The Law Commission has published two consultations exploring reforms to the law relating to commercial leasehold and business tenancies.

The consultations continue recent work from the Commission to address an area of law which it says has not kept pace with changes in the commercial leasehold market and “creating uncertainty, wasted costs, delays, and frustration for tenants and landlords”.

The first consultation focuses on proposals to overhaul the existing regime of security of tenure under Part 2 of the Landlord and Tenant Act 1954. This provides existing commercial tenants with a statutory right to continue to occupy the premises when their tenancy would otherwise come to an end, subject to the landlord being able to oppose renewal on a limited number of grounds. As the Law Commission points out, many have expressed dissatisfaction with the current regime, commenting that “aspects of the law are burdensome, unclear and out-of-date”. In particular, it notes that even where many parties simply choose to contract out of the right to renew, that process itself can be unnecessarily cumbersome.

Last year, the Law Commission recommended against the wholesale abolition of the ‘contracting-out’ model, noting that it strikes the best balance between landlords and tenants. However, it acknowledged that there was a need for a legal framework that responded to modern commercial practice and which would be widely used rather than routinely opted out of.

To that end, the Law Commission provisionally proposes that the current contracting-out procedure (which currently involves a separate and bureaucratic process, including the use of statutory declarations) be replaced entirely with a process requiring contracting out to take place within the terms of the lease. It also proposes increasing the threshold before certain tenancies enjoy security of tenure, as well as taking periodic tenancies out of scope of the existing regime.

The second consultation concerns “overcoming barriers to transactions” in commercial leaseholds. It recommends, for example, that the grant of a lease of a part of the premises which is (or is to be) exclusively used for non-residential purposes should not trigger the right of first refusal, and that anti-avoidance provisions in the Landlord and Tenant (Covenants) Act 1995 “should facilitate, rather than prohibit” assignments and guarantees between members of the same group of companies.

Both consultations close on 16 September 2026, and can be read here and here.