How Reform of the Landlord & Tenant Act 1954 Could Affect Future Commercial Leases

The future of business tenancies 

As discussed in our previous article, the Law Commission's first consultation considered whether the current security of tenure model should be changed or continue in its present form. Its provisional conclusion was that qualifying business tenants should remain protected by default, while landlords and tenants should remain free to contract out before the lease is granted. 

The second consultation focuses on business tenancy reform within that framework. It considers which tenancies should qualify, how the renewal process should work, when landlords may oppose renewal, how renewal rent and terms are decided, and how disputes could be resolved more efficiently. 

Which future leases could be protected? 

One area under review is the minimum length a fixed-term tenancy must have before it can qualify for protection. The consultation also proposes excluding most new rolling or periodic tenancies. If adopted, these changes could mean that some shorter or more flexible occupation arrangements would no longer benefit from security of tenure protection under the Landlord and Tenant Act 1954 

This could give landlords greater certainty that certain short-term arrangements will end without statutory renewal rights. Tenants considering shorter leases would need to understand whether they will have a right to remain and seek a new tenancy when the agreed term ends. 

Could contracting out of the Landlord and Tenant Act 1954 become simpler? 

The ability to contract out is expected to remain, but the Law Commission is consulting on a simpler process. The proposals include placing the prescribed warning and the tenant's declaration within the lease, rather than relying on the present separate notice and declaration procedure. 

This would be one of the most significant practical changes to the Act because it could remove a common source of delay and technical error in commercial leasing transactions. However, a contracted-out lease renewal would still require careful planning because the tenant has no automatic statutory right to a new lease when the existing term ends. Until any reform takes effect, landlords and tenants must continue to follow the current contracting-out formalities. 

How security of tenure reform could affect lease strategy 

The consultation also considers renewal rent and terms, redevelopment grounds, compensation and dispute resolution. If implemented, reforms could affect how future leases address environmental obligations, turnover rent, redevelopment plans and the route taken when renewal terms cannot be agreed. 

The proposals do not alter existing leases now. Landlords should not delay suitable lettings while waiting for reform, and tenants should not assume that future changes will improve or remove their renewal rights. For now, landlords and tenants should continue to structure transactions using the existing LTA 1954 framework, clearly document whether protection is intended to apply, and keep standard lease documentation under review as the consultation progresses. 

Landlord and Tenant Act 1954 reform: frequently asked questions 

How could reform of the 1954 Act affect my lease? 

Proposed reform could affect which future leases qualify for security of tenure, how landlords and tenants contract out of the Act, and how renewal rent, terms and disputes are handled. The proposals are not yet law and would only affect new leases granted after reform takes effect. 

Will contracting out change? 

The ability to contract out is expected to remain, but the Law Commission is consulting on simplifying the process, including placing the prescribed warning and tenant's declaration within the lease itself. Until reform takes effect, the existing contracting-out formalities continue to apply. 

Do the reforms affect existing leases? 

No. The proposals would not alter existing leases. They are intended to apply to future leases once the Law Commission's recommendations are adopted and any resulting legislation is passed. 

Should landlords wait for reform before granting leases? 

No. The proposals are not yet law and there is no confirmed timetable for change. Landlords should not delay suitable lettings while waiting for reform, and should continue to structure leases under the current LTA 1954 rules. 

Next reads 

• The Landlord and Tenant Act 1954 Review: What Commercial Property Owners Need to Know

• Security of Tenure: Five Questions Landlords and Tenants Should Be Asking Now

Commercial lease and renewal advice 

Our Commercial Property team advises landlords, tenants, investors and owner-occupiers across London on new leases, lease renewals, Heads of Terms and rent review drafting. 

If you are negotiating terms now, we can help you assess the practical impact on your proposed lease or renewal. Call 020 8858 6971 or email commercialpropertyenquiries@grantsaw.co.uk to discuss your circumstances. 

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Disclaimer 

This article is for general information only and is not legal advice. Laws and guidance change and outcomes depend on facts. If you need advice on your situation, please contact us. Grant Saw Solicitors LLP is authorised and regulated by the Solicitors Regulation Authority. 

Last updated: 14 September 2026