Landlord & Tenant Act 1954 under review: what the proposed changes could mean

The biggest review of commercial lease renewal rights in more than 70 years is underway.

On 16 June 2026, the Law Commission published the second stage of its review of the security of tenure regime under the Landlord and Tenant Act 1954 (the Act). While no immediate legal changes have been made, the proposals could fundamentally reshape the way business tenancy renewals operate across England and Wales.

For both commercial landlords and tenants, the potential reforms raise important questions about flexibility, costs, redevelopment projects and the future of statutory protection. Businesses that lease, occupy or manage commercial property should pay close attention.

Security of tenure: the current framework

Part II of the Landlord and Tenant Act 1954 gives many business tenants a valuable statutory right to remain in occupation and apply for a new lease when their existing tenancy expires.

This protection, known as security of tenure, can only be defeated if a landlord successfully establishes one of a limited number of statutory grounds of opposition.

Although parties can agree to exclude these rights through the well-established contracting out procedure, security of tenure remains a cornerstone of the commercial property market and is often regarded as a valuable tenant protection. Tenants will often pay a premium to secure these rights.

However, with the legislation now more than seven decades old, the Law Commission has recognised that the commercial property landscape has evolved significantly and that the current framework may no longer reflect modern market practice.

A reminder: what happened during the first consultation?

The Law Commission’s first consultation, published in November 2024, focused on the future structure of the Act.

Following industry feedback, the Commission’s interim conclusions included:

• retaining the current contracting out model
• increasing the threshold for excluding shorter leases from the protection of the Act from six months
• preserving the overall security of tenure framework rather than replacing it entirely.

The second consultation now explores how the regime could be modernised and simplified.

What changes are being consulted on?

The Law Commission’s latest consultation contains several potentially significant reforms designed to streamline the current system and reduce complexity.

Key proposals include:

• excluding most periodic business tenancies from the scope of the Act (currently, all periodic business tenancies automatically benefit from security of tenure and cannot be contracted out of the Act)
• increasing the minimum qualifying lease term (at present business tenancies granted for six months or less fall outside the Act)
• simplifying the contracting out process (currently, a prescribed form must be served by the landlord on the tenant, giving at least 14 days’ notice. If less than 14 days’ notice is given, then the tenant must provide a statutory declaration)
• modernising rent determination in renewal leases such as turnover rents, whereby the rent is based on a percentage of the tenant’s revenue generated from the property, hybrid rent arrangements, and other modern commercial leasing models (at present, if the Court is required to determine the rent under the renewal lease, such rent will be based on the open market valuation method)
• expanding redevelopment Ground F to capture refurbishment projects and retrofitting works undertaken by landlords to comply with environmental standards such as the Minimum Energy Efficiency Standards (at present, redevelopment Ground F can only be relied upon where the landlord is seeking to undertake demolition, reconstruction and substantial works of construction on the premises)
• moving disputes to tribunals (currently all claims under the Act are heard in county courts).

What could these changes mean for landlords?

For commercial landlords, the proposed reforms are largely focused on increased flexibility.

Excluding most periodic tenancies from the Act would reduce the risk of inadvertently granting security of tenure rights and provide greater freedom when managing property portfolios.

Similarly, increasing the qualifying lease term could allow landlords to offer longer short-term leases without triggering statutory protection, creating additional asset management opportunities.

Any simplification of the contracting out procedure should also streamline lease completions and reduce associated professional costs.

The proposed expansion of Ground F is perhaps the most significant change in practice and may be particularly attractive to landlords undertaking redevelopment, refurbishment or ESG-driven improvements. If implemented, the reforms could make it easier to recover possession where substantial building improvements are planned.

A transfer of claims to tribunals may also significantly reduce the cost and complexity of commercial lease renewal disputes. Tribunals are much better resourced to deal with matters more efficiently, again driving costs savings.

What could the changes mean for tenants?

For tenants, the reforms present both opportunities and risks.

The proposed exclusion of periodic tenancies may reduce the availability of security of tenure for businesses occupying premises under informal or flexible arrangements.

Likewise, increasing the qualifying lease length could make it harder for start-ups and growing businesses to access statutory renewal protection without committing to longer lease terms.

While a simplified contracting out process could reduce transaction costs, it may also encourage more landlords to seek exclusion of security of tenure rights, making it increasingly important for tenants to obtain early legal advice before entering into lease commitments.

The potential widening of Ground F could make it easier for landlords to oppose renewals, potentially resulting in more contested commercial property disputes. That said, it may also bring greater alignment with modern property requirements, particularly environmental upgrades, potentially leading to improved building standards and more sustainable property for tenants to enjoy.

The proposed shift of claims to tribunals would also offer tenants a quicker and more cost-effective forum in which to pursue their rights or challenge opposition to renewal.

Looking ahead

Although the proposals remain at consultation stage, they represent the most significant review of the Landlord and Tenant Act 1954 for a generation.

The outcome could have a major impact on:

• commercial lease renewals
• security of tenure rights
• redevelopment strategies
• property investment decisions
• landlord and tenant dispute resolution.

Businesses planning lease renewals, acquisitions, disposals or redevelopment projects should begin considering how a revised statutory framework could affect their future property strategy. Early advice will be key to navigating any changes effectively and mitigating potential risk.

How can we help?

Birketts’ specialist commercial property disputes lawyers advise landlords, tenants, retailers, investors and developers on all aspects of:

• Landlord and Tenant Act 1954 applications
• commercial lease renewals
• security of tenure disputes
• opposed lease renewals
• redevelopment Ground F objections
• dilapidations disputes
• commercial property litigation.

If you would like to discuss how the proposed reforms may affect your property portfolio or business interests, please contact:

Stephanie Kingdon, Partner, commercial property disputes by email at [email protected] or call 0117 233 1713.

Mia Clothier, Solicitor, commercial property disputes by email at [email protected] or call 0117 2331789.