Leasehold law

We have identified some areas of law that our experience and discussion with stakeholders suggest may require reform. They could be potential projects for the Programme. We would like to hear your views about these, and whether you think they should form part of our work over the next few years.

Leasehold law

Are there areas of commercial, residential or agricultural landlord and tenant law which impose unnecessary restrictions, inefficiencies or costs?

The law of leasehold impacts the lives of millions of people, whether they are landlords or tenants of homes, farms or businesses.

We have heard of increasing dissatisfaction with two areas of commercial leasehold law. While technical, we understand that they have very significant financial impacts and have the potential to inhibit the proper functioning of businesses with knock-on consequences for the wider economy.

Criticisms have been made of Part 2 of the Landlord and Tenant Act 1954, which provides security of tenure for business tenants, such as those running shops and garages and office tenants. A review could consider the extent to which such security continues to perform an important function and whether it should continue under the existing model. It could also (or alternatively) consider whether more technical amendments to the Act could make it more straightforward. Problems also arise under the Landlord and Tenant (Covenants) Act 1995 when leases are assigned. Case law has established that standard and commercially important consensual transactions are made difficult or impossible by the 1995 Act, and we have heard of a range of problems giving rise to costs of £100,000s.

There is a raft of legislation governing long and short residential tenancies, which is vital for those with an interest in the millions of such tenancies in England and Wales. In England alone, the most recent statistics show that 8.2 million households are rented privately or socially, and 4.1 million dwellings are held under a long residential tenancy. We are interested to hear whether there are areas where the law is causing practical difficulties for landlords and tenants. For example, the Competition and Markets Authority has recommended a review of the regime governing the recoverability of service charges under long residential leases in respect of major works. We are also aware of uncertainties concerning the ability to challenge leasehold terms – such as ground rents subject to exponential price escalation clauses – as being unfair in consumer protection legislation. Other concerns may be of relevance only to short residential leases.

We are aware of criticisms of the regime governing agricultural tenancies under the Agricultural Holdings Act 1986. The Act permits succession to agricultural tenancies, but there is dissatisfaction amongst some stakeholders with the conditions that must be fulfilled in order to make a successful succession application. There may also be some technical difficulties with the practical operation of the Act.

A project could include one or more of these issues, or other areas of leasehold law. We want to hear about problems in any area of leasehold law and in particular: how common those problems are; the extent to which they have a significant practical and economic impact and whether such impact has become more significant in recent years; and why they should be considered a law reform priority.

What do you think?

Are there any areas of leasehold law which we should (or should not) be considering for inclusion in our 13th Programme of law reform? Please use this form to send us your comments on this potential project, and email it to programme@lawcommission.gsi.gov.uk.

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