Associate Megan Harris, in our Commercial Property team, unpacks the latest on business tenancy renewal rights consultation.
On 16 June 2026, the Law Commission published its second of two consultations on the right to renew business tenancies under Part 2 of the Landlord and Tenant Act 1954. This is often referred to as “security of tenure” which can give a business tenant the right to stay in its premises and ask for a new lease when the current one ends, unless the landlord can rely on one of the statutory grounds to oppose a lease renewal.
Why is reform being considered?
The 1954 Act is over 70 years old. Although it has been updated before, the commercial property market has changed significantly. Businesses now use space more flexibly, online trading has changed the role of shops and offices, and landlords and tenants often want deals to complete quickly. The consultation asks whether the detailed rules still work well in practice, or whether they create unnecessary cost, delay and uncertainty.
What is the Law Commission looking at?
The first consultation was published on 19 November 2024 to address whether the current approach of giving tenants security of tenure by default with the ability to ‘contract out’ is appropriate for the modern commercial leasehold market. Following this the Law Commission released an interim statement that the current contracting out model should remain but that the threshold for excluding tenancies from security of tenure should be extended.
This second consultation focuses on how security of tenure operates, rather than replacing the whole system. Key issues on which the consultation is seeking views include:
- which tenancies should qualify for security of tenure with suggestions that periodic tenancies are excluded and an increase to the threshold for a fixed term tenancy below which there is no security of tenure from 6 months to 1 or 2 years;
- how landlords and tenants can agree to ‘contract out’ of renewal rights with a more streamlined process included in the tenancy agreement suggested which may help avoid last minute delays and reduce the risk of technical mistakes;
- the grounds landlords can use to oppose a new lease;
- the rent and terms of any renewal lease; and
- how disputes should be resolved.
Why landlords and tenants should pay attention
Any changes could affect how commercial leases are negotiated, renewed and brought to an end. Landlords may want to consider how reform could affect portfolio management, redevelopment plans and letting strategy. Tenants may wish to think about how renewal rights support business continuity, especially where premises are central to customer footfall, staff access or brand identity.
Conclusion
The consultation is open until 16 September 2026. It does not change the law now, but it is an important opportunity for commercial landlords, tenants and advisers to shape future reform. Those affected by business lease renewals may benefit from reviewing the proposals and considering whether to respond.
For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800.
This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.
