I, and I am sure the whole House, are grateful to my hon. Friend the Member for Tiverton (Mrs. Browning) for raising the important subject of leasehold premises—shops and offices. She put her case with lucidity and care.
The Government fully appreciate the concerns of business tenants facing problems with rents and other aspects of their tenancy agreements. The recent report, "Retail Rents: Fair and Free Market?" by Professor Burton, which the Property Market Reform Group commissioned, criticises the so-called institutional leasing system and proposes radical reforms to the operation of the letting market.
No one can deny that present property market conditions are severe. They are, however, not unprecedented in what, for a long time, has been a cyclical market. Understandably, there are a number of problems facing tenants at the moment, and they arise from a variety of causes.
Business leases are founded on the package of rights and obligations for tenants and landlords set out in part II of the Landlord and Tenant Act 1954, which includes security of tenure and the right to renew a lease, and freedom for the parties to negotiate tenancy agreements on the open market.
The 1954 Act has worked well, providing a well-understood and balanced framework for the commercial property market through all the ups and downs of the past 40 years. We have rightly kept the Act under close consideration. When a review of part II was conducted in the mid-1980s—with particular reference to small businesses—it was concluded that the Act generally strikes a fair balance between landlords and tenants.
We are currently considering the Law Commission's report, which recommends changes to the working of the Act while leaving its fundamentals unchanged. We continue to look carefully at all the implications, and I have been interested to hear the views expressed by my hon. Friends this evening. The fundamentals of the legislation have endured for 40 years. Clearly, any major reform would require a substantial justification.