A new lease of life for security of tenure: the Law Commission publish their second consultation on the Landlord and Tenant Act 1954

In An interim update on security of tenure, we noted that a second consultation paper was expected to examine how the contracting-out procedure under Part 2 of the Landlord and Tenant Act 1954 (the 1954 Act) could be improved and better aligned with the needs of the modern commercial property market. The Law Commission published this second consultation on 16 June 2026, marking the next stage of what could become the most significant review of business tenancy law in over 70 years.

The consultation builds on the Law Commission’s first consultation, which, as we discussed in Security of tenure – hold or fold?, considered whether the existing security of tenure regime should be retained, abolished or reformed. Having considered the responses received, the Law Commission concluded that the “contracting-out model” should be retained. Rather than replacing the existing framework, the latest consultation, which remains open until 16 September 2026, focuses on how it can be modernised and made fit for purpose to better reflect the needs of today’s commercial property market.

Why is the 1954 Act being reviewed?

The 1954 Act gives qualifying business tenants the right to renew their leases at the end of the contractual term unless the landlord can successfully oppose renewal on one of the statutory grounds (e.g. redevelopment). The 1954 Act is designed to strike a balance between protecting business tenants’ security of tenure and enabling landlords to recover possession where there are legitimate grounds for doing so.

What changes are being considered?

Some key proposals include:

1. Raising the threshold for the short-term tenancy exemption

Currently, business tenancies granted for a term of up to six months generally fall outside the protection of the 1954 Act (provided certain conditions are met). The Law Commission is proposing to increase that threshold to two years. If implemented many more short-term commercial lettings would fall outside the statutory renewal regime, providing greater flexibility for both landlords and tenants. The proposal reflects the increasing use of short-term and flexible occupancy arrangements in the modern commercial property market.

2. Simplifying the contracting-out procedure

At present, landlords and tenants wishing to exclude the security of tenure provisions must follow a prescribed statutory procedure before the lease is completed. The Law Commission is considering whether the process can be simplified whilst ensuring that tenants continue to understand what rights they are giving up. The objective is to strike a balance between improving efficiency in commercial lettings and maintaining adequate safeguards so that tenants make fully informed decisions when agreeing to exclude security of tenure protections.

3. Streamlining the renewal process

The current regime contains a number of prescribed notices, deadlines and procedural requirements which can result in costly technical disputes. The consultation explores whether the proceedings can be simplified without undermining the protections offered to both landlords and tenants.

4. Reviewing renewal rents and other lease terms

The consultation also considers whether the Court’s powers when determining the terms of a renewal lease should be updated. This includes seeking views on the approach to interim rent, the possibility of turnover rents in appropriate cases, and whether the legislation should better accommodate modern lease practices, including environmental and sustainability provisions.

5. Updating the statutory grounds of opposition

The consultation seeks views on whether the statutory grounds on which a landlord may oppose a lease renewal remain fit for purpose. In particular, there is a concern that Ground F (which covers demolition, reconstruction and substantial works of construction) is narrowly worded and does not cover new ways of redeveloping a property, such as retrofitting and that Ground F cannot be relied upon to carry out energy efficient works to comply with Part 3 of the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015.

6. Resolving disputes

The consultation is seeking views on whether lease renewal disputes should continue to be determined by the County Court, or whether there is scope for greater use of the Tribunal or alternative dispute resolution to improve efficiency and reduce costs.

Why does this matter?

The consultation demonstrates that there is considerable scope for reform of the way the current regime operates. Although the reforms remain some way off, landlords, tenants and property professions should consider whether the proposals may affect their businesses and whether they wish to respond to the consultation.

Full details of the consultation and how to respond can be found here: Business tenancies: the right to renew – Law Commission.

This consultation is being run in parallel with a consultation on commercial leasehold reform. Once the Law Commission have considered the responses to both consultations they will publish their final recommendations for a comprehensive package of reforms.

How we can help?

Our property litigation team advises landlords and tenants on all aspect of the 1954 Act, including lease renewals, opposed renewals on the statutory grounds and interim rent. We are closely following the Law Commission’s review and will continue to provide updates as the proposals develop. If you would like to discuss how the proposed reforms may affect your business or property portfolio, or require advice on lease renewal, please get in touch.