In March 2023, the Law Commission announced it intends to review Part 2 of the Landlord and Tenant Act 1954 (the Act) with a view to publishing a consultation paper towards the end of 2023.
WHN director Daniel Long, head of our commercial property disputes team, outlines the areas of the Act that may be considered for reform and how such reform may affect the commercial landlord and tenant sector.
Commissioned by the Department for Levelling Up, Housing and Communities (DLUHC) and forming part of government’s new Anti-Social Behaviour Action Plan, the review will examine and focus on Part 2 of the Act that is a vital piece of legislation entitling commercial tenants to a new property lease in certain circumstances after the term of the existing lease has expired and to stay in their leased premises longer.
The 70-year-old Act, which affects commercial tenancies, has not been reviewed for over 20 years, in which time many major changes have affected the industry, including changes in consumer behaviour such as the growth of online shopping as well as due to the financial crisis of 2008, the recent Covid-19 pandemic and the current economic crisis.
Potential changes may be considered to matters including:
- The continuation of business tenancies beyond their contractual term and a tenant’s right to a new lease (security of tenure).
- The qualifying criteria.
- Termination grounds (where a landlord is seeking to terminate a business lease or oppose renewal) including the redevelopment ground.
- The process of serving notices under the Act.
- Compensation payable when a business lease is not renewed.
- The court process and considerations when settling the terms of a new business lease (for example term, rent and interim rent).
- The parties’ ability to contract out of the Act.
Government priorities have also evolved during the history of the Act. With an increased focus on the environmental sustainability of commercial properties and, as part of its Anti-Social Behaviour Action Plan, the government is seeking to rejuvenate high streets and town centres, tying in with its ‘net zero’ and ‘levelling up’ strategies to create prosperous public spaces that communities, landlords and businesses choose to invest in and use.
Professor Nicholas Hopkins, the Law Commissioner for property, family, and trust law, stated that: “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.” He also stated that: “The wide-ranging review of this aspect of the Landlord and Tenant Act 1954 is a fresh opportunity to ensure that the law is simple and works for landlords, businesses and communities.”
While major reform is not anticipated at this stage, we await the outcome of consultations. Any changes could still potentially be significant in terms of the commercial lease renewal landscape, but whether a clear and simple revision of the Act that will be more flexible and fairer is achievable, remains to be seen.
The Law Commission aims to publish a consultation paper by December 2023. As a specialist in this field, WHN will provide regular updates when there is further information available.
In the meantime, landlords and tenants should keep an eye out for any consultations and proposals to ensure your feedback and voice is heard.
Daniel Long is a director at WHN Solicitors and heads up the firm’s commercial department and property disputes team.
He specialises in resolving disputes between landlords and tenants of commercial leases on matters including rent and service charge recovery, dilapidations, forfeiture, possession, insolvency-related matters, and lease renewal and termination.
For advice on how any reforms to the Act may affect your circumstances as either a landlord or tenant, please contact Daniel on 0161 761 8063 or email him at firstname.lastname@example.org