The Landlord and Tenant Act 1954 Right to Renew or Time to Rethink?

Despite the need for change, in its latest update, the Law Commission has made clear that it’s not planning to rip up the rulebook just yet. Rather than sweeping changes the Commission has provisionally concluded that the core of the Act - security of tenure - should stay exactly where it is. That means business tenants will continue to have the right to renew their lease when it expires, unless they’ve agreed (before signing) to “contract out” of that protection.

For landlords, especially those with short-term investment or redevelopment plans, this will come as a disappointment. For tenants, particularly small and medium-sized businesses, it’s a reassurance.

So, what does this actually mean? And is the Commission playing it too safe?

Why the Landlord and Tenant Act Matters

Part II of the 1954 Act offers a degree of predictability in a market where costs, demand and expectations are anything but predictable. It allows businesses to settle, invest in premises, and build customer relationships, all without the looming threat of losing their lease at renewal. That’s the security in “security of tenure.”

But landlords have long argued that this protection can work against the market’s need for agility. The British Property Federation (BPF), which represents many institutional landlords, lobbied hard for change, specifically for a shift to an opt-in model, meaning businesses would only be protected if both parties agreed. They also suggested exempting short leases altogether.

Instead, the Law Commission is sticking with the current opt-out system, arguing that while reform is necessary, the underlying model still works provided the details are brought into the 21st century.

Theory vs Practice in the Commercial Property Market

In reality, especially in landlord-dominated markets like central London, many leases are already contracted out of the Act as a matter of course. Where demand is high and tenants are keen to secure a particular space, we often see landlords negotiating from a position of strength and trying to make exclusion from the Act a condition of the deal.

This has created an environment where, despite the legal protections technically in place, many tenants have little choice but to waive them. For these occupiers, the practical experience already leans more towards a system without default security of tenure - one that reflects the BPF’s lobbying position more than the legislation itself.

That disconnect between policy and practice is one of the reasons reform is so complex. On paper, the Act protects tenants. In reality, we often see that market power dictates otherwise.

What’s Changing? (Eventually)

This latest announcement isn’t the end of the road - it’s more like a halfway marker. The Commission has committed to a second consultation later this year that will dive into how the Act should be updated.

That technical detail matters. Expect proposals on:

• Simplifying the contracting-out process, which is widely seen as clunky and overly formal
• Modernising lease terms, including ESG clauses and turnover rents
• Improving dispute resolution, possibly moving unopposed lease renewals away from the courts
• Adjusting the threshold for which leases are protected, likely lifting it from six months to two years

So while the structure stays, the scaffolding around it may look very different.

A Missed Opportunity? Or a Measured One?

For those hoping for more radical reform, this will feel like a cautious compromise. As the BPF put it, the proposals are “modest”. But reforming a 70-year-old piece of legislation that underpins the UK’s commercial property market was never going to be fast or flashy.

This isn’t just about legal process, it’s about economic balance. For every landlord frustrated by lease renewal delays, there’s a tenant whose business would be destabilised by weaker protections.

If the Law Commission can streamline how the Act operates without undermining its intent, that may well be the pragmatic middle ground we need.

What Next?

The second consultation will be the real test: can we modernise without destabilising? Can we reduce friction and delay without compromising protection?

Landlords want flexibility. Tenants want certainty. And in the commercial leasing world, those aren’t always mutually exclusive, but getting the balance right takes care, not shortcuts.

We’ll be watching closely as the next stage unfolds.