Commercial landlords and tenants could be facing another significant change to the way business premises are let, with the Law Commission consulting on wide-ranging reforms to commercial leasehold law.

The consultation closes on 16 September 2026, so landlords and tenants with upcoming lease renewals, assignments or new lettings should be taking notice now.

The proposals cover some fundamental areas of commercial property law, including security of tenure, lease renewals, contracting out, rent and the grounds on which a landlord can oppose a tenant’s renewal.

This comes at a time when the sector is already adapting to changes to upward-only rent reviews. For landlords and tenants, there is a lot to keep track of.

What is the Law Commission proposing?

One of the main areas under review is the Landlord and Tenant Act 1954 and the system of security of tenure for business tenants.

The Act has been in place for more than 70 years and gives qualifying business tenants the right to remain in their premises and, subject to certain conditions, to seek a new lease when their existing lease comes to an end.

The Law Commission is not proposing to abolish the current system. It has provisionally concluded that landlords and tenants should continue to be able to agree to contract out of security of tenure.

However, a number of other changes are being considered.

These include changes to the process for contracting out, the types of tenancy which fall within the Act, the terms of a renewed lease and the way rent is dealt with on renewal.

There are also proposals around the grounds on which a landlord can oppose a tenant’s renewal. This could be particularly relevant where a landlord is looking to redevelop a property or needs to carry out works to meet future requirements.

What could this mean for landlords?

For landlords, greater flexibility could be welcome, but there is also more to consider when managing a property portfolio.

The prospect of changes to renewal rights and the terms of renewed leases could affect asset management and investment decisions. Landlords with properties approaching the end of their current terms should be considering what they want to achieve before entering into renewal discussions.

There is also the wider question of how these proposals will sit alongside other changes affecting commercial property.

Energy efficiency requirements, for example, are becoming an increasingly important consideration for landlords. The cost of upgrading older buildings, and deciding who should bear that cost, can have a significant impact on the value and future use of a property.

This is why landlords should be looking at upcoming lease events as part of a wider asset management strategy rather than treating each renewal in isolation.

What about tenants?

For tenants, the reforms could provide greater clarity and flexibility, but there will also be decisions to make.

A business coming towards the end of its lease will need to understand its renewal rights and whether it is better to renew, negotiate a new lease or consider alternative premises.

Tenants should also be thinking about how long they really need their premises for. With changing working patterns, operating costs and energy efficiency requirements, committing to a long lease without considering future flexibility could create problems further down the line.

Getting advice early can make a significant difference, particularly where a tenant has significant investment in its premises or relies on the location for its business.

Could commercial property transactions become easier?

The Law Commission is also considering changes to other legislation affecting commercial lease transactions.

Proposals under the Landlord and Tenant (Covenants) Act 1995 could make certain assignments and guarantees involving group companies and partnerships easier.

There are also proposals to remove the right of first refusal for leases of premises used exclusively for non-residential purposes, subject to a limited exception.

These may appear to be technical changes, but they could make a real difference to businesses dealing with restructurings, acquisitions and disposals.

For landlords, investors and businesses with larger property portfolios, it is worth considering how the proposed changes could affect the way future transactions are structured.

What should landlords and tenants do now?

The reforms are still at the consultation stage, so there is no need to change existing arrangements based on proposals that may not ultimately become law.

However, there is a good reason to start thinking about them now.

Landlords should consider identifying leases with upcoming renewals, breaks, assignments and other key dates over the next 12 to 24 months. They should also consider whether any planned development or refurbishment could be affected by changes to renewal rights.

Tenants should review upcoming lease expiries and consider their options well before a renewal becomes urgent. This is particularly important where premises are critical to the operation of the business or where significant investment has been made in the property.

It is also worth looking at these changes alongside the reforms to upward-only rent reviews and the increasing focus on energy efficiency. Taken together, these changes could have a significant impact on the way commercial property is valued, leased and managed.

The Law Commission’s consultation closes on 16 September 2026. While any changes are still some way off, landlords and tenants should not wait until new legislation is introduced before considering what it could mean for their property strategy.

Early planning will give businesses more time to understand their options, identify potential risks and make informed decisions about their leases.

For advice on how the proposed commercial leasehold reforms could affect your lease, property portfolio or future plans, our real estate team is here to help. Get in touch with Manjit Virdee at ManjitVirdee@schofieldsweeney.co.uk.