Select Committee on Regulatory Reform Second Report

Landlord and Tenant Act 1954, Part II - A brief overview

The Landlord and Tenant Act 1954 (the Act) is an important piece of legislation affecting a large number of properties and a considerable section of the community.

Part II of the Act recognises that protection is necessary for business tenants since they stand to lose any goodwill they may have built up, and much of the value of their stock and equipment, if they have to leave the premises when the contractual date of the lease expires. Accordingly, the Act gives business tenants a right to renew their tenancies, at a full market rent.

The cornerstone of this protection is section 24, which provides that a business tenant's existing lease is continued until terminated in accordance with the Act. Where such a termination occurs, business tenants are given a right to renew their leases. This right is activated by the service of a statutory notice from either the landlord or the tenant. Until that step is taken, the current tenancy is automatically continued.

The tenant's right to renew his tenancy can be resisted by the landlord only on one or more of the seven grounds of opposition set out in the Act.[4] If the landlord fails to establish any of these grounds, the tenant will be entitled to a new tenancy. The terms of the new lease will be agreed by the parties, or (if they cannot agree) by the court in accordance with the rules set out in the Act.

Within this seemingly simple structure, there is much complex and technical detail, particularly with regard to the exchange of notices between the parties.[5]

The Act applies to tenancies where the property is occupied by the tenant for business purposes. "Business" is widely defined to include a trade or profession, and "any activity carried on by a body of persons, whether corporate or unincorporate."[6] To qualify for protection, the tenant need not occupy the whole of the premises, nor does he have to use the premises exclusively for business purposes.

There are a few specified cases where the right to renew is excluded.[7] Further, the parties can, subject to court approval, agree to exclude the security of tenure provisions. There are also ways in which the current tenancy can be brought to an end without renewal, e.g. a tenant who wishes to quit can serve a notice at least 3 months before the contractual term date.


The Law Commission has conducted two periodic reviews of the Act. In 1969 it published a report recommending some amendments,[8] which were implemented by the Law of Property Act 1969. In 1992 the Commission published a further report proposing the amendments which form the basis of this present proposal.[9]

In the 1992 Report the Commission explained the background to the review and its aim as follows:

    The 1954 Act is an established part of the commercial property market and the practices of that market develop and change over the years, so it is appropriate for the statutory provisions to be reviewed from time to time to ensure that they are still fulfilling their intended purpose. On this occasion, we have identified some features which experience has shown could benefit from change. The aim of our reform proposals is to improve the working of the Act by amending some of its details while leaving its fundamentals undisturbed; this should increase its usefulness and eliminate unnecessary formalities.

The Commission's recommendations were guided by the following general principles:

  • The overall balance between landlord and tenant is generally regarded as fair and should be maintained. Clearly, almost any single alteration will change that balance, but the recommendations taken as a whole are intended to be broadly neutral.

  • The renewal procedure is familiar to professional advisers and to major property owners. It should not therefore be changed unless there are clear countervailing advantages.

  • Although it must always be possible to refer disputes to court, to ensure that those involved can enforce their statutory rights, it should not be necessary to take proceedings as a routine part of the procedure. Recourse to the court should be kept to a minimum to cut out expense and delay for the parties and to reduce unnecessary burdens on the court system.

Structure of this report

The Government's proposals for changes to the Landlord and Tenant Act 1954 may conveniently be split into a number of sections, each dealing with separate aspects of the working of the Act. The report below is in two parts. The first part describes the effect of those sections, and assesses each one against the standing order criteria applying to individual provisions ("burden"; "proportionality"; and "necessary protection"). The second part of the report assesses the proposal against the remaining criteria, which apply to the proposal as a whole.

4   These are set out in s 30(1)(a) to (g). Briefly, they are as follows: (a) tenant's failure to repair, (b) persistent delay in paying rent, (c) other substantial breaches by the tenant, (d) availability of suitable alternative accommodation, (e) the tenant is a sub-tenant of part of the property originally let and the landlord can obtain a better rent by re-letting the property as a whole, (f) the landlord's intention to demolish or reconstruct the premises, and (g) the landlord's intention to occupy the premises himself either for the purposes of his business or as a residence. Back

5   See para 51ff. below under "Statutory Renewal Procedures". Back

6   S 23(2). Thus the tenancy of a members' tennis club has been held to be within the Act, since playing tennis is an activity which was carried on by a body of persons. But for an individual, carrying on an activity is not enough. It must be a trade, profession or employment. So a tenant who ran a free Sunday school in a shop was held to be outside the definition. Back

7   For example, short fixed-term lettings not exceeding six months, and certain other tenancies, such as agricultural holdings, mining leases, and service tenancies: s 43. Where a new tenancy is granted by the court for a period limited in accordance with a ministerial certificate that on a certain date the use and occupation of the premises should change in the public interest, there is no right to renew the tenancy: s 57(3)(b). Back

8   Report on the Landlord and Tenant Act 1954 Part II (Law Com. No. 17). Back

9   Business Tenancies: A Periodic Review of the Landlord and Tenant Act 1954 Part II (Law Com. No. 208). Back

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