What is the LTA 1954?

The Landlord and Tenant Act 1954 (the “Act”) governs the rights and obligations between tenants and landlords, in relation to premises that are used for business purposes in England and Wales.

If a business tenant satisfies the conditions set out in Section 23 of the Act, they will have a statutory right to automatically remain in the property and renew their existing lease on materially the same terms as the previous lease, at the end of the lease term. This concept is commonly referred to as security of tenure. Conceptually, the Act seeks to protect businesses from being evicted by their landlord at the end of their commercial tenancy.

For business tenants to be afforded this statutory protection (more commonly referred to as a protected lease), the property must be solely used for a business purpose, the tenant must be in current occupation of the property, and the tenancy must exceed six months in duration.

What are the implications of the Act?

If the above conditions are satisfied, the general position is that legally tenants are automatically granted security of tenure.

If the Act applies, landlords may find themselves struggling to obtain vacant possession of commercial properties. Accordingly, the process of evicting tenants can cause extensive delays and costs, which can negatively affect any development or sale plans.

Conversely, tenants often seek to leverage the provisions of the Act to secure long term occupancy and safeguard their interests. Therefore, it is imperative for both landlords and tenants to understand whether any commercial leases that they enter are protected, as this will largely impact the future use and control that the respective parties have over the property.

Can parties contract out of the Act? If so, how?

Parties to a commercial lease can agree to exclude the security of tenure provisions conferred automatically under the Act. This may be the case if the landlord intends to carry out a re-development of the property or the lease is for a very short term.

If the parties do not agree to exclude the Act, landlords only can only object to the security of tenure on specific limited grounds. Presently, there are seven statutory grounds for landlords to object to the automatic renewal of commercial leases. The most common grounds include persistent delay in the tenant paying rent, failure by the tenant to comply with obligations and any repairing covenants, and if the landlord requires possession to let or dispose of the whole of the property.

Practically speaking, for parties to agree to contract out of the Act, a specific procedure must be followed. Firstly, the landlord must serve the tenant with written notice 14 days before the tenant is contractually bound to enter the lease, when the lease is in an agreed form. This notice confirms that the lease will be excluded from the Act and that the statutory rights will not apply. In response to the notice, the tenant must complete a simple declaration confirming that they understand and agree to the exclusion. The lease must also have an express written provision confirming that the Act has been excluded.

Alternatively, if the lease is entered into less than 14 days after service of the warning notice, the tenant must swear a statutory declaration (as opposed to a simple declaration). This statutory declaration must in the form prescribed by the 2003 statutory instrument. Specifically, the declaration must be sworn by both the tenant and the guarantor (or someone authorised on their behalf). The declaration must be completed in person and in front of an independent solicitor or commissioner for oaths.

It is important to note that the statutory declaration will be invalid if it is sworn in from before a solicitor who is acting for any of the parties in the transaction.

Failure to issue the correct notices within the required time periods or any small technical errors can render the notices invalid. Therefore, it is important to seek legal advice on the steps that you are required to take to ensure that a lease is lawfully contracted out.

Upcoming Reform to the Act?

In November 2024, the Law Commission published a consultation paper setting out its proposals to reform the Act. The consultation paper proposes four possible models and sets out the pros and cons of each respective model. The proposed models are set out below:

1. Mandatory security of tenure – meaning it would not be possible to contract out of the Act;
2. No security of tenure – tenants would not have the right to renewal;
3. Contracting in – parties could contract into the provisions of the Act;
4. Contracting out – position remains as it currently stands

In June 2025, the Law Commission published their results from the consultation exercise. The key takeaway point was a preference to retain the current ‘contracting out’ system that is already in place. Some other minor amendments were suggested, such as increasing the duration for qualifying leases from six months to two years and reviewing whether the procedure to terminate or renew the tenancy is fit for purpose.

Currently, the Law Commission are working on the second consultation paper which is currently due to be released later this year, and after its release will work on preparing the final recommendations. We eagerly await to see if any functional changes will be made to the legislation moving forward.

How can Redkite help you?

If you are unsure about your ability to contract out or renew your commercial lease and require our help or guidance, then please get in contact with our leading team of experts here at Redkite Solicitors.

Our friendly team of experts in our Commercial Property Department are here to help and support you at every step of the way.

This article was written by Redkite Solicitors, Evangeline O’Dowd.