Leasing in Scotland
Leasing in Scotland - Part 1
In addition to the acquisition and sale of property in Scotland, there are specific differences in commercial leasing north and south of the border.
Formation of the Lease
In Scotland, the terms of the lease contract entered into between the Landlord and the Tenant form the lease. In the event of a dispute on the contractual terms of a lease, the Courts look closely at the terms of the contract and the intention of the parties is taken into account. If the lease is silent on any point, the common law prevails. By contrast in England, the terms of the lease and statutory legislation under the Landlord and Tenant Act 1954 and/or the Law of Property Act 1925 form the lease. In the event of a dispute the Courts tend to rely on both the contractual provisions within the lease and statutory legislation for interpretation of the lease.
No Landlord and Tenant Act
Although there are some exceptional statutory provisions governing the law of leases in Scotland there is no equivalent of the Landlord and Tenant Act 1954 or the Law of Property Act 1925. As there is no such legislation in Scotland there is no protection for the tenant to have their lease renewed at the end of the term and therefore, assuming a Notice to Quit has been served (this is further explained below), the lease will come to an end at the date of expiry. There is one exception to this under the Tenancy of Shops (Scotland) Act 1949 – this Act allows proprietors of retail premises the right to obtain a new lease from the landlord for a limited period. However this Act is rarely used and it is not considered to be significant in commercial leasing – this may be due to the Act being difficult to interpret and the various interpretations of the Act that exist.
Bringing a Lease to an End (Tacit Relocation)
In Scotland, a lease will only come to an end if either the Landlord or the Tenant serves a formal Notice to Quit prior to the date of expiry in the lease. If either party fails to serve notice the lease will, under the Scots law doctrine of Tacit Relocation, automatically continue on a year to year basis, on the same terms and conditions, until formal notice to end the lease is served by either party.
If the lease is silent on the notice period, the statutory notice periods in terms of the Sheriff Court (Scotland) Act 1907 would come into play. In the majority of cases the notice period is 40 clear days; however this can vary depending on the size of the leased premises and the duration of the lease.
By contrast in England, in some circumstances, at the contractual expiry of the lease the tenant may have security of tenure and can call upon their landlord to renew their lease on similar terms.
Keep a look out for more information on leasing in Scotland.
For more information contact Shabnam Hanif.
This article is for general guidance only. We are not, under any circumstances, providing advice or accepting any liability for any party who may seek to rely on the terms of this article.