On 16 June 2026, the government published its second consultation paper on the rights of commercial tenants to renew their leases, and on what needs to change to make the security of tenure regime fit for the modern commercial landscape.
Over the past few weeks, I have been unpacking the key proposals for my network on LinkedIn, one strand at a time. I wanted to bring that mini-series together in one place, because for anyone who develops, owns, occupies or manages commercial property, this is a regime worth watching. So here is my plain-English tour of where it all began, and where it might be headed.
What is security of tenure, and why does it matter?
Under English law, a business tenant with a fixed-term tenancy of more than six months, or a rolling tenancy of any length, has an automatic right to a new lease on broadly similar terms when its existing one expires. A landlord can only refuse on one of a limited number of statutory grounds, such as wanting to occupy or redevelop the premises, or where the tenant has persistently breached its obligations, and even then a specific notice procedure must be followed.
Because this right can be exercised repeatedly, many landlords see it as an unwelcome constraint. As a result, “contracting out” of security of tenure, so that any future lease negotiations are purely a matter for the parties, has become the norm rather than the exception in my experience advising on these deals. The last major shake-up of the regime was in 2004; more than 20 years on, change looks to be on the horizon again, with the government aiming to maximise efficiency without compromising tenant protection.
The contracting-out headache
Contracting out is a strict, multi-step process that must be completed before the landlord and tenant are contractually bound. The landlord serves a prescribed warning notice explaining what the tenant is giving up; the tenant then signs a declaration (or, where there is less than 14 days before completion, a formal statutory declaration witnessed by an independent solicitor) confirming it understands the implications.
In practice, this creates real friction, and I remember it well. As a junior solicitor, few things brought me more joy than a phone call containing the words “can you do a stat dec?”, followed by a crisp £5 note in exchange for witnessing a fellow solicitor’s signature as their client confirmed it understood it was giving up its statutory right to renew. The lease needs to be in final form before the notice is served, and there is uncertainty over whether later amendments might invalidate the whole process, potentially leaving the tenant with protection it had agreed to give up. Many deals cannot accommodate the full 14-day run-up to completion, which means scrambling to find an independent solicitor to witness the more formal statutory declaration at short notice, sometimes mere hours before signing the contractually binding documents themselves. Anyone who has tried to track down a solicitor at 4.30pm on Christmas Eve will know exactly what I mean.
Rather than simply extending time limits or tying them to a trigger event, which would leave the same tight, document-heavy process in place, the government’s preferred option is more radical: build the warning notice and tenant declaration into the lease itself, executed at the same time as the lease. No separate documents, no 14-day countdown, and no last-minute scramble for a witness.
Tightening up who qualifies for protection
The consultation also looks at the qualifying criteria for protection, aiming to remove anomalies and the unintentional gaining or losing of protection. Two options are on the table for the minimum term that attracts protection: leases of more than two years (Option A) or more than one year (Option B), up from the current six-month threshold. Under both options, all new periodic (rolling) tenancies would lose protection entirely.
Renewals of an already-protected lease would stay protected, regardless of the new lease’s length or whether it’s fixed term or periodic lease. Renewals of an unprotected lease are more nuanced: for fixed-term renewals under Option A, prior occupation would count towards eligibility, whereas under Option B it would be ignored; renewals of an implied periodic tenancy would not be protected under either Option A or B.
Rethinking compensation for “no-fault” terminations
Where a lease ends because a landlord relies on one of the “no-fault” grounds, the tenant is entitled to statutory compensation, currently calculated from the property’s rateable value and doubled once the tenant has been in occupation for 14 years or more. That single cliff-edge threshold is increasingly out of step with a market where average lease lengths have been falling, so fewer tenants ever reach it.
The consultation considers three changes: switching the basis of calculation from rateable value to the rent actually payable under the lease; replacing the 14-year cliff-edge with stepped bands so compensation rises gradually with length of occupation; and reviewing whether landlords and tenants should still be able to contract out of compensation altogether where occupation is under five years, including whether that threshold needs adjusting and whether more transparency is needed around any such exclusion.
Modernising the redevelopment ground
Ground F lets a landlord oppose renewal where it intends to demolish, reconstruct or carry out substantial construction works that cannot reasonably be done with the tenant in occupation. The consultation flags that this wording sits awkwardly with modern practice, where retrofitting and refurbishment, often done for sustainability reasons, are increasingly common but can struggle to meet the “substantial works” bar. That creates a perverse incentive: more disruptive, old-style redevelopment clears the hurdle more easily than a lighter-touch green refurbishment.
Three options are proposed: widen the categories of qualifying works to capture modern construction methods, but only where there is an environmental or planning-compliance purpose; widen the categories with no such purpose filter; or scrap the categories altogether in favour of a single “substantial works” test. The balancing act is real: landlords need a workable route to deliver sustainability upgrades, but not one so wide that it undermines the very protections that Ground F is designed to safeguard.
Speeding up disputes
The final strand looks at how disputes are resolved when parties cannot agree renewal terms, or where a landlord opposes renewal outright. Most disputes currently land in the county court, and the consultation identifies two recurring problems: cases take too long and cost too much to resolve, and county court judges do not always have specialist landlord and tenant expertise.
Options under consideration include a bespoke pre-action protocol, standardised case management directions, and costs sanctions modelled on Part 36 of the Civil Procedure Rules. There is also a push towards greater use of Alternative Dispute Resolution, including giving either party the right to refer a dispute to non-binding ADR, and requiring statutory renewal notices to flag ADR as an option from the outset.
Where this leaves the market
Taken together, these proposals touch almost every stage of the commercial leasing lifecycle: how a lease is contracted out in the first place, who qualifies for protection, what a tenant receives if a lease ends through no fault of its own, how redevelopment and refurbishment plans interact with a sitting tenant, and how disputes get resolved when parties cannot agree. None of this is law yet, and the government may land on a different combination of options once consultation responses are in. But for landlords, developers, contractors and occupiers alike, this is a regime that has not been touched in two decades and is now very much back on the table. I will be keeping a close eye on how it develops and will update you as it does, though I confess I will feel a small pang of nostalgia if that crisp £5 note for witnessing a stat dec becomes a thing of the past.
For further information, please contact:
Emma Brindley-Raynes, Partner, Bird & Bird
