Let’s make Security of Tenure in leases work!

by Avi Barr and Claudia Rubiano

The Government has just announced a wide-ranging review of Part 2 of the Landlord & Tenant Act 1954.  This legislation has been a cornerstone of landlord and tenant work for over 60 years and was last reviewed about 20 years ago.  In effect, it contains the rules that relate to security of tenure and the ability to exclude a tenant’s rights to a new lease.  The review is said by the Government to be “wide ranging” and is designed to try and improve conditions for landlord and tenants taking into account the challenges particularly on the high street in letting commercial space.  However, the Government review contains very little by way of ideas of how the legislation could be improved.

Here are some thoughts that I have on how security of tenure may be reviewed for the benefit of everyone:-

• Let’s dispense of the need for a statutory declaration where there is less than 14 days.  If a tenant understands and signs up the exclusion provisions, that should be sufficient. A streamlined approach would be welcome by willing tenants.

• We could probably skip the whole notice procedure whereby a formal notice needs to be served on the tenant before the tenant can then provide the declaration.  Let’s avoid questions about whether notice was effective and just focus on a tenant signing a declaration agreeing to exclude security of tenure.

• The general view in relation to effective contracting out is that it needs to take place once the lease is in settled form so that the tenant can be said to have properly excluded its rights for security of tenure based on the final form of lease.  Is there any real need for this delay in the process?  Would it really make a difference if the tenant entered into the declaration earlier on in the process, knowing that it could always withdraw from its position before completion?

• Generally, it is short lettings where the prevailing view is that landlords are better off contracting out tenant’s rights. The current procedure can be lengthy and costly for all parties defeating the simplicity that ought to prevail in simple short lettings. It may well be of benefit if the law allows for every lease of two years or less to be automatically regarded as excluded (without the need for any specific process) and if the parties in fact want to contract within the Act, they could specify as such within the lease.  The advantage of this approach may well be to encourage tenants to take longer leases, which would have the effect of potentially energising harder to let properties.

I am sure that people far wiser than me will come back with other ways of reviewing the legislation but the key objective here must be creating a more streamlined and quicker process so that the time between landlords and tenants or their agents agreeing terms and keys being handed out is shortened as much as possible, and the process made as simple as possible.

The 1954 Act was initially introduced to protect tenants at  a time when there was shortfall of commercial units after the war. We face a different market nowadays, with a well-supplied market  where the security of tenure exclusions may arguably be holding back business or increasing costs and time for all parties. A review of the Act seems necessary to remove barriers and modernise the legal framework to fit the current market, reducing empty high streets and potentially reducing the antisocial behaviour that may come with it.