In January we published news that the government was consulting on the future of the issue of security of tenure, provided to business tenants by way of the Landlord and Tenant Act 1954 (the Act).
In an interim statement, the Law Commission has issued provisional recommendations:
- That the current position, that leases are inside the Act unless the parties ‘contract out’ (save for certain excluded leases), remains broadly unchanged; and
- Further consultation will be undertaken to ascertain whether the threshold for tenancies to benefit from security of tenure should increase from the current six-month threshold to two years.
The full statement can be found here: Business tenancies: Interim statement on direction of reform – Law Commission
Data gathered by the Property Litigation Association, British Property Federation and City of London Society Land Law Committee indicates that a significant proportion (up to 90% in some instances) of their members’ leases do not have security of tenure (are contracted out of the Act).
In relation to the threshold for the benefit of the Act to apply, British Property Federation and City of London Society Land Law Committee indicated support for a change from 6 months to up to 5 years.
The Law Commission will now carry out its second consultation, before reporting its recommendations to the government.
If the Law Commission’s recommendations are approved, the changes will be implemented by way of new legislation.
Until any new legislation is passed, the current regime will still apply.
We will publish further updates on this consultation as they become available. In the meantime, please contact a member of our team if you have any questions on what the consultations mean for you.