Law Commission consultation on business tenancies: modernising security of tenure

We provisionally propose that the current contracting-out procedure should be replaced with a new process, whereby contracting out would take place within the lease. A contracted-out lease would need to contain:

1. a prescribed warning indicating that the parties agree the lease is contracted out and explaining to the tenant (in similar terms to the current warning notice) the implications of doing so; and 
2. a prescribed declaration signed by the tenant on executing the lease, confirming that they have read and understood the terms of the warning. 

Do consultees agree?

Please explain why.

In order that the prescribed warning and declaration are prominently displayed within the lease:

1. we provisionally propose that the prescribed warning and declaration should be included in outlined text box(es) in the lease. Do consultees agree?
2. we invite the views of consultees as to whether the prescribed warning and declaration should be displayed in a particular position within the lease (for example, at the start of the lease, or at the end of the lease by the signature block). If so, where should they be displayed?
3. we invite the views of consultees as to whether there are any other ways in which the prescribed warning and declaration could be displayed in the lease to ensure tenants are aware of them and their importance.

Please use the text box below to answer the three numbered questions above.

If consultees do not agree that the current contracting-out procedure should be replaced with the new process set out above, what improvements, if any, do consultees consider should be made to the current contracting-out process? Please explain why.

We provisionally propose that the following contracting-out process should apply to agreements to enter into a lease in the future (such as agreements for lease, options to renew and guarantees). 

1. The future lease would be contracted out by undertaking the same process as set out in Consultation Question 8 – that is, via the inclusion of a prescribed warning and declaration in the lease. 
2. Prescribed wording should also be included in the agreement itself, explaining that the future lease would be contracted out. Doing so would impose a contractual obligation on all parties requiring them to contract out the future lease, if and when it comes to be completed. The obligation would bind any successors in title to the original parties to the agreement. 
3. Failing to include the prescribed wording in the agreement would not prevent the future lease from being contracted out. Instead, it would mean that no party could require the future lease to be contracted out. 

Do consultees agree?

Please explain why.

In order that the prescribed wording is prominently displayed within the agreement: 

1. we provisionally propose that the prescribed wording should be included in outlined text box(es) in the agreement. Do consultees agree?
2. we invite the views of consultees as to whether the prescribed wording should be displayed in a particular position within the agreement (for example, at the start of the agreement, or at the end of the agreement by the signature block). If so, where should it be displayed? 
3. we invite the views of consultees as to whether there are any other ways in which the prescribed wording could be displayed in the agreement to ensure tenants are aware of it and its importance.

We provisionally propose that it should be possible to contract out all written tenancies within the scope of the 1954 Act, not just fixed-term tenancies. Do consultees agree?

Please explain why.

Under the current law, it is possible for an unauthorised sublease to have security of tenure where the unauthorised sublease is granted out of an unprotected headlease. We invite the views of consultees, together with reasons, as to: 

1. whether the law should be changed; and
2. if so, how broad the change should be. For example, should it apply only where the headlease is contracted out or should it apply when the headlease is unprotected for other reasons?