Business Tenants - What You Need to Know About Commercial Lease Renewal Changes
Published on 13th Apr 2026
If you operate your business from leased premises, then there is a law which is currently under review which may affect your business. For the past 70 years, the Landlord and Tenant Act 1954 has underpinned your right to stay put in premises. However, this is now in the process of being updated, which could impact every business tenant in England and Wales.
In this blog, we cover what is currently happening, what is likely to happen in the future, and actions that all businesses can take now if they lease their premises.
What is changing for commercial leases?
The Law Commission launched a two-part review of the 1954 Act in November 2024, with the first consultation closing in February 2025. A second consultation paper focusing on the technical detail of reform is expected in spring 2026.
The Commission's interim findings, published in June 2025, set out the likely direction of travel:
· The existing contracting-out model will be retained. The Commission provisionally concluded this model strikes the best balance between landlords and tenants and avoids causing unwarranted disruption to the commercial leasehold market.
· The minimum lease duration needed to qualify for security of tenure protections is proposed to increase from six months to up to two years. This is a significant shift for businesses. It means that short-term commercial tenants could lose statutory protection under the new threshold.
· The detailed procedures around contracting out, dispute resolution, grounds of opposition, and compensation are all under review in the second consultation.
What Does This Mean for Business Tenants Right Now?
The law has not changed yet, but there are practical steps every business tenant should be taking now.
Review your lease term
Short-term leases of less than two years may lose security of tenure protection under the new threshold. It is worth taking advice on whether you should be reviewing any such leases before renewal or re-letting. If your lease is coming to an end and you have not already served the correct notices to trigger a renewal, you could inadvertently lose your rights.
Check whether your lease is inside or outside the Act
Many businesses are surprised to discover their lease was contracted out at the time of signing. This means they have no automatic right to renew at all. If you are unsure, take legal advice before your lease term ends. Once the term expires without the right notices being served, it can be too late.
Do not assume your landlord is acting in good faith
Lease renewal negotiations can become contentious, particularly where landlords see an opportunity to dramatically increase rent or recover possession. Having a solicitor advising you early gives you the strongest possible negotiating position.
Watch out for rent reviews
Lease renewal is often the trigger for a rent review, and the new rent is determined by reference to open market value. This can come as a shock to tenants who have been in occupation for many years. Understanding your rights around rent determination, including the right to apply to court if agreement cannot be reached, is essential.
Does This Apply to Contracted-Out Leases?
If your lease was granted outside the 1954 Act, you have no statutory right to renew. Your position at the end of the term is entirely dependent on what you and your landlord agree. This does not mean you are without options. However, it does mean you need to start conversations early, ideally 12 months before expiry, to give yourself time to negotiate or find alternative premises if needed.
What Does the 1954 Act Do for Business Owners?
Security of tenure is a statutory right granted by the Landlord and Tenant Act 1954. It gives commercial tenants the right to remain in occupation of their premises after the contractual term of the lease comes to an end. It also gives them the right to a new lease on similar terms to the previous one, unless the landlord has valid grounds to oppose it.
Your landlord cannot simply wait for your lease to expire and then refuse to renew it without good reason. A landlord can refuse to renew a lease only on specific grounds. This can be either fault-based grounds, such as rent arrears or disrepair, or no-fault grounds, such as an intention to redevelop or occupy the property themselves. If the landlord opposes renewal on no-fault grounds, the tenant may be entitled to compensation.
This protection applies automatically to most business tenancies, however it can be waived. Many leases are granted "outside the Act," meaning the tenant gives up these rights entirely, often without fully understanding what they are signing away.
How Nicholas & Co Solicitors Can Help
Our commercial property team regularly advises businesses on lease renewals, rent reviews, and disputes with landlords. Whether your lease is inside or outside the 1954 Act, we can help you understand your rights and make sure the process is handled correctly.
With reform of the 1954 Act on the horizon, there has never been a better time to get proper advice about your commercial premises, before any rules change.
Contact us today to speak to one of our commercial property solicitors.
