On 16 June 2026, the Law Commission published two consultations that could significantly reshape the legal framework for commercial property in England and Wales. Whether you are an investor, developer, asset manager, or business tenant, these proposals may affect how you lease, manage, and transact commercial premises. Both consultations are open for responses until 16 September 2026.
Reforming the Security of Tenure Procedure Under the Landlord and Tenant Act 1954
The Landlord and Tenant Act 1954, (the “1954 Act”), gives most business tenants security of tenure, which gives them a right to renew their lease when it expires if they are still occupying for business purposes. While this right is a cornerstone of commercial landlord and tenant law, the procedures around it are widely regarded as outdated and cumbersome.
The Law Commission’s first consultation paper on the 1954 Act in June 2025 concluded that the current system for “contracting out” of the security of tenure provisions should be retained but modernized. On 16 June 2026, a second consultation paper was released which focuses on the practical detail of how the 1954 Act should operate.
Key proposals include:
Who is protected? The consultation proposes excluding most periodic tenancies (rolling arrangements with no fixed end date) from the scope of the 1954 Act. It also considers raising the minimum fixed-term length for protection (currently 6 months), so that tenancies granted for more than one year (or another option of two years) would be excluded from having security of tenure.
A simpler contracting-out process. Currently, when a landlord and tenant agree to exclude security of tenure, they must complete separate warning notices and simple / statutory declarations. The Law Commission proposes replacing this with prescribed warning language built directly into the lease, along with a declaration signed by the tenant confirming they have understood the terms.
Renewal terms, rent, and energy standards. The consultation considers how courts determine the terms of a renewed lease and whether the process should better accommodate modern rental models, such as turnover rents. It considers whether interim rent should be simplified, including by using one fixed valuation date, or retaining two valuation dates but simplifying the procedure. It also asks whether the regime should reflect environmental requirements, including Minimum Energy Efficiency Standards (known as “MEES”).
Grounds for landlord opposition. When a landlord opposes renewal, one key ground for opposition is that it intends to redevelop the property. The consultation asks whether this ground should be updated to reflect modern construction practices such as refurbishment and retrofitting, and whether environmental obligations should also be taken into account.
Dispute resolution. The consultation explores whether lease renewal disputes should continue to be heard in the county courts, or whether some or all cases should move to a specialist tribunal or the High Court. It also asks whether alternative dispute resolutions could play a greater role.
Law Commission Consultation on Barriers to Commercial Leasehold Transactions
A separate consultation published on the same date examines two areas of law that can create obstacles to straightforward commercial property transactions.
Anti-avoidance rules under the Landlord and Tenant (Covenants) Act 1995 (the “1995 Act”).
The 1995 Act was introduced to ensure that when a business tenant assigns (transfers) its lease to a new tenant, the outgoing tenant is automatically released from its obligations to the landlord. A landlord can require the outgoing tenant to enter an “authorised guarantee agreement” (or “AGA”), under which it guarantees the performance of the incoming tenant but only of that immediate successor, not any future tenants.
The 1995 Act also contains broadly drafted anti-avoidance provisions designed to prevent landlords and tenants from circumventing these protections. However, these provisions often inadvertently block commercially sensible arrangements. For example, the 1995 Act has stopped lease transfers within the same corporate group, between partnerships with substantially the same partners, or from a tenant to its own guarantor.
The Law Commission proposes that the 1995 Act should facilitate, rather than prohibit, these types of arrangements and looks to reform these obstacles.
Rights of first refusal under the Landlord and Tenant Act 1987 (the “1987 Act”).
The 1987 Act requires a landlord of a block of flats to offer the right to buy property to its residential leaseholders before selling or granting a new lease to a third party. This right does not apply where more than 50% of the building’s floor area is used for non-residential purposes.
In mixed use buildings which predominantly comprise residential space (with fewer commercial units) assuming all the other requirements of the 1987 Act are satisfied, the right of first refusal is likely to apply when the landlord attempts to grant a lease of commercial space.
The Law Commission proposes that the grant of a lease of premises used exclusively for non-residential purposes should not trigger this right for residential leaseholders to buy, while preserving the core protection intended for residential leaseholders.
Looking Ahead
Both consultations close on 16 September 2026. The Law Commission will consider responses and publish final reports with its conclusions.
We encourage you to respond to these consultations if you own, occupy, invest in, or manage commercial property, as these proposals could have a meaningful impact on how your leases and transactions are structured.
