The Landlord and Tenant Act 1954 (the Act) was enacted to provide security to business tenants. However, does the Act reflect the current commercial market? Many people think not and there have been calls to reform the Act, which was last updated almost 20 years ago.
In March 2023, the Law Commission announced that it will be reviewing the Act and it is expected that a consultation paper will be published in December 2023. Commissioned by the Department for Levelling Up, Housing and Communities (bizarrely as part of the Anti-Social Behaviour Action Plan), the review is expected to consider whether the Act effectively balances landlord and tenant relationships, and whether the existing scheme could be simplified.
What can we expect?
Contracting out
One of the main gripes with many Real Estate practitioners is the process of contracting out of the Act. The Act recognises that landlord and tenants should have the contractual freedom to decide whether the Act should apply to their lease. However, the current process (serving warning notices and declarations) is heavily administrative and can cause wide ranging problems.
Could this process be streamlined by the provision of simple declarations with electronic signatures, or even the inclusion of a provision within the lease?
Use of the Court
The County Courts are regularly used for determining disputes under the Act, however, with long Court waiting times becoming commonplace, is there an alternative option?
- FFT: the Law Commission may consider whether the First-Tier Tribunal would be better equipped to assist with claims under the Act, as has been suggested with possession proceedings under the Renters Reform Bill. FFT judges can be more experienced and better placed and to deal with property disputes, but would an influx of FTT work just transfer the problem?
- Arbitration: others have suggested that claims under the Act could be dealt with by an arbitration scheme, similar to that used for the Coronavirus rent arrears scheme. This may be a more flexible scheme and arbitrators could be instructed who have particular expertise in the property. However, parties would be responsible for the costs of the arbitrator.
Redevelopment and ESG
The Law Commission is also expected to consider whether the ground of opposition for redevelopment should be expanded.
The current legislation providing landlords with the ability to oppose a new lease in order to redevelop is tightly drafted. However, as the MEES Regulations start to bite and it is now unlawful to let substandard properties, landlords will be keen to have the flexibility to improve their properties to meet the governments energy targets.
As the law stands, landlords may be encouraged to carry out significant works of redevelopment, or even demolition, in order to meet the criteria under the Act, even where there are perhaps more carbon efficient options available.
If it ain't broke?
The results of a survey carried out by the Property Litigation Association suggest that the Act is broadly fit for purpose but could be streamlined to help business growth. There is some concern that the Act is widely understood and that reform for reform's sake could result in confusion and unintended consequences.
It seems, however, that some reform would be welcomed by most - even if only dealing with court delays and simplifying processes.
