Review of the Landlord and Tenant Act 1954: Impact on business leases
Any lawyer dealing with leases of business premises must know their way around the intricacies of the Landlord and Tenant Act 1954 (“1954 Act”). This act underpins the tenant’s rights to security of tenure and ensures their ability to renew at the end of the contract on the same terms as the old lease, subject to reasonable modernisation and a rental cost in line with the market.
The government’s last review of the Landlord and Tenant Act 1954, despite its critical importance, was 20 years ago. A further review has recently been instigated and it is expected that the Law Commission’s consultation paper will be received by the end of the year (2023).
It is currently being argued that the legislation needs to be reviewed and updated to reflect the growth of online retail and the impact of the recent COVID pandemic. The objective of the review is to ensure a more modern framework is in place that would support ailing high streets and thus reduce the number of vacant units.
The concern is that the Landlord and Tenant Act 1954 in its current form, is too inflexible and out of date. Even though the legislation dates back to the 1950s, we actually find that the Act works well for business leases and is generally understood by all those involved with landlord and tenant relations. We are also not particularly clear how the application of the 1954 Act has much impact upon the current challenges being faced by high street retail. This begs the question as to what changes could be made to the Act to have a significant impact to the sector.
Another key concern behind the review is the belief that many parties choose to contract outside of the Landlord and Tenant Act 1954 Act and so leave tenants without the protection of security of tenure. What appears to be overlooked with this, however, is the fact that it may well be acceptable to the tenants for the property to remain outside of the Act. If the property is not protected by the Landlord and Tenant Act 1954 then they are able to argue for lower rents for leases.
It likely goes without saying that anything that reduces costs for business tenants in the current economic climate should not be jeopardised. It would be imprudent for the government to seek to force upon landlords and tenants specific choices and relationships. There could be unintended adverse consequences to such an approach.
We await with interest the Law Commission’s consultation paper about the Landlord and Tenant Act 1954 and shall report further on the potential impact for our landlord and tenant clients and business leases as the review progresses.
You can read another recent article about commercial lease negotiation post-pandemic here.
If you would like to speak to one of our experienced commercial property solicitors about the Landlord and Tenant Act 1954, or any other commercial property matter, then please get in touch by calling 01752 203500. You can also email me directly via david.stone@GAsolicitors.com.
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