An interim update on security of tenure

Back in December, we published an article on the Law Commission of England and Wales’ (“LC”) consultation on the security of tenure regime under Part 2 of the Landlord and Tenant Act 1954 (“54 Act”). The article summarises the current position under the 54 Act and the four options for possible reform proposed by LC’s consultation. LC’s aim is to ensure “the 54 Act works for the modern commercial leasehold market”.

The deadline for responses to LC’s first consultation was 19 February and following that, LC has recently issued an interim statement on its provisional conclusions.

Those conclusions can be summarised as follows:

1. The regime: the existing “contracting out” regime, which gives security of tenure as the default position with a right for the parties to contract out, remains the most appropriate model. LC acknowledge that there were “powerful” arguments in favour of the existing regime remaining unchanged, and that a change to it would cause “unwarranted disruption” to the real estate market;
2. Types of tenancies: the 54 Act currently excludes certain types of tenancies from the scope of the security of tenure provisions, for example farm business tenancies and mining leases. LC agrees with the general consensus expressed by consultees to retain the current exclusions without modification; and
3. Duration of tenancies: the 54 Act also currently excludes tenancies for a term of six months or less. In their interim statement, LC concluded that the six-month threshold should be increased. It is expected that their second consultation paper will propose an increase from a six month minimum threshold up to two years, so as to “give greater flexibility in the short-term lettings market”.

The second consultation paper is expected to focus on how the procedure of contracting out can be improved and made more useful to current market procedures.

A full copy of the interim statement is available on the Law Commision website.

LC’s interim statement certainly does not go so far as to suggest a complete overhaul of the security of tenure regime which doesn’t come as a surprise to many. Inevitably, it has left many wondering what will be achieved.

The key takeaway in December was “wait and see” and following the interim statement, that message broadly remains the same!

How we can help

For expert advice on how these proposed changes may impact your specific property interests, our specialised teams are here to help. Please do get in touch.