Right to Renew: The Law Commission’s Statement

What is a right to renew?

Many commercial tenants occupy their premises under tenancies. Part 2 of the Landlord and Tenant Act 1954 (the “Act”) gives these business tenants the right to remain in their premises when their tenancies would have otherwise come to an end, this is known as a “right to renew” or “security of tenure”. Under this right, the tenant will be protected by the Act and their lease will not terminate at the end of the contractual term. Instead, the tenancy will continue and only terminate in one of the ways specified within the Act.

Majority of commercial tenants will automatically have this right to renew, under Part 2 of the Act, unless they choose to “contract out” and agree with the landlord that the right to renew will not apply. Where a tenancy is contracted-out, the lease will come to an end on the contractual expiry date.

Contracting out must be approached with caution, as any agreement between a landlord and tenant will be invalid if it has not followed one of the procedures set out in the Regulatory Reform (Business Tenancies) (England and Wales) Order 2003/3096 (“RRO 2003”). The RRO provides two procedures for contracting out, the statutory declaration procedure and the advance notice procedure.

It has been twenty years since any significant update has been made to Part 2 of the Act and many landlord and tenants find that the Act causes unnecessary costs and delays in the process of occupying commercial premises. The Law Commission (the “Commission) was commissioned to conduct a review of Part 2 of the Act with a view to “modernising commercial leasehold legislation” and the Commission’s First Consultation paper was published on 19 November 2024.

The Law Commission’s Interim Statement

On 4 June 2025, the Commission published its Interim Statement on the right to renew business tenancies. The statement set out the Commission’s provisional conclusions following its First consultation, which received over 160 consultation responses. The consultation investigated the issues with the process for excluding security of tenure and whether the current process should be replaced and updated. The Commission explored three alternative processes: (1) Mandatory Security of Tenure, (2) Abolition of Security of Tenure, and (3) A Contracting-In Model.

Following its consultation, the Commission came to three provisional conclusions.

1. The current contracting-out model is the right and appropriate model. The Commission came to the provisional conclusion that the current model strikes a balance between landlords and tenants.
2. The current list of tenancies which are excluded from the Act is appropriate. The Act currently has certain tenancies which are excluded from the right to renew, these include agricultural tenancies. The Commission came to the provisional conclusion that the current list of tenancies is appropriate.
3. The threshold for excluding tenancies based on the tenancies duration should be increased. Under the current Act tenancies of up to six months are excluded from the right to renew. The Commission provisionally concluded that this six month threshold should be increased. The Commission expects to consult on increasing the threshold to two years.

Next Steps

The Commission’s provisional conclusions will provide the basis for its Second Consultation, which will focus on the technical detail in reforming the Act.

If you are a landlord or tenant and require advice on the legislation surrounding security of tenure or need assistance on how to effectively contract out of a tenancy, If you need assistance,  get in touch with our Commercial Property solicitors.