If you’re taking on or letting a commercial property, sooner or later someone will mention “the 1954 Act” in a slightly ominous tone. It tends to get treated as a piece of legal mystery best left to the solicitors. It isn’t, really. The core idea is simple, and it matters enough that both sides should understand it before they sign anything.
What the Act Actually Does
The Landlord and Tenant Act 1954 (Part II, to be precise) gives most business tenants something called security of tenure. In plain terms: when your lease runs out, you don’t have to leave automatically. You have a legal right to stay and request a new lease on similar terms.
That’s the whole thing in a sentence. The tenant doesn’t get turfed out the day the term ends. The lease continues until one side properly brings it to an end. The Act sets out exactly how that works.
For a tenant who has fitted out premises and built a customer base around a location, that protection matters enormously. For a landlord, it stops them simply reletting to someone else at the end of the term.
When Does It Apply?
The Act applies where a tenant occupies premises in England and Wales for business purposes. That covers the vast majority of commercial lettings — shops, offices, workshops, industrial units. If a business operates from the property under a lease, you’re almost certainly in 1954 Act territory. The only exception is where someone has taken specific steps to remove that protection before signing the lease. Those steps matter. The protection only disappears if both sides follow the right procedure beforehand. That’s contracting out — and it has its own rules worth understanding separately.
How a Protected Lease Ends
This is where people get caught out. A protected lease doesn’t just stop on its end date. To end it, the landlord normally serves a notice under section 25. The tenant can then request a new tenancy under section 26. Both sides must follow strict timing rules — generally between six and twelve months’ notice — and use a prescribed form.
If the landlord wants the property back rather than offering a renewal, they can only oppose on one of seven specific grounds the Act sets out. The two most common are redevelopment — where the landlord intends to reconstruct the property — and own occupation, where the landlord wants to move in themselves. Some of those grounds entitle the tenant to compensation.
What a landlord cannot do is simply decide they want a different tenant at a higher rent. The Act doesn’t allow that.
I asked Richard, our SRA-regulated co-founder, what security of tenure means in practice and what landlords most often get wrong about it:
In simple terms, security of tenure means that at the end of a lease protected by the 1954 Act, the tenant has the right to a new lease, unless they are in breach of the existing lease (for example, significant rent arrears) or the landlord has fairly advanced plans to redevelop the property.
Landlords often believe, incorrectly, that simply intending to redevelop is enough to deny the tenant a new lease. The plans have to be well advanced, with any planning consents either in hand or, at the very least, with no reason why consent should not be granted.
Richard, our SRA-regulated co-founder
Why It Matters Before You Sign
Think about the Landlord and Tenant 1954 Act at the start — not the end. A landlord who wants flexibility to get the property back — to sell with vacant possession, redevelop, or occupy it themselves — needs to decide whether to contract the lease out before the deal completes. A tenant who accepts contracting out should understand exactly what they’re giving up and price it into the deal accordingly.
Get this right at the heads of terms stage and everyone knows where they stand. Leave it vague and both sides risk an expensive disagreement years later — usually at the worst possible moment.
Frequently Asked Questions
Does the 1954 Act apply to my lease?
If the premises sit in England or Wales and a business occupies them under a lease, the answer is almost certainly yes. The main exceptions are leases that both parties contracted out before signing, and some short-term arrangements that fall outside the Act entirely.
What is security of tenure?
Security of tenure gives the tenant the right to stay in occupation when the lease term ends and to request a new lease on similar terms. A protected tenancy doesn’t end on its contractual end date — it continues until one side brings it to an end using the procedures the Act sets out.
Can a landlord ever get the property back? Yes, but only on one of seven statutory grounds, most commonly redevelopment or the landlord’s own occupation. The landlord’s plans have to be genuinely advanced, and some of the grounds require the landlord to compensate the tenant.
What does “contracting out” mean?
Both parties agree before signing the lease that it will sit outside the Act’s renewal protection. They must follow a specific warning notice and declaration procedure exactly — or the tenant keeps their protection automatically.
Do the same rules apply in Scotland or Northern Ireland?
No. The 1954 Act covers England and Wales only. Scotland and Northern Ireland each operate their own separate rules for commercial tenancies
Every lease on Aqqord handles the 1954 Act correctly. If you’re contracting out, the platform takes care of the warning notice and declaration procedure for you. If you’re granting full security of tenure, the lease reflects that correctly from the start. Senior solicitors drafted our documents and pre-negotiated them to be fair to both sides. You can enter your terms and preview a full draft for free at aqqord.com — nothing to pay until both parties are ready to sign.
If you’re weighing up the costs of going through the traditional legal route for your lease renewal, read our guide on how much a commercial lease costs — it might surprise you.
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