Rents of business premises are set in the market by agreement between the parties. The Government do not plan to limit increases. However, when business tenancies expire, the Landlord and Tenant Act 1954 gives the tenant the right to a new tenancy and restricts the rent to the market value. The new rent will be fixed by the courts if the parties cannot agree. This protection is not available in cases where the tenant agrees to 'contract out' of the protection of the Act before the grant of the original lease.
More generally, the Government are keen to promote more flexible leasing arrangements in the commercial sector, along with greater awareness among small businesses about the implications of lease terms. It is important that, subject to market conditions, tenants should be able to negotiate terms reflecting their business needs. The Government remain committed to lease reform and, dependent upon the impact of the 'Code for Leasing Business Premises in England and Wales 2007', has not ruled out legislation as an option in the longer term.