Commercial leasehold

A review of aspects of the law relating to commercial leasehold. On 16 June 2026, we published our consultation paper on the first sub-project mentioned below.

Find out how to respond

We invite consultees to submit responses via the online response form. If possible, please use this method.

Alternatively, you can respond by email or by post (see our contact details at the end of this page).

Consultation opened: 16 June 2026
Consultation closes: 16 September 2026

Background (Back to top)

Our project, Business Tenancies: the Right to Renew, is addressing one aspect of commercial leasehold law, but there are other issues in the commercial leasehold sphere which this project will review.

First, we have heard that two aspects of the law are causing significant problems in practice for commercial leasehold transactions, creating barriers for businesses, preventing commercially sound transactions and imposing needless bureaucracy.

Secondly, we have heard about the law governing the maintenance, repair and upgrading of leased commercial buildings. There is concern that the law in this area is causing confusion and unfairness, and that it is has not kept pace with modern priorities (such as the need to improve the environmental sustainability of buildings or to reinvigorate the high street).

This project forms part of the Law Commission’s 14th Programme of Law Reform.

Project (Back to top)

First sub-project

The first sub-project is a focused review of two aspects of the law relating to commercial leasehold transactions:

(1) issues with the Landlord and Tenant (Covenants) Act 1995; and

(2) rights of first refusal under the Landlord and Tenant Act 1987 (in so far as the law relates to commercial premises).

First sub-project: Terms of Reference

Our Terms of Reference, agreed with the Government, require the Law Commission to conduct a focused review of two areas of law which cause problems for commercial leasehold transactions:

Landlord and Tenant (Covenants) Act 1995: the project will examine whether aspects of this Act – in particular, the anti-avoidance provisions – are standing in the way of commercially important transactions.
Landlord and Tenant Act 1987: the project will review whether aspects of this Act are creating unnecessary confusion or bureaucracy for transactions involving commercial property – in particular, whether the grant of leases of commercial units in mixed-use premises should be excluded from the rights of first refusal given to residential tenants.

The Commission will consider reforms with a view to:

streamlining commercial leasehold transactions;
decreasing bureaucracy, delay and costs;
reducing confusion about how the law applies; and
aligning the reforms to the wider review of the Landlord and Tenant Act 1954 and ensuring that reforms collectively (when considered alongside reforms under the 1954 Act project) support the objectives of that review.

Certain aspects of the law are outside the scope of the project, including residential leasehold law.

Our full Terms of Reference are available.

Second sub-project

The second sub-project will be a scoping project, focusing on the law governing the maintenance, repair and upgrading of leased commercial buildings. As part of this scoping work, we will consider the law relating to dilapidations, service charges, and the interaction between environmental frameworks and commercial leasehold law. Scoping work will enable us to understand the problems that exist and to test which might have a law reform solution.

Further detail about the second sub-project will be included on this webpage when the sub-project commences.

First sub-project – Commercial Leasehold: overcoming barriers to transactions

On 16 June 2026, we published our consultation paper on the first sub-project, Commercial Leasehold: overcoming barriers to transactions. The consultation paper (together with a summary) and further details on how to respond are available below.

We are consulting on our provisional proposals for targeted reforms to aspects of the Landlord and Tenant Act 1987 (“1987 Act”) and the Landlord and Tenant (Covenants) Act 1995 (“1995 Act”).

This consultation runs alongside a consultation on our business tenancies project, which focuses on Part 2 of the Landlord and Tenant Act 1954 and the security of tenure regime for business tenants. We published a first consultation paper on that project in November 2024, followed by a second consultation paper on 16 June 2026. All documents relating to the project, including the consultation paper and its summary, are available on the business tenancies project page.

Both projects share the objective of improving commercial leasehold law and are being progressed in tandem with a view to us providing a coherent package of reforms across key aspects of commercial leasehold law.

Scope of the project

In our work on the 1987 Act and the 1995 Act, we are considering whether particular aspects of those Acts are operating as intended in relation to commercial leasehold transactions, or whether they are generating unnecessary cost, delay and uncertainty.

Although both Acts apply more widely, this project is confined to the commercial leasehold context. Broader residential leasehold issues fall outside the scope of this consultation.

Bearing in mind the scope of our work, we have been careful not to make provisional proposals which might cause adverse impact to residential leaseholders or the residential leasehold market. However, we are keen to hear consultees’ thoughts on this.

Our provisional proposals

The 1987 Act: right of first refusal

We provisionally propose that the grant of a lease of premises that is exclusively occupied or used for non-residential purposes should not trigger the right of first refusal. This is subject to a limited exception for areas shared by residential leaseholders which are ancillary to their residential use.

Our proposal is limited to the grant of leases that are exclusively non-residential. It is designed to preserve the core protection that the right of first refusal affords residential leaseholders, while preventing it from applying to transactions that are unlikely to be of benefit to them.

The 1995 Act: facilitating commercial transactions

We are aware that certain aspects of the 1995 Act may be preventing commercially important and sensible arrangements. Our consultation explores whether greater flexibility can be introduced without undermining the 1995 Act’s central objective. We make provisional proposals to facilitate:

assignments and guarantees involving group companies
assignments and guarantees involving partnerships where the partners comprising the assignor and assignee are in substantially the same partnership
assignments to guarantors.

Consultation

The consultation is open until 16 September 2026 following which we will consider responses. We will later publish a final report setting out the conclusions we reach.

We invite views on our provisional proposals and other questions that we raise. We are also keen to receive evidence on the financial, practical and other impacts of our provisional proposals.

We would like to hear from as many stakeholders as possible, including business tenants, landlords, representative groups, property professionals, legal practitioners, judges, academics, researchers, and members of the public. We are keen to hear from residential leaseholders and representative bodies, particularly in relation to our proposals regarding the right of first refusal.

Consultation events

We will shortly be publishing here details of our consultation events, which will take place before the consultation period ends on 16 September. At these events we will explain about more about our work on this project and the Business Tenancies project we refer to above.

Next steps (Back to top)

First sub-project: Following the close of the consultation period on 16 September 2026, we will analyse responses and publish a final report setting out our conclusions and recommendations

Second sub-project: Further steps and their timings will be confirmed in due course.