Select Committee on Regulatory Reform Second Report


The Regulatory Reform Committee has agreed to the following Report:


Report under Standing Order No. 141

The Regulatory Reform Committee has examined the proposal for the Regulatory Reform (Business Tenancies) (England and Wales) Order 2002 in accordance with Standing Order No. 141. We have concluded that the proposal should be amended before a draft order is laid before the House.


On 22 July 2002 the Government laid before Parliament the proposal for the Regulatory Reform (Business Tenancies) (England and Wales) Order 2002 in the form of a draft of the order and an explanatory memorandum from the Office of the Deputy Prime Minister (the Department).[1] The proposed regulatory reform order would amend Part II of the Landlord and Tenant Act 1954 to make the renewal or termination of business tenancies, in the Department's words, "quicker, easier, fairer and cheaper."[2] Specifically, the proposed order would:

  • replace the need for court approval for agreements to "contract out" of the provisions of the Act providing security of tenure with new procedures designed to ensure that the tenant becomes aware of the consequences of such a course of action (see Part I, section A, of the Report below)

  • revise the statutory renewal procedures to facilitate the process of renewing a tenancy to which the Act applies (section B)

  • rationalise, and bring into line with other relevant legislation, those provisions of the Act which are concerned with the definition of the business entities which enjoy rights under the Act or are subject to its provisions (section C)

  • revise the provisions of the Act governing the service of notices requiring information necessary for parties to be able to exercise their rights under the Act, so as to make them more effective (section D)

  • change the rules on interim rent, with the aim of making the system fairer (section E)

  • extend the provisions of the Act governing the circumstances where the tenant can claim compensation for the loss of his tenancy following misrepresentation by the landlord, and rationalise the rules for compensation payable in certain cases where the landlord successfully opposes renewal of the tenancy (section F)

  • confirm on the face of the Act the court's interpretation of the existing law that the tenant can end the tenancy by quitting the property before the contractual term date, and provide that a notice to terminate a fixed term tenancy which is continuing beyond its term date by virtue of the Act's provisions will be able to take effect on any day, rather than at the end of a period ending on a quarter day (section G)

  • make certain other changes relating to the working of the Act (section H).

The House has instructed us to examine the proposal against the criteria specified in Standing Order No. 141(6) and then, in the light of that examination, to report whether the Government should proceed, whether amendments should be made, or whether the order should not be made.[3]

Our discussion of matters arising from our examination is set out below. Where a criterion specified in Standing Order No. 141(6) is not discussed in this report, this indicates that we have no concerns to raise about that criterion. In the course of our examination, we requested further information from the Department about a number of matters connected with this very substantial proposal. We were satisfied with the Department's reply on all but one point, namely, the maintenance of necessary protection for tenants in respect of one aspect of the new procedure for excluding security of tenure. This matter is discussed at paragraphs 38 to 50 below. Other matters arising from the Department's reply are discussed elsewhere in the Report.

1   Copies of the proposal are available to Members of Parliament from the Vote Office and to members of the public from the Department. The proposal is also available on the Cabinet Office web site Back

2   Explanatory statement, para 3. Back

3   Standing Order No. 141(2). Back

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Prepared 19 December 2002