Lease renewal

Part II of the Landlord and Tenant Act 1954 (as amended) is the primary legislation governing lease renewals in England and Wales. Landlords must be aware of their rights and obligations under the Act to ensure they maintain and improve investment values.

The Act details how a landlord can terminate a lease with a section 25 notice, and how a tenant can request a new tenancy with a section 26 notice. It also covers how landlords can oppose renewals and how new rents should be determined.

There are a small number of important exemptions to the Act that landlords should be aware of, and some significant case law that clarifies key issues.

On 27 March 2023, as part of its Anti-Social Behaviour Action Plan, the UK government announced that ‘because complex commercial leasing rules are holding back high streets, we will launch the Landlord and Tenant Act Review – led by the Law Commission – with a view to their reform. Our aim is to make the system easier to understand and more transparent and attract more investment into UK commercial property.’

Accordingly on 28 March 2023, the Law Commission announced its review of part 2 of the Landlord and Tenant Act 1954. The Act, which introduced security of tenure for business tenants after the Second World War, is nearly 70 years old, and it is almost 20 years since the legislation was last reviewed. The Law Commission acknowledges that ‘parts of the current legislation are overly complex and bureaucratic, which is holding back businesses and the high streets and town centres they operate in’, that the Act can cause unnecessary delays and costs and that the tenants’ rights it gives are frequently contracted out of by landlords and tenants. 

In the context of the UK government’s aim to increase focus on revitalising high streets and town centres, as well as on improving the environmental sustainability of commercial properties, the Law Commission will consider the existing legislation in the context of:

• creating a legal framework that is widely used rather than opted out of, without limiting the rights of parties to reach their own agreements
• supporting the efficient use of space in high streets and town centres and
• fostering a productive and beneficial commercial leasing relationship between landlords and tenants.

The review is at pre-consultation stage and the Law Commission aims to publish a consultation paper by late 2023.

This section is maintained by Peta Dollar, freelance lecturer, trainer and writer.

Document template: Lease renewal process flowchart

RICS standards: Surveyors acting as arbitrators in commercial property rent reviews

RICS journal article: The commercial lease code is here