Out-Law News 1 min. read
05 Apr 2023, 9:34 am
A review into a key piece of legislation used by businesses who lease shops, offices and other commercial premises in England and Wales will benefit both landlords and tenants alike, according to one legal expert.
The 1954 Landlord and Tenant Act gives business tenants a right to renew their tenancy at expiry of the term – known as “security of tenure”. The Act contains the framework for the parties to agree the terms of that renewal lease, which can ultimately be determined by the courts if the parties cannot agree terms.
But the government’s anti-social behaviour action plan said that “complex commercial leasing rules are holding back high streets” and promised a review of the 1954 Act, led by the Law Commission for England and Wales, to “make the system easier to understand” and “attract more investment into UK commercial property.”
Currently, proceedings can take an inordinate amount of time to resolve, particularly given current court delays. This is not helpful to either landlords, who might require the premises back to redevelop them, or tenants, who want certainty
The Law Commission’s review will explore problems with the existing law and recommend changes to develop a modern legal framework that is widely used rather than opted out of. The review is also intended to bolster the long-term resilience of UK high streets while also considering government priorities on the environment and regional investment.
Commercial property expert Adam Carney of Pinsent Masons said an overhaul of the current regime was “long overdue” and welcomed the Law Commission’s proposed review.
“The rationale for the legislation is to give businesses certainty as to the premises they trade from. However, there are numerous exceptions to the right of renewal which, together with the huge body of caselaw that has built up around them, leads to both landlords and tenants often spending vast sums on strategic and legal advice,” Carney said.
“Currently, proceedings can take an inordinate amount of time to resolve, particularly given current court delays. This is not helpful to either landlords, who might require the premises back to redevelop them, or tenants, who want certainty. It is not known what the commission will recommend, but a consolidation of the caselaw and taking resolution of renewal disputes outside of the court system would be welcomed by many,” Carney said.
He added: “It would be a missed opportunity if the review didn’t also consider how ‘green’ lease provisions could be better incorporated as part of lease renewals. It will be interesting to see how the review develops to take into account the legitimate concerns of both landlords and tenants.”
The Law Commission said it aims to publish a consultation paper on the review by December 2023.