It has long been acknowledged throughout the commercial property sector that change and modernisation of the system is much-needed after more than 70 yrs, but reform is proving slow progress.

The second stage of the review was published in June 2026, following by a further consultation period which closed in September. The Law Commission is now considering the feedback before publishing its report and recommendations.

Until the Commission’s work is complete and final reforms implemented, lease renewals continue to be a major and often complex issue for commercial landlords and tenants.

The existing position

Under the existing 1954 Act, most commercial tenants enjoy security of tenure. It means that when a qualifying lease ends, the tenant can remain and apply for a new lease – unless the parties contracted out at the start of the lease.

Where a business enjoys security of tenure, a landlord can only refuse to renew the lease on very limited statutory grounds. For example, if the tenant persistently in rent arrears or the landlord intends to occupy or develop the property.

What’s proposed?

The Commission’s initial proposals included retaining the existing contracting out model, rejecting a possible opt-in model. It has also proposed increasing the qualifying minimum lease threshold to 1 or 2 years (from the current 6 months) for most tenants, which would enable landlords greater flexibility to offer longer short-term leases without the risk of statutory protections being triggered.

Periodic tenancies would also be removed from the security of tenure framework under the Commission’s interim conclusions. The latest consultation focuses on these proposals, as well as simplifying the contracting out process, modernising the approach to rent determination in renewal leases and restricting resolution of disputes to tribunals (rather than the county court).

Interim rents

The issue of interim rents in the context of lease renewals is particularly challenging for clients and lawyers, with complicated provisions concerning the calculation of interim rent. The Law Commission’s first consultation considered how to improve the interim rent process.

In its second consultation document, the Commission is considering interim rent reviews in much more detail, including the date from which the new rent should be payable; reform of the rules relating to calculation and payment of interim rent during continuation tenancies; and when the renewal tenancy should commence.

Two models for payment of interim rent during the continuation period have been proposed:

Option A - The valuation and commencement date for the renewal tenancy would be fixed at a date specifically linked to the s25 or s26 notice (largely removing the need for interim rent provisions)

Option B – The existing valuation and commencement date of the renewal tenancy would be retained, and the existing interim rent provisions retained but simplified by setting out one basis of assessment

Commercial property practitioners will be watching closely for the Law Commission’s final proposals once the responses have been analysed.