Property law features heavily in the Law Commission's 14th Programme of Reform
Commercial leasehold reform
There are two parts to the Law Commission's commercial leasehold reform. Part 1 focusses on two legislative matters:
- The Landlord and Tenant (Covenants) Act 1995;
- Rights of first refusal under the Landlord and Tenant Act 1987 relating to commercial premises.
- Reforms aim to eliminate bureaucracy and unintended legal consequences arising from these Acts.
- Whilst the 1995 Act provided tenants who assigned a lease with certainty that their liability comes to an end (unless they enter into an Authorised Guarantee Agreement), the complexity of the Act had unintended consequences for intra-group transfers/reorganisations. For example, the Act prevents tenants from assigning a lease to their own guarantor or from carrying out an assignment between two SPVs with the same guarantor, thereby making commercial leasing rigid and creating potential pitfalls.
- The 1987 Act is seen as over complex and confusing, particularly when dealing with mixed-use buildings. Landlords must go through an inconvenient process of giving tenants a right of first refusal – incorrectly following the process carries the risk of criminal charges. Proposed reforms would aim to create a more user-friendly scheme for commercial property.
The Law Commission hopes that reforming these two Acts would remove outdated blocks and give businesses the flexibility they need to structure property deals efficiently and lawfully.
Part 2 of the Law Commission's commercial leasehold reform project will consider maintenance, repair obligations and service charges.
- The aim is to progress toward modern commercial, environmental, and sustainability goals including ESG compliance and high street regeneration.
- Current challenges include rigid lease structures, a lack of flexibility regarding disrepair, disputes with service charge mechanisms, and disputes as to who pays for sustainability upgrades in multi-let properties – these all delay/prevent building improvements.
- The Law Commission will review dilapidations (how they are assessed and enforced), service charges, energy performance certificate requirements, decarbonisation targets and adapting properties for high street revival.
- The aim is to take a consultative approach, and focus on modernised, clearer frameworks, revitalisation and energy efficient improvements.
Other key property law reforms in the 14th Programme
Beyond commercial leasehold reform, the Law Commission is reviewing the management of housing estates, ownerless land and agricultural tenancies. Here’s what’s changing:
- A consultation regarding management of housing estates is planned for 2026 which may propose new governance rights for homeowners on private estates, including a new "right to manage" common areas for freehold homeowners on housing estates. This aims to prevent developers from using their continued ownership of common areas to maximise profits and income stream, leading to high service charges for residents that cannot be properly challenged.
- The Law Commission wants to address the legal uncertainties that can arise when property reverts to the Crown as (without taking possession of the land) the Crown has no legal obligations to manage such land, which leaves safety and environmental risks unresolved. The focus of the consultation is on whether certain land types should be transferred to bodies other than the Crown and powers of third parties to obtain vesting orders.
- A review of the current regime for farm business tenancies (based on either the Agricultural Holdings Act 1986, for pre-1995 tenancies, or the Agricultural Tenancies Act 1995, for post-1995 tenancies) will take place to seek to bolster farm productivity and encourage new entrants to the farming sector.
Look out for consultations on the Law Commission's various projects and take the opportunity to have your say.
Read more on the Law Commissions 1954 Act reform:
