Security of tenure for Business Tenants – Possible areas of Reform

As we reported here, it now looks unlikely that there will be substantial changes to the Landlord and Tenant Act 1954 (the “Act”) following the Law Commission's initial consultation. However, the Law Commission is due to launch a second consultation on ways in which the Act may be reformed, albeit on a smaller, more granular scale. We set out here some of the possible areas for reform.

1. An increase in the term length of tenancies excluded from the scope of the Act. The Law Commission have already signalled that they expect to consult on an increase from 6 months to two years.
2. A simplification of the contracting-out process, including the removal of the requirement for a statutory declaration.
3. A framework to make it easier for turnover rents to be awarded in renewal leases. The lack of flexibility in this area is often cited as a problem for tenants.
4. A requirement that the Act should only apply to tenancies made in writing. This would put an end to the possibility of tenants acquiring rights following a periodic tenancy arising at the expiry of a contracted-out tenancy.
5. Moving the default forum for determining the terms of a new lease in an unopposed renewal from the County Court to another tribunal, such as the First Tier Tribunal Lands Chamber, arbitration, expert determination or similar.

The Law Commission is shortly due to publish a compilation of the responses received to the first consultation paper, which should give further indication of the areas in which the Law Commission is likely to consider recommending reform. We will blog again on this issue following the publication.

If you are a commercial landlord or tenant dealing with lease renewals and terminations or you have any concerns or questions about the impact changes to the legislation may have on you or your business, please do not hesitate to get in touch with our Real Estate Disputes team or your usual Brodies' contact.