The Landlord and Tenant Act 1954 is now quite an old piece of legislation, introduced after the Second World War to stabilise the imbalance between landlords and tenants in the commercial lettings market.
Broadly speaking, it was designed to empower tenants with leases that were harder for a landlord to end, so that the tenant could build up goodwill and hopefully have a successful business on the local high street.
But, 70 years on, is it still working?
Leases ‘Inside’ the Act
A lease granted inside the provisions of the Act, specifically sections 24-28, have what is known as ‘security of tenure’. This security means that the tenant is entitled, by the provisions of the Act, to stay in occupation after the term ends and also to apply for a new lease. A landlord can only end the tenancy or object to the grant of a new lease if they can prove one of the seven grounds for opposition, and doing so can often mean a trip to the Courts.
Leases inside the Act can be beneficial. They can be used to great effect when creating a long-lasting commercial relationship, particularly where the premises or the particular business operation are unique.
Leases ‘Outside’ the Act
Often though, the landlord will want more flexibility over the occupation of the premises and will want a ‘contracted out’ tenancy. This means the provisions of the Act relating to security of tenure are removed, so the tenant has no right to stay in occupation and no right to a new lease. When the term ends, it ends.
This can be of benefit to a landlord with premises that can suit a variety of different uses, as they can review their commercial position towards the end of the lease and renegotiate or remarket. It can also be useful for tenants who do not want to be ‘stuck’ in long term lease arrangements.
Shaking it up – reform on the horizon?
The Act is not without its problems though. It has been about 20 years since the last changes took place, and the Act simply doesn’t reflect today’s commercial property market. Competition for high street premises is seemingly weaker, as more and more businesses turn to the internet, and following the Covid-19 pandemic, many businesses have found other ways to work that require less physical space.
The previous government announced a consultation paper in Autumn 2024, which it framed as “conducting a wide review of .. the Act …” though in reality with a new government following the general election, it is unclear whether this will remain a high priority issue.
The team at Greene & Greene can assist in the acquisition, disposal or leasing of commercial properties. For further advice please contact James Southward on 01284 717522.
This is only intended to be a summary and not specific legal advice. If you would like further information or advice, please do contact a member of our team.
For more information on the services offered by Greene & Greene Solicitors please visit www.greene-greene.com and follow on Twitter @GreeneGreeneLaw.
