The Law Commission of England and Wales will review the key piece of legislation used by businesses who lease shops, offices and other commercial premises, it was announced yesterday.

The new review, commissioned by the Department for Levelling Up, Housing and Communities (DLUHC), forms part of the government’s new Anti-Social Behaviour Action Plan. It will examine part of the Landlord and Tenant Act 1954 – a central piece of legislation that gives businesses the right to stay in their premises for longer.

A high proportion of businesses rent their warehouses, factories, shops and office spaces, rather than owning the freehold, and want greater certainty when it comes to their lease. Estimates have suggested that around half of all UK commercial property is rented.

For more than half a century, the Landlord and Tenant Act 1954 has given businesses the right to acquire a new lease of their premises after their existing one has run out – known as “security of tenure”.

Following the rise of online retail, the 2008 financial crisis and recent pandemic, the landscape for businesses has also shifted significantly – leading to growing calls for laws to be modernised.

The Law Commission’s review will explore problems with the existing legislation with a view to developing a modern legal framework that is widely used rather than opted out of, and that helps businesses to grow and communities to thrive.

The review will also seek to support the long-term resilience of high streets, by making sure current legislation is fit for today’s commercial market, while also considering Government priorities, including net zero and levelling up.

Dehenna Davison, Parliamentary-Under Secretary for Levelling Up, said: “For too long commercial tenants and landlords alike have been held back by a legislative framework that is outdated and out of sync with the realities of the sector today.

“With this review of the legislation, we hope to remove the barriers that inhibit growth by modernising the legal framework and making sure it is fit for today’s market, supporting the efficient use of space and fostering a productive, beneficial leasing relationship between landlords and tenants.

“In achieving these goals this review will help to create a leasing framework that supports the Government’s priorities of growing the economy and aiding the regeneration of our town centres. The review will also help to make leasing clearer and more easily accessible to small businesses and community groups, reducing the growing number of vacant properties on our high streets and the anti-social behaviour that comes with it.”

Reflecting on the review, professor Nicholas Hopkins, the Law Commissioner for Property, Family and Trust Law, commented: “The right to a new lease has been available to many business tenants for over half a century. Whether they operate in shops, cafes, or factories, many businesses have been afforded the security of being able to continue in the same premises after their lease runs out.

“But it’s clear that the law is in need of modernisation. 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.

“Our wide-ranging review of this aspect of the Landlord and Tenant Act 1954 is a fresh opportunity to ensure that the law is simple and works for landlords, businesses and communities.”

Edward Cooper, partner at Howard Kennedy, added: “I am pleased to see that the consultation is reconsidering the original purposes of the Act in a modern context. With more and more business being conducted online, the need for security of tenure has undoubtably reduced for many. Similar regimes in other jurisdictions appear to be much more targeted, focusing on businesses where goodwill is key. In my experience, restaurants and shops are very likely to value security of tenure, but do offices really need that protection in a post pandemic world?”