Review of the Landlord and Tenant Act 1954

The iconic Landlord and Tenant Act 1954 looks to be set for change, nearly 20 years since it was last reviewed.  

The legislation provides occupying tenants with the right to remain in occupation at lease expiry, known as ‘Security of Tenure’. It was originally put in place to rebalance the power between landlords and tenants which had been created by a shortage of commercial property following World War II.

The decades old legislation has remained mostly unchanged and some in the industry feel that it no longer reflects the realities experienced in the market today. The market has changed significantly in the last 70 years and with the growth in online retailing, the prominent focus on ESG, amongst other market trends, its argued that the leases which businesses currently operate under are no longer fit for purpose and restrict space in high streets and other commercial property from being occupied efficiently.   

It is reported by the people using the legislation, that its now become over complex, inflexible, outdated, bureaucratic and out of sync with the current market. Not only that, but the court system was much quicker in 1954, whereas now resolving a contested lease renewal in court can take years. Many argue that it sometimes causes more unnecessary delay and cost for landlords and tenants, as opposed to solving disputes.

As such the Government are reviewing the legislation with the view that it will provide a more modern framework. A consultation was due to be published in December 2023, however the Law Commission is now promising to publish its consultation paper in Autumn 2024. In the meantime, we understand there are some expectations being discussed within the commercial market:

  • Contracting out

Security of tenure is not going anywhere but some believe it needs to be improved and simplified. The current procedure requires a landlord to serve a warning notice on the tenant and the tenant must either make a simple or statutory declaration. There is a view as to whether contracting out is appropriate in the modern market and a likely change is to remove the requirement to obtain declarations and ‘opt into the Act’ as opposed to ‘contracting out of the Act’. 

  • Grounds for opposition

The 1954 Act allows landlords to oppose lease renewals on certain grounds to enable them to regain possession of a property. Ground F enables a landlord to terminate a lease on the basis that they intend to demolish or redevelop, however it is felt that this ground no longer aligns with the MEES regulations and the Government’s ESG targets. A landlord cannot oppose a lease renewal on the ground that the property does not meet minimum EPC standards or include a landlord’s intention to conduct energy efficiency upgrades within it. There is thought that ground F should include energy efficiency upgrades or allow the court to be given the power to order renewals but require the tenant to provide the landlord access to undertake energy upgrade works.

  • Turnover rents

Turnover rents are usually based on a percentage of the tenant’s turnover, and they enable landlords and tenants to share the risks and rewards of a business. They have become more common in the retail sector, particularly following the pandemic. As it stands, the provisions within the Act don’t allow the court to order turnover rents on a protected renewal, therefore it may be considered appropriate that a more modern Act accept turnover rents where there might be a convincing and justified argument.

There is a worry that the changes might make things more complicated which leads to further litigation, but overall most people seem to agree that the Act is in need of some moderate tweaks and updating at the very least. Whilst we await further information on the proposed changes, if you require advice in respect of a commercial lease and wish to discuss your options in respect of security of tenure, please get in touch with our lease advisory experts.

© Cluttons LLP. 2024. This publication is the sole property of Cluttons LLP and must not be copied, reproduced, or transmitted in any form or by any means, either in whole or in part, without the prior written consent of Cluttons LLP. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Cluttons LLP does not accept any liability in negligence or otherwise for any loss or damage suffered by any party resulting from reliance on this publication. We strongly recommend that you always seek advice and presentation from a suitable qualified professional on any matter.

Contact

If you do not wish to receive further communications from us, please email [email protected]. More details on how to opt out can be seen in our Privacy Policy.

Alex Weatherilt

Associate, lease advisory

Manchester

T +44 (0) 7971 809 776

Related services

Lease advisory

Our RICS registered valuers have market data access, insight and will value, negotiate, and resolve lease disputes on your behalf as well as advise on lease renewals, break notices and lease…

Commercial agency

Agile and highly responsive in our approach we are ideally placed to advise you on buying, selling, leasing, or re-gearing your London and UK offices as well as other types of commercial and…

Business rates

Working for occupiers, developers, and landlords in London and nationally, we operate across office, retail, and industrial and logistics sectors.

Dilapidations consultancy

Our resolution consultancy team focuses exclusively on dilapidations, providing commercially focussed advice to support you with dilapidation claim disputes activated by the condition of a property.