Thinking of responding to Law Commission Consultation on Security of Tenure for Business Tenants?

Responses to the Law Commission's second consultation paper on reforming Part II of the Landlord and Tenant Act 1954 Business tenancies: the right to renew – Law Commission are due by 16 September 2026, less than a month away.  

Clients with interests in commercial premises — whether as landlord or tenant — should consider engaging with the consultation process, particularly if they have experience of the practical problems caused by the current contracting-out requirements or grounds for opposing renewal. 

The Commission has confirmed it will advise retaining the existing "contracting-out" model rather than pursuing structural reform, and this consultation focuses on the technical details of how security of tenure for business tenants should work in the future. 

Our article Security of tenure: what a reformed regime might look like - Burges Salmon outlines the proposals. The principal ones on which views are sought are:

Scope

• whether the threshold for short fixed-term tenancies being excluded from security of tenure should rise from 6 months as at present to 2 years (including any period of prior occupation by the tenant) or a 1-year term (ignoring any prior period of occupation).  
• Renewal tenancies granted to existing protected tenants would always remain within scope, even if below the threshold, though the parties could still contract out.
• Periodic tenancies granted to new tenants (both express and implied) would be excluded from the Act and would not attract security of tenure. 

Reform contracting-out process

• The current two-stage warning-notice and declaration process would be replaced by prescribed warning wording and a declaration included prominently within the lease itself, effective only on completion. This would remove any perceived need to repeat the process where draft terms or the parties change after the contracting out process but before the lease is granted. No separate notice, statutory or simple declaration would be required.  Views are sought on whether this adequately protects unrepresented tenants.
• This would remove the need for protective contracting out in advance of leases which may never be granted (under options or pursuant to a guarantee) or where either landlord or tenant disposes of their interest in the reversion or the contract between exchange and completion of an agreement for lease.   
• The paper considers if agreements to surrender should be valid without contracting out, but if contracting out is retained, how the process should be reformed.  

Interim rent and grounds of opposition 

• The consultation explores whether to retain a separate valuation date for interim rent and, if so, how to simplify the basis on which interim rent is assessed.
• it also considers reform to the redevelopment ground (Ground F), in particular, the interaction with the MEES energy efficiency regime, and Ground G (own occupation), which must be proved by a landlord who wishes to oppose the grant of a renewal lease.

Terms of the renewal tenancy and compensation

• Reforms are proposed to accommodate modern rental models, in particular turnover rents.
• The existing test for the "other terms" of a renewal tenancy would be retained.
• Compensation for non-renewal would be based on current rent rather than rateable value, with no move to bespoke compensation.
• Any exclusion of compensation would have to be made clear by prescribed lease wording.

Responses can be submitted via the Law Commission's online response form or by email. 

In this paper, we are consulting on provisional proposals and questions aimed at modernising the 1954 Act so that it is clear, efficient and works effectively for landlords and tenants.

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