The Law Commission has published its second consultation paper on wide- ranging reforms to the renewal of business tenancies regime in England and Wales, building on its first consultation (November 2024 – see AG insight) and interim conclusions (June 2025).
The consultation focuses on the detailed operation of the Landlord and Tenant Act 1954 (Act). The Commission is not proposing to abolish or fundamentally restructure security of tenure. The existing contracting-out model is to remain. Instead, it is consulting on targeted modernisation of the Act's mechanics to ensure the Act remains fit for purpose. Ultimately it will be for the Government to decide whether to implement the Commission’s recommendations so this remains very much a starting point for discussions.
With it running to 524 pages and raising 67 consultation questions, there is a lot to digest. Responses are invited by 16 September 2026. This note summarises the key legal proposals relevant to landlords, tenants and their advisers and highlights what we consider to be potential “easy wins” in that the property sector as a whole should welcome.
We will then follow up over the coming weeks with additional insights delving further into the detail of some of the areas the consultation reviews.
Contracting out within the lease - simplifying the process
The existing statutory declaration process (which currently requires tenants to swear a declaration, often a statutory declaration in front of a solicitor, and only once the lease terms have been agreed) would be abolished entirely and replaced with a new paper- based process undertaken by the parties to the tenancy so that contracting out takes place within the lease itself rather than a separate prior process.
A contracted-out lease would then just need to contain the prescribed warning indicating that the lease is contracted out and a prescribed declaration signed by the tenant would need to be prominently displayed within the lease.
The way the current legislation is drafted, and the various litigation that has taken place since its inception, means unnecessary time and costs are often incurred once the lease has been agreed and both parties are keen to complete. Often evidence is requested to demonstrate the person swearing the declaration has been authorised by the relevant tenant company to do so, that there is express authorisation to accept service of the notice by email, etc. The statutory declaration, especially when it is often sworn by the solicitor acting for the tenant, offers no additional protection than a tenant signing a declaration in the lease at the same time as executing it. We believe changing this aspect of the Act can be dealt with relatively easily through secondary legislation and that it should be prioritised whilst the remainder of the consultation is discussed. Both landlords and tenants (and their lawyers!) would welcome this.
Duration threshold
The Commission is proposing changes to the duration thresholds that determine which fixed-term tenancies benefit from security of tenure.
Currently, only fixed-term tenancies granted for more than six months are eligible for protection. The Commission proposes raising this threshold. Two options are put forward:
- Option A: Protection only applies to tenancies granted for more than two years.
- Option B: Protection only applies to tenancies granted for more than one year.
The preferred option is to be determined following consultation. This change is significant but is likely to be welcomed as it will remove short term tenancies from the Act’s regime.
Periodic tenancies
The Commission is proposing excluding the majority of periodic tenancies from the scope of the Act.
The Commission proposes:
- All new periodic tenancies would be excluded from protection.
- All renewal periodic tenancies would also be excluded.
This removes an existing anomaly and simplifies the position significantly.
Renewal tenancies for existing protected tenants
Where a tenant already holds a protected tenancy, any renewal tenancy — regardless of length or type — would remain protected. Existing protection follows the tenant.
Contracting out — universal application
Any written tenancy within scope would be capable of being contracted out. This removes current restrictions and addresses the 'Thomas van Staden trap', where parties inadvertently created protected tenancies when they intended to contract out. If the parties agree to contract out, it should be contracted out. Removal of uncertainties should be welcomed by all parties concerned.
Comment
Both this project and the parallel Commercial Leasehold project (considering the Landlord and Tenant Act 1987 and the Landlord and Tenant (Covenants) Act 1995) are being progressed together, with a view to presenting a coherent package of commercial leasehold reform.
We have highlighted above what we perceive to be some easy wins. Other areas covered in this consultation include:
- Removing traps on agreements to surrender and future renewal tenancies (in terms of contracting- out)
- Registration gap issues and the impact it is having on renewals
- Terms of a renewal tenancy (and how to incorporate turnover rents into the rental determination)
- Reviewing the ground (f) (redevelopment) test and whether it should change to take into account modern building methods and/or the Minimum Energy Efficiency Standards (MEES) regime
- How to incorporate MEES regulations and whether there should be a market-based approach for green provisions
- Whether the 5-year rule for ground g (own occupation) offers the right protection for a tenant wishing to protect its goodwill from being taken by a landlord taking over its business
- Changing the basis for compensation for opposed renewals from the current multiplier of 1 or 2 x rateable value and whether 14 years remains a suitable threshold
- Changes to the dispute resolution process and whether the county court is the right forum for ADR
- Interim rent and whether there should be an interim procedure to determine the interim rent payable whilst the renewal is ongoing and whether any balancing payment should be recoverable as a judgement debt or automatically offset against the rent (if a reimbursement) as well as the valuations dates
A lot of food for thought. There will be more to follow on the Commission’s other proposals in bite-sized digestible pieces.
