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The Law Commission has launched its second consultation on business tenancies and renewal rights under Part 2 of the Landlord and Tenant Act 1954. It may sound like a technical sideshow, but it isn't. The Act shapes the way commercial leases are granted, renewed, opposed and priced across England and Wales.
Responses are due by 16 September 2026. For landlords, tenants, investors, funders and occupiers, this is the moment to tell the Law Commission what works, what does not and what needs to change.
What needs fixing?
The 1954 Act gives many business tenants security of tenure – the right to stay and seek a new lease when the current one ends, unless the landlord can rely on a statutory ground to oppose renewal.
The regime is well known, but it is showing its age. The Act is more than 70 years old, and was last updated around 20 years ago. Since then, the market it governs – and the way we live and work – have evolved significantly. The regime has not kept up.
The Law Commission's concern is simple: parts of the Act are burdensome, unclear and out of step with modern leasing. This can increase costs, delay transactions and make it harder to occupy space quickly.
What has the Law Commission already said?
This is the second stage of the project.
The first consultation, published in November 2024, tested the big question: should security of tenure be kept, changed or replaced? The Law Commission published its provisional conclusions in June 2025.
The headline is continuity, not revolution. The Law Commission is not proposing to scrap the current contracting-out model. For now:
- business tenants would still have security of tenure by default;
- landlords and tenants could still agree to exclude it, and;
- the main task is to make the regime clearer, simpler and easier to use.
So the market is not facing a complete reset. It is being asked to help shape changes that will affect real deals.
What is in the new consultation?
The second consultation gets into the mechanics: 13 chapters, 67 questions and a series of proposals with practical consequences.
The main areas are:
Which tenancies should be protected?
The Law Commission is revisiting the gateway question: which tenancies should qualify for protection?
Currently, fixed-term tenancies of six months or less are usually outside the Act, unless the tenant has already been in occupation for 12 months. Periodic tenancies are protected and cannot be contracted out.
One option is to raise the threshold, so new fixed-term tenancies would only be protected if they run for more than one or two years.
The Law Commission also provisionally proposes excluding all new periodic tenancies from protection.
This is significant for pop-ups, meanwhile uses, short-term lettings and flexible occupation.
Could contracting out be simpler?
Contracting out is routine, but it is also one of the easiest places to make a costly mistake.
The current process relies on prescribed warning notices and declarations. Most of the market knows the drill, but getting it wrong can create serious problems, especially for landlords.
The Law Commission is looking at ways to reduce the traps and make the process easier. This will matter where speed is essential: fast lettings, portfolio deals, renewals, management arrangements and time-pressured transactions.
What should renewal leases look like?
Where a protected tenant is entitled to renew, the parties must agree the new lease terms or ask the court to decide.
The Law Commission is asking whether the current rules on renewal terms still work. It is also looking at environmental issues, including energy performance and sustainability. This is one to watch – green lease clauses, minimum energy efficiency standard (MEES) compliance and asset management plans are now mainstream. The renewal regime needs to handle them without uncertainty.
How should renewal rent be set?
The Law Commission is considering changes to the rent provisions, including whether the court should be able to order turnover rent on renewal. That point is practical for retail, leisure and mixed-use assets. Turnover rents are part of the market; the statute needs to recognise that reality.
The consultation also looks at interim rent. Any reform could affect cash flow and negotiating leverage while a renewal dispute is ongoing.
When can a landlord say no?
The consultation reviews the grounds on which a landlord can oppose renewal.
A key focus is ground (f), the redevelopment ground. The Law Commission is asking whether the test should better reflect modern construction methods and the Minimum Energy Efficiency Standards regime.
That will matter to landlords planning refurbishment, redevelopment or decarbonisation works as well as tenants whose businesses may be displaced by those works.
Where should disputes be resolved?
Most lease renewal disputes currently sit in the County Court. The Law Commission asks whether they should stay there or move in whole (or in part) to the tribunal or the High Court. It is also asking whether alternative dispute resolution should do more of the heavy lifting.
Forum is not a dry procedural point. It can affect costs, speed, tactics and outcome. A shift in forum could change how parties approach contested renewals.
Why does this matter for stakeholders?
This is policy work with a very practical edge.
For landlords, reform could affect:
- how new lettings are structured;
- whether short-term occupation carries renewal risk;
- how easily leases can be contracted out;
- how redevelopment and refurbishment strategies are protected, and;
- how renewal disputes are run.
For tenants, reform could affect:
- whether their occupation is protected;
- how much leverage they have at renewal;
- what happens if the landlord wants the property back;
- how renewal rent and lease terms are set, and;
- how quickly disputes are resolved.
For investors and funders, the issues go to income assumptions, vacant possession strategy, asset management plans and due diligence.
Put simply: the 1954 Act is part of the operating system of the commercial property market. If that system changes, deal terms and risk allocation may change too.
What should stakeholders do now?
The Law Commission wants views from landlords, business tenants, representative bodies, property professionals, legal practitioners, judges, academics and the wider public. It also wants evidence of the financial, practical and commercial impact of its proposals.
The consultation closes on 16 September 2026. The Law Commission will then review responses and publish its final recommendations. It will then be for Government to decide whether to implement them.
Have your say
This is a real opportunity for the market to influence the future of business tenancy renewals in England and Wales.
The strongest responses will be practical. They will explain how the current law works on the ground, where it adds cost or delay, and what the commercial consequences of reform would be.
Our Real Estate team is following the consultation closely and can help landlords, tenants, investors and other stakeholders prepare clear, evidence-led responses.
Read the original article on GowlingWLG.com
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