security of tenure: what a reformed regime might look like

On 16 June 2026, the Law Commission published its second consultation paper on the right to renew business tenancies, proposing detailed reforms to modernise Part 2 of the Landlord and Tenant Act 1954. 

Background

Part 2 of the 1954 Act gives business tenants security of tenure: the statutory right to remain in their premises and to renew their tenancy at expiry, unless the landlord can establish one of the limited grounds for opposition. Parties may agree to contract out of these protections before the tenant is contractually bound to take the lease, subject to a prescribed notice and declaration procedure being strictly followed. 

The Consultation

The Commission's first consultation, published in November 2024, considered four models for security of tenure. Its interim statement of June 2025 confirmed that the existing contracting out model should be retained, but that the threshold for excluding short tenancies should be increased from the current six months. 

The second consultation paper now addresses the technical detail across 67 questions, with proposals including:

Scope. Raising the duration threshold for excluding short tenancies from security of tenure protection from six months to two years, and excluding most periodic tenancies from the Act. Protection is also proposed to vary by tenancy type and whether the tenancy is a renewal of an existing tenancy.  

Contracting out. Simplifying the process by replacing the notice and declaration procedure with a prominent warning notice and tenant's declaration contained within the lease itself, as opposed to being served and declared separately. Proposals are also made to ease practical problems in relation to contracting out leases which are granted pursuant to options and contracts.  

Surrenders. Potentially removing the requirement that the parties complete the contracting out process before they agree to the surrender of a protected lease, or alternatively retaining it subject to simplification. 

Grounds of opposition. Three options are proposed for updating the redevelopment ground (F), designed to allow for modern construction methods, such as refurbishment and retrofitting. In relation to ground G (occupation by landlord), a proposal is made to allow landlords to make alterations before occupying the premises. 

Rent. Enabling the court to grant renewal tenancies with turnover rents and reforming the interim rent process.

Renewal terms. Considering whether environmental matters and green lease clauses could be better accommodated in court-determined renewals.

Dispute resolution. Exploring whether the county courts are the best place for renewal disputes or whether some should move to the tribunal or High Court, with a potentially greater role for alternative dispute resolution.

What to Expect Next

The consultation closes on 16 September 2026, after which the Law Commission will publish a final report with recommendations. This review runs alongside a parallel consultation on commercial leasehold reform, with both intended to deliver a coherent package of reforms.

We are consulting, and making provisional proposals, on a wide range of issues across the 1954 Act regime

https://lawcom.gov.uk/project/business-tenancies-the-right-to-renew/