NewRiver boss: Consign the 1954 Act to history with Spam, Camp Coffee and Rinso

By Allan Lockhart, chief executive of NewRiver REIT

Government plans to ban upward-only rent reviews under the pretext of improving market efficiency and supporting the high street have sparked controversy among real estate owners. But the real issue lies with the outdated 1954 Landlord and Tenant Act, a 71-year old piece of legislation which plagues the retail market to this day.

Not that I agree with scrapping upward-only rent reviews: the impact assessment issued alongside plans to ban them says “landlords are obtaining supranormal profits”, which in my view is not correct.

But there is no doubt that the government is focused on a growth agenda and even if some of its ideas are misplaced, this is being done with the best intentions.

The government’s stated objective in banning upward-only rent review clauses is to make “the market more efficient, and to ultimately contribute to thriving high streets and economic growth”.

But there is a different, cost-free measure which the government could take which would help to revive town centres far more effectively at a stroke, speed up the energy transition and sweep away swathes of burdensome red tape: reforming the 1954 Landlord & Tenant Act.

Out of date

The Law Commission’s latest consultation on reform of the 1954 Act, which underpins the majority of commercial leases, concluded that there was no case for reviewing security of tenure. This could not be more wrong.

Security of tenure guarantees occupiers the right to renew leases at a market rent at the end of the lease term, unless both parties agree to opt out of the act. The act does not apply in Scotland or in Europe, which function perfectly well without its strictures.

I have been vocal on reform of the 1954 Landlord & Tenant Act for many years, and in 2014 wrote an article headlined “At 60, it’s time for this act to be retired”.

At the time, NewRiver owned and managed 23 shopping centres with 850 retail occupiers. Today we own and manage 80 retail assets and work alongside 3,500 tenants from whom we collect £250m a year in rent.

But 11 years on I believe those tenants and NewRiver could have grown much more effectively without security of tenure, which was relevant when it was introduced in the wake of the Second World War to protect family businesses threatened with losing their shops in the post-war development boom but is irrelevant and archaic 60 years later in 2025.

First, the act is hopelessly out of date: we now live in a world of omni-channel retail where lease lengths have got drastically shorter and the idea of legislation which gives one party the right to renew without considering the rights of the other party is completely out of place in a modern democratic country.

Next, security of tenure is restricting the regeneration of town centres across the UK. A handful of tired or failing retailers which are refusing to leave a high street or shopping centre can prevent vibrant new retailers or restaurants from moving in, preventing the needs of the community being met, limiting the ability to attract greater footfall, and in turn support local economic and social growth.

This hinders inward investment and growth among successful chains, as well as introducing aspiring new independent businesses that can contribute so much to the revival of a location.

This ability to refresh locations would encourage real estate owners to invest in their properties, meaning an improvement to their environmental credentials as well as creation of new construction apprenticeships and jobs.

The bureaucracy involved with renewing leases is painful, as well, swallowing up costs for both owners and occupiers which a far less confrontational law would ease.

Today’s retail world is more fast-moving than ever, but the sector operates with the handbrake on because of the 1954 Landlord & Tenant Act.

Making shoppers suffer

Real estate owners like NewRiver, which are long-term investors in local communities, are prevented from fully curating our shopping centres and retail parks because of the dead hand of the act, the courts are bogged down with unnecessary cases and the best retailers cannot reshuffle their portfolios and grow.

Most importantly, shoppers suffer from the act as well: it is anti-competitive because it restricts choice in shopping centres and high streets, hampering those locations efforts at revival.

Chancellor Reeves in her July Mansion House speech in the City said excessive regulation and red tape have been a “boot on the neck of business”, stifling enterprise and regulation.

If legislation passed since the global financial crisis is 10 years is out of date, how past its sell-by must the 1954 Landlord & Tenant Act be?

Upward-only rent reviews are largely irrelevant now because leases are so short: in retail few leases are signed that are longer than five years anyway, so the whole exercise of banning them is futile.

But where the government can really make a difference in driving growth and reviving the high street is by reforming the 1954 Landlord & Tenant Act, which should be consigned to history like the Spam, Camp Coffee and Rinso soap powder so many people bought in Britain that year.