If you’re running a business from leased premises, the law that governs your right to stay there is over 70 years old. The Landlord and Tenant Act 1954 gave commercial tenants something they never had before — a legal right to remain after the lease expires and to ask for a new one. But that right is not automatic, and the government is now consulting on major changes that could affect how disputes play out. Here’s what you actually need to know.
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This article is general information only and does not constitute professional advice. For your specific situation, consult a qualified professional.
The 1954 Act was designed to stop landlords from kicking tenants out without reason. Before it, commercial leases ran on pure contract — if your lease ended, you had no right to stay. That changed with Part II of the Act, which introduced security of tenure. But the law has not kept pace with how business premises are used today. The Law Commission’s review, which started in July 2024, is now in its second consultation phase, with responses due by September 2026. If you’re a tenant, the outcome will affect your next lease negotiation and any dispute you might face. For more context on what lease terms can catch you out, read our guide on break clauses in commercial leases.
Key Takeaways for Tenants Facing a Dispute
What I tend to notice is that many tenants do not know whether their lease is contracted out until a dispute arises. That single fact changes everything — your right to stay, your negotiating position, and what you can demand from the landlord.
What a Lease Dispute Really Costs
Most tenants think about rent when they argue with a landlord. But the costs of a commercial lease dispute go far beyond the monthly payment. Legal fees for a contested lease renewal can run into tens of thousands of pounds. Surveyor fees for rent review arbitration, dilapidations claims at the end of the lease, and the cost of moving premises all add up. The table below shows the seven grounds a landlord can use to oppose a new lease — each one triggers a different cost and risk profile for the tenant.
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| Ground | What the Landlord Must Show | Risk to Tenant |
|---|---|---|
| Ground A – Disrepair | Tenant has failed to repair the premises | High — can be used early in the lease |
| Ground B – Persistent delay in rent | Tenant has repeatedly paid rent late | Medium — depends on pattern of payment |
| Ground C – Other breaches | Tenant has broken other lease terms | Medium — broad scope |
| Ground D – Suitable alternative premises | Landlord offers alternative space | Low — tenant gets to stay in business |
| Ground E – Multiple lettings | Landlord wants to let the whole building as one unit | Medium — only applies in specific cases |
| Ground F – Redevelopment | Landlord intends to demolish or rebuild | High — tenant cannot stay |
| Ground G – Landlord’s own occupation | Landlord wants to use the premises for their own business | High — tenant must leave |
If you lose on Ground F or G, you have to leave and your business relocation costs are rarely recoverable. The proposed Law Commission reforms include a review of Ground F to reflect modern building methods and the Minimum Energy Efficiency Standards — meaning the redevelopment ground could get harder for landlords to use from 2027 onwards.
Where Commercial Tenants Get Caught Out
Not checking whether the lease is contracted out
This is the most common trap. If your lease includes a contracting-out notice signed before the lease started, you have no automatic right to renew. Many tenants do not realise this until the landlord serves notice to quit. The proposed reform would increase the minimum term for contracting out from six months to two years, which would narrow the scope of exclusion. But for now, check your lease immediately. If you are unsure about the terms, a real estate lawyer can review the document quickly.
Ignoring the dilapidations process until it is too late
At the end of a lease, the landlord can serve a schedule of dilapidations listing every repair, redecoration, and reinstatement you owe. The cost can be huge — especially if you made alterations without permission. The best move is to commission your own schedule of condition at the start of the lease and to instruct a surveyor six months before the lease ends. Negotiation early can prevent a formal claim.
Assuming quiet enjoyment protects you from all disruption
The right to quiet enjoyment means the landlord cannot substantially interfere with your use of the premises. But it does not stop them from carrying out structural work to other parts of the building, or from entering for inspections with proper notice. If the landlord’s work blocks your access or makes the premises unusable, you may have a claim — but only if the interference is substantial and the lease does not permit it. Check the access and service charge clauses first.
Overlooking the proposed ban on upwards-only rent reviews
Most commercial leases include an upwards-only rent review clause — the rent can only go up, never down. The English Devolution and Community Empowerment Bill proposes to ban these clauses in new commercial leases and in renewal leases where the tenant has security of tenure. If you are negotiating a new lease now, push for a rent review clause that allows downward movement. The law may force that change soon anyway.
How the 1954 Act Works and What’s Changing by 2026
How to renew a lease under the 1954 Act
The process is rigid. The tenant must serve a formal notice requesting a new lease, usually between six and twelve months before the current lease ends. The landlord can either agree or serve a counter-notice opposing the new lease on one of the seven statutory grounds. If the landlord opposes, the tenant applies to the county court for a new lease. The court decides whether the landlord’s ground is valid and, if not, grants a renewal on similar terms. The whole process can take six to twelve months from start to finish.
What happens if the landlord wants to redevelop
Ground F — the redevelopment ground — is the most common reason landlords oppose renewal. The landlord must show a genuine intention to demolish or reconstruct the premises. The Law Commission’s second consultation is reviewing whether this ground should take into account modern building methods and the Minimum Energy Efficiency Standards. If you are a tenant facing a Ground F opposition, get a surveyor’s report on whether the building can be upgraded without full demolition. That could weaken the landlord’s case.
What the Law Commission reforms mean for you
The Law Commission’s interim statement, published on 4 June 2025, confirmed that the existing contracting-out model will stay — but the minimum lease term for exclusion will increase from six months to two years. The second consultation, published on 16 June 2026, covers 67 questions on qualifying criteria, renewal terms, rent, grounds of opposition, and dispute resolution. The consultation closes on 16 September 2026. If you are a tenant, this is your chance to shape the rules that will govern your next lease. You can submit a response via the Law Commission consultation page.
How disputes may be resolved differently in future
The consultation also explores whether lease renewal disputes should move from the county court to the tribunal or High Court, and whether alternative dispute resolution (ADR) could play a bigger role. That could mean faster, cheaper resolutions — but only if the reforms are adopted. For now, the county court remains the default venue. If you are in a dispute, consider mediation or independent expert determination for rent reviews before heading to court. If you need quick guidance, a business law specialist can help you assess your options.
Commercial Lease Disputes — Your Questions Answered
Can my landlord evict me if my lease has ended and I am still in the premises? ▾
What is a “contracted out” lease and how do I know if mine is one? ▾
Can I sublet without the landlord’s permission? ▾
What happens if my landlord refuses to do repairs to the shared areas? ▾
Can I break my lease early if my business is struggling? ▾
What is the proposed ban on upwards-only rent reviews? ▾
Why the 2026 Reforms Change How You Handle Disputes
The Law Commission’s review is not just a technical exercise. It will determine whether you can renew your lease, how much rent you pay, and where disputes are resolved. The decision to keep the contracting-out model but raise the minimum term to two years means more tenants will be protected — but only if they know the rules. The proposed ban on upwards-only rent reviews will shift the balance of power in rent negotiations. And the review of Ground F could make it harder for landlords to evict tenants for redevelopment. If you want to understand how these changes affect your specific situation, speaking to a tenant and landlord lawyer now can save you money later.
Remember: this article is general information only. For advice on your specific situation, speak to a qualified professional.
If this was useful, you might also want to read Understanding Personal Guarantees When Renting Commercial Spaces in the UK.
Sources and Further Reading
Understanding Landlord Service Charge Legal Costs in the UK — A practical breakdown of service charge disputes and what tenants can challenge.
High Street Revival: Can Independent Businesses Afford to Rent in Prime UK Locations? — Examines the affordability pressures facing commercial tenants and how lease terms affect viability.
UK Legal Guides (2024). Understanding Rights Under a Commercial Lease. 🔗
Sprintlaw (2024). Commercial Property Tenant Rights in the UK. 🔗
Ashfords LLP (2026). Law Commission Consultation 2026: Reforming the Landlord and Tenant Act 1954 and Security of Tenure. 🔗
Morr & Co (2026). Commercial Property Law Reform in 2026. 🔗
Law Commission (2026). Commercial Leasehold Project. 🔗
