Tanfield Update on the Law Commission’s Interim Statement on reform of Part 2 of the Landlord and Tenant Act 1954 (the right to renew)

Philip Brown takes a look at the Law Commission’s interim statement on the modernisation of commercial leasehold legislation.

Following the closure of the Law Commission’s First Consultation on modernisation of commercial leasehold legislation, it has now published an Interim Statement.

Provisional conclusions

The Law Commission’s provisional conclusions are that:

• The existing “contracting-out” model is the right model.
• The existing types of tenancy (such as agricultural tenancies) excluded from the protection of the should remain outside the protection of the 1954 Act.
• The duration of tenancy that can benefit from security of tenure under the 1954 Act (currently those of more that 6 months) should be extended.

So no suggestion that this should be an area for widespread reform and this would now appear unlikely such that landlords and tenants are likely to be able to continue to rely upon the current framework which has become well understood and tested through the substantial body of case law which has built up.

However this does not mean that proposals for at least some reform will not follow. The most significant of these likely to be in relation to the extension of the duration of tenancy that can benefit. The Interim Statement indicates that, while the views of consultees on such an extension were mixed, there was support for an extension to give greater flexibility in the short-term lettings market.

In addition proposals may well follow for reform of the contacting-out procedure. The Interim Statement indicates that the Second Consultation (for which the dates have not currently been published) is expected to focus not only on the increase of the threshold to 2 years but also on the technical detail of how the 1954 Act may be reformed, including potential reform to the contacting-out procedure.

So what comes next?

• The Law Commission intend to publish a compilation of consultees’ responses from the First Consultation.
• The Second Consultation Paper will be published setting out the details and extent of the consultation and the date of closure of the consultation period.
• Following the Second Consultation the Law Commission will publish a final report setting out their proposals for reform in the light of the responses received and taking account of the terms of reference for the project which (as a reminder) are:

“to conduct a wide review of Part 2 of the Landlord and Tenant Act 1954 with a view to modernising commercial leasehold legislation, with an emphasis on:

• • creating a legal framework that is widely used rather than opted out of, without limiting the rights of parties to reach their own agreements, by making sure legislation is clear, easy to use, and beneficial to landlords and tenants;
  • supporting the efficient use of space in high streets and town centres, now and in future, by making sure current legislation is fit for today’s commercial market, taking into account other legislative frameworks and wider government priorities, such as the “net zero” and “levelling up” agendas; and
  • fostering a productive and beneficial commercial leasing relationship between landlords and tenants.”