Security of Tenure -The Landlord and Tenant Act 1954

Law Commission Consultation

The consultation paper is the first part of a two-stage process with the content of the second consultation paper depending on the outcome and findings in the first consultation paper.

Current position under the Act

The current position under the Act gives business tenants the statutory right to continue to occupy the property subject to their lease and the right to obtain a new lease at the expiry of the term of the lease on substantially the same terms. Such leases are protected leases and provide the tenant with security of tenure. There are limited grounds on which a landlord can refuse to grant a new lease which is protected under the Act. The statutory grounds for the landlord to refuse the grant of a new lease are set out in section 30(1) of the Act and being:

1. The tenant’s failure to repair and maintain the property.
2. The tenant’s persistent delay in paying rent.
3. The tenant is in substantial breach of other obligations.
4. Alternative accommodation offered, which must suit the tenants needs and be on reasonable terms.
5. Sub-letting of part where higher rent can be obtained by single letting of the whole.
6. The landlord intends to demolish or reconstruct and could not reasonably do so without obtaining possession.
7. The landlord intends to occupy the holding for their own business or as their residence.

Depending upon the ground(s) used, the landlord may have to pay compensation to the tenant.

However, the landlord can follow a procedure prior to the commencement of a lease to exclude the security of tenure provisions from applying, known as contracting out. For a lease to be contracted out of the Act, before the lease is entered, the tenant must, either swear a statutory declaration, or sign a simple declaration and wait the prescribed time before the lease is entered.

Objectives of the Consultation

The Law Commission’s objective for the two-part consultation is to see if the current approach to the security of tenure provisions under the Act is still as effective and workable as it was when first introduced just over 70 years.

The first consultation paper asked whether there is still a need for security of tenure and proposed four models:

1. Mandatory security of tenure – all tenants would automatically have security of tenure, and it would not be possible to contract out of the security of tenure provision.
2. No security of tenure – meaning tenants would have no right to a new lease at the end of the lease term and would not be afforded security of tenure in any circumstances.
3. A contracting in model– The starting position would be that tenants do not have security of tenure but, if agreed between the parties, security of tenure can be contracted into. This is the reverse of the current position under the Act.
4. A contracting out model – This is the current position under the Act.

Once the Law Commission have an outcome of their two consultations, they will publish a report with their recommendations. It will then be for the Government to decide whether or not to follow the Law Commission recommendations and implement their findings.