Business Tenancies: Law Commission Signals Direction of Reform

On 4 June 2025, the Law Commission published its interim statement sharing provisional conclusions on reforming Part 2 of the Landlord and Tenant Act 1954. This Act sets out security of tenure for business tenancies in England and Wales. Notably, this update comes after a consultation held from 19 November 2024 to 19 February 2025. During this period, the Commission received over 160 responses from landlords, tenants, professionals, and representative organisations.

Key Provisional Conclusions

Retention of the “Contracting-Out” Model

First, the Law Commission provisionally concludes that the current “contracting-out” model should stay in place. This model allows landlords and tenants to agree that the statutory right to renew a tenancy will not apply. Significantly, most consultees supported this approach because it balances the interests of landlords and tenants while preventing unnecessary disruption in the commercial leasehold market.

Scope of Tenancies Covered

Currently, the Act excludes certain tenancies, such as agricultural tenancies. During the consultation, the Commission asked whether these exclusions should continue. In the end, most consultees agreed that the current exclusions are appropriate, and the Commission provisionally supports this stance.

Duration Threshold for Security of Tenure

Under current law, tenancies lasting up to six months do not qualify for security of tenure. During the consultation, stakeholders shared mixed views on this rule. However, many supported raising the threshold to create more flexibility in the short-term lettings market. Therefore, the Law Commission provisionally concludes that the threshold should increase and plans to consult on raising it to two years. This proposal will feature in the Commission’s upcoming second consultation paper.

What Happens Next?

Looking ahead, these provisional conclusions will guide the Law Commission as it prepares its second consultation paper. This paper will cover the technical details of the proposed reforms, including potential changes to the contracting-out process. Following this, the Commission will publish its final recommendations for reform in a report.