The Landlord and Tenant Act 1954 gives business tenants a statutory right to a new tenancy on the expiry of their existing tenancy and provides that a landlord can only recover possession where at least one of seven statutory grounds applies.
The Act was put in place to promote the economy and provide a secure basis for businesses to grow following the war.
Almost 70 years later, the promotion and growth of businesses remain essential for our economy – but the pressures on businesses have changed immeasurably.
From the huge growth of online retail to the essential focus on energy efficiency, businesses – and the leases under which they operate – must adapt.
There are concerns that the processes set out in Part 2 of the 1954 Act are inflexible and hinder this adaptation.
Those concerns surround:
- The requirement for the parties to follow the "contracting out" procedure, serving notices and signing declarations if the tenancy is not to have the protection of the Act.
- A lack of provision in the Act for modern rent arrangements. Many businesses are now looking for turnover rents, but these do not sit well with the provisions of the 1954 Act.
- Difficulties in promoting green leases and furthering the "net zero" objective.
Those involved in lease renewals will no doubt be aware of the requirement to consider "reasonable updating" of lease terms on renewal.
But is it time for the Act itself to be updated?
Given the concerns outlined above (and as part of the government's Anti-Social Behaviour Action Plan), the Law Commission has announced that it will review the processes outlined by the Act and implement changes allowing it to adapt to the changing pressures of business.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.