Changes to security of tenure

Reform of the Landlord and Tenant Act 1954

The Landlord and Tenant Act 1954 (“the Act”) is a 70 year old piece of legislation existing in a commercial market that is consistently evolving and adapting to modern times. Whilst the Act has been updated during its 70 year life, there have been no significant updates in the past 20 years. This could change, as the Law Commission have recently consulted on whether the Act needs reform, especially in relation to security of tenure.

Security of Tenure

The Act, and in particular Part 2 of the Act, has a fundamental impact on business tenancies. Where a tenant occupies premises for business purposes, Part 2 of the Act provides tenants with a statutory right to continue to occupy the premises once their contractual lease term has ended and it entitles them to obtain a renewal tenancy, subject to limited statutory exceptions in the Act. Where a tenant has the benefit of such rights, they are said to have “security of tenure”.

A tenant who occupies premises for business purposes will have security of tenure unless the parties agree to contract out of the protection afforded to tenants by Part 2 of the Act. To contract out, the prospective landlord and tenant must satisfactorily complete specific procedural steps set out in the Act before any agreement for lease or lease is entered into.

Law Commission consultation

The consultation addressed:

1. Whether the current contracting-out model should be retained
2. What types of tenancy should benefit from security of tenure (the Act currently excludes certain types of tenancy and the consultation looked at whether the list of excluded tenancies is appropriate)
3. What duration of tenancy should benefit from security of tenure (the Act currently excludes tenancies of up to six months).

In June 2025, the Law Commission published an interim statement setting out their provisional conclusions on whether, and in what circumstances, business tenants should have security of tenure.

The findings were:

1. The existing “contracting-out” model is the right mode
2. The list of excluded tenancies should be kept
3. The six month threshold should be increased to give greater flexibility in the short-term lettings market. The Law Commission have indicated that their second consultation will consult on increasing the threshold from six months to two years (so that leases granted for a term of less than 2 years would be excluded and not need to be contracted out).

The Law Commission have said that their findings will shape their second consultation “to ensure the 1954 Act works for the modern commercial leasehold market”.

The second consultation will consider how the technical “contracting-out” procedure could be reformed, so the Act could still see significant change.

Confirmation of the date/time period for the second consultation is still to be confirmed.

Summary

The question as to whether or not security of tenure should continue has been answered, for now. The main takeaway from the consultation is that the current “contracting-out” model is still considered to be the right approach. We wait to see what amendments they will seek to make to the actual contracting out process.

If you have any questions about the topics raised in this article, our Portfolio Asset Management team would be happy to help.