Contracting out of the 1954 Act

The procedure

Since 2003 no court order is needed. The landlord serves the prescribed-form warning notice on the tenant, explaining that the protection of the Act will not apply. The tenant then makes a declaration acknowledging that it has received the notice and accepts the consequences.

Which declaration depends on timing. If the notice is served at least fourteen days before the tenant becomes contractually bound, a simple declaration suffices. If less than fourteen days, the tenant must make a statutory declaration before an independent solicitor or commissioner for oaths. Finally, the lease itself must refer to the notice and the declaration, and contain the agreement to exclude sections 24 to 28.

• Serve the prescribed warning notice on the tenant (or its authorised agent)
• Obtain the correct declaration before the tenant is contractually bound
• Recite the notice, declaration and exclusion agreement in the lease
• Keep signed and dated copies of all three on the file

Where it goes wrong

The recurring failures are all about sequence and identity. The notice is served after an agreement for lease has already bound the tenant. A simple declaration is used where fewer than fourteen days elapsed. The notice names the wrong tenant, or is served on the wrong person. The lease is later renewed or varied so as to create a new tenancy, and the procedure is not repeated.

The consequence is stark: the exclusion fails and the tenant has full security of tenure — often discovered only years later when the landlord wants possession.

Practical points

Count the fourteen days from service of the notice to the date the tenant becomes contractually bound, which may be the date of an agreement for lease rather than completion. Where there is any doubt about the count, take the statutory declaration: the extra step costs little compared with an unintended protected tenancy.

For tenants, a contracted-out lease means no right to renew and no compensation on quitting. Price that into the rent and the term, and consider asking for an option to renew or a longer term instead.

Future of contracting out: the Law Commission's proposals

The Law Commission is reviewing whether the current section 38A procedure is still fit for purpose. Its headline proposal is to replace the separate warning notice and declaration with a contracting-out process built into the lease itself.

Practitioners' common criticisms of the current regime are that deal timetables often do not allow a full 14-day warning period, forcing tenants to swear a statutory declaration that adds cost without adding protection; the framework is administratively heavy; delays create hidden costs in lost fit-out and trading time; technical mistakes can leave a lease protected when the parties intended otherwise; and tenancies without a fixed term cannot currently be contracted out at all — the so-called Van Staden drafting trap.

Under the proposed model, the lease alone would show whether protection has been excluded. A clear front-page warning, separately signed by the tenant, would replace the separate notice and declaration. Agreements for future leases would simply contain a contractual obligation to grant a contracted-out lease, and the distinction between fixed-term and non-fixed-term leases would disappear, removing the Van Staden trap.

The overall direction is towards a simpler, clearer and more commercially workable regime. The proposal has not yet been enacted, so the current notice-and-declaration procedure remains the law for now.

Source and further reading: Addleshaw Goddard, 'Deep dive: 1954 Act Consultation – contracting out of security of tenure (chapter 3): the Law Commission’s proposals for reform' (24 August 2026).