Where were we, where are we, and where do we want to get to? Reform of the Landlord and Tenant Act 1954

Following the Law Commission's publication of an interim statement in June, partner Paul Greatholder takes stock of the current landscape, weighing up the case for and against fundamental reform and outlining next steps. 

The LTA 1954 has been in force for over 70 years and is one of the few pieces of legislation that directly affects the operation of commercial leases. The key points are that:

1. The LTA 1954 applies to all commercial leases unless steps are taken to exclude it;
2. a commercial lease within the LTA 1954 generally will not come to an end simply because the contractual term has expired. Someone needs to serve a notice to bring about a termination or renewal process;
3. A landlord who wants to stop a tenant from securing a renewal lease needs to prove one of seven legal grounds in order to do so.
4. If a landlord prevents a tenant from acquiring a new lease on any of the ‘no fault’ grounds under the LTA 1954, then the landlord must pay compensation to the departing tenant. 

There have been two major reform events of the original LTA 1954 – in 1969, and in 2004 both of which addressed perceived flaws in the Act. There has therefore been a growing feeling in the property industry that it is time to look again at the operation of the Act and what, if anything, should be done differently. Criticism has been levelled at the operation of the Act including suggestions that it acts as a time-consuming and expensive obstacle to landlords being able to maximise the utility of their estates. On the other hand commercial tenants understandably regard the protection of the Act as a longstanding and well-understood commercial benefit that is factored into lease negotiations. 

In November 2024 the Law Commission issued a consultation paper seeking the views of stakeholders in relation to one of four possible options. These were (to paraphrase, and from one extreme to the other):

• To abolish it completely
• To keep it but all the parties to ‘opt in’ rather than the current ‘opt out’ system
• To keep the ‘opt out’ system
• To make the Act compulsory for all commercial tenancies.

In June 2025 the Law Commission produced the results of the consultation exercise: the headline point is that the Law Commission recommends retaining the current ‘opt-out’ system. There will therefore not be a fundamental realignment of the balance between landlords and tenants under commercial leases.  The possible recommended changes are more in respect of the details of the Act including: 

• the qualifying threshold length for a lease to fall within the terms of the LTA 1954 is to be extended from the current six months to two years – ie leases that are less than two years in duration will not benefit from the Act
• there will be a review of the mechanics of the current opt-out system (known as ‘contracting out’)
• the procedures for determining the process for either terminating or renewing a tenancy will be subject to review.  This could include a review of whether the current county court renewal process is really fit for purpose.

A second consultation paper will now follow seeking views on the technical detail of how the LTA 1954 might be reformed, following which the Law Commission will prepare its final recommendations. 

Paul Greatholder is a partner in the property litigation team. He advises businesses, charities and individuals on all aspects of property disputes, including Supreme Court cases, and their avoidance.