The Landlord and Tenant Act 1954 has long shaped the legal relationship between commercial landlords and tenants across England and Wales. Originally passed to protect business occupiers following the Second World War, the Act introduced “security of tenure” — a principle allowing tenants to renew their lease automatically unless it is formally excluded or a statutory ground for opposition applied.
But with sweeping changes in the commercial landscape — including hybrid working, co-working spaces, and increasing appetite for short-term, flexible leases — the legislation is being reconsidered. The Law Commission began a full-scale review of the Act in late 2024, with the first consultation now complete and a second one due later in 2025.
At CDS Mayfair, we are advising clients daily on how these potential changes could influence property strategy, lease structuring, and tenant negotiations. Below is a full breakdown of the key issues, the Law Commission’s provisional views, and what it means for you.
What Is the Landlord and Tenant Act 1954?
The 1954 Act grants business tenants a statutory right to remain in occupation of premises after the end of a lease — unless the lease has been specifically “contracted out” of the Act or certain exceptions apply. This means, in most cases, commercial tenants have the right to a new lease on similar terms, ensuring continuity of business premises.
It has traditionally provided a fair balance: protection for tenants from losing valuable trading locations, and structured pathways for landlords to oppose renewal under clearly defined legal grounds (e.g. redevelopment, breach of lease, or personal occupation).
Why Is the Act Being Reviewed?
The review was prompted by a growing consensus that the Act no longer reflects how commercial property is used. The rise of serviced offices, co-working hubs, and short-term lets has highlighted several shortcomings:
- The legislation is heavily paper-based and administratively complex.
- Many tenants prefer flexibility over long-term protection.
- The “contracting out” process is viewed as overly formal in practice.
The Law Commission’s aim is to modernise the law to reflect current market needs while maintaining essential protections and market confidence.
First Consultation: Key Areas Reviewed
The first phase of the consultation closed in early 2025, focusing on three fundamental issues:
1. Should the Contracting-Out Process Be Changed?
Under current rules, landlords and tenants can agree to exclude security of tenure — but this requires specific legal steps, including serving a formal notice and making a declaration before the lease is signed.
Options considered included:
- Keeping the existing system.
- Introducing a “contracting-in” model (where leases default to being excluded).
- Making security of tenure mandatory for all business tenants.
Provisional conclusion: Retain the existing contracting-out model. Most stakeholders felt it strikes a good balance between flexibility and legal certainty, particularly in sectors where temporary arrangements are common.
2. Which Tenancies Should Qualify for Protection?
Some tenancy types — such as agricultural or mining leases — are currently excluded. The review asked whether these exclusions remain appropriate.
Provisional conclusion: No major change needed. Respondents broadly supported keeping the current list of exclusions.
3. What Should the Minimum Lease Length Be to Trigger the Act?
At present, leases under six months are excluded. However, the market has seen a rise in short leases, particularly in retail and flexible office environments.
Provisional conclusion: Extend the threshold to two years, allowing short-term arrangements to remain outside the Act while reflecting modern leasing patterns.
What’s Next?
The second consultation, expected in late 2025, will focus on the operational side — including how lease renewals are handled, notice requirements, compensation for non-renewal, and dispute resolution mechanisms.
Final recommendations will follow and could pave the way for legislative reform, although any changes would still need Parliamentary approval.
What This Means for CDS Mayfair Clients
Whether you’re a landlord or tenant, these proposals carry significant implications:
- Lease Drafting: If the threshold rises to two years, more agreements will fall outside the Act by default — which could simplify short-term leasing
- Occupational Strategy: Landlords seeking possession for redevelopment or sale will need to be more aware of timing and grounds for opposition. Tenants must also be proactive in understanding whether their lease grants renewal rights.
- Risk Management: The continuation of the current contracting-out regime means formal notices and declarations will remain a crucial — and potentially contentious — part of lease documentation.
- Portfolio Planning: Property owners managing multiple short-term tenancies may see more flexibility under the proposed threshold change. Meanwhile, occupiers looking to secure strategic locations for the long term will want clear renewal rights written into heads of terms.
How CDS Mayfair Can Help
As a boutique commercial law firm with expertise in real estate, we are well placed to support you through these developments. From reviewing lease terms to advising on portfolio strategy or dispute resolution, our team combines legal precision with commercial pragmatism.
If you’d like tailored advice on how the Landlord and Tenant Act 1954 reform could impact your leases, or to review your lease agreements in light of the latest Law Commission guidance, our Real Estate team is ready to assist.
Get in touch today to speak with our legal specialists.
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