Law Commission consultation asks whether security of tenure for business tenancies “still fit for purpose”

The Law Commission has released its first consultation paper on the right to renew business tenancies under Part 2 of the Landlord and Tenant Act 1954, also known as 'security of tenure'.

The consultation paper evaluates whether the current security of tenure model meets the needs of tenants and landlords.

The current law gives business tenants the right to renew their tenancies when they expire under certain conditions.

While the law has been updated in the past – notably to allow tenants to "contract out" of the right when the tenancy is granted - it is now around 20 years since the last significant updates were made.

The consultation paper asks whether the existing contracting-out model remains appropriate or if alternative models are needed.

The consultation specifically concerns the advantages and disadvantages of the current 'contracting-out' model of security of tenure, and three alternative models: mandatory security of tenure, abolition of security of tenure and a 'contracting-in' model.

It also looks at whether the types of business tenancy which can benefit from security of tenure are the right ones.

The Commissioner for Property, Family and Trusts, Professor Nicholas Hopkins, said: "The existing model of security of tenure was introduced decades ago when the commercial leasehold market looked very different from how it does today.

"In our first Consultation Paper we ask whether the model is still fit for purpose, or if it's time for a change. We are keen to hear from all of those affected by the law."

Commenting on the consultation, the Minister for Local Growth, Alex Norris, said: "We want to give local businesses the tools they need to breathe new life into our high streets and town centres.

"That is why we have asked the Law Commission to carry out this important work so we can bring forward a legal framework that is fit for purpose, boosting economic growth and productivity while making sure small businesses can occupy property more quickly and better understand their rights."

The consultation is open until 19 February 2025.

The Law Commission then expects to publish a second consultation paper – with the timing to be confirmed – based on the responses it has received to the first consultation and the conclusions it has reached.

The law reform advisory body said it would like to hear from businesses, landlords, their representative bodies and advisors, and anyone else affected by the legislation.

Adam Carey