As part of measures brought in during the coronavirus pandemic there were restrictions on irritancy (termination) of commercial leases. Currently, the protections for commercial tenants are enshrined as part of the Coronavirus (Scotland) Act 2020 (the “Act”) (in schedule 7, paragraphs 6 and 7) and the Coronavirus (Extension and Expiry) (Scotland) Act 2021.
The restrictions are that a landlord cannot irritate a commercial lease for rent arrears or other monetary breach in the absence of notice for a minimum period of 14 weeks. Pre-Covid, the minimum notice period was 14 days. However, this protection period expires on 30 March 2022.
30 March 2022 onwards
Following the recent publication of The Coronavirus (Scotland) Acts (Early Expiry of Provisions) Regulations 2022 (SSI. NO. 64/2022) which comes into force on 29 March 2022, it is clear from regulation 2 (c) that the specific irritancy restrictions in the Act come to an end on 30 March 2022 and are not being further extended.
As a result, landlords operating commercial property portfolios can move more swiftly when deciding how best to deal with a monetary breach of lease terms.
Irritancy
There is no statutory relief from irritancy in Scotland so if the tenant does not clear the rental arrears within the minimum notice period the landlord is entitled to issue a notice to terminate the lease. Under specific circumstances, summary diligence may be utilised by landlords which is much cheaper and quicker than a court action. While there is no barrier to raising an action for payment through the courts, this remains a relatively costly option and should be carefully considered in the particular circumstances.
For commercial landlords and property managers, the important point to remember is that despite the imminent return to the 14 day notice period, it may still be advisable to try to engage effectively with tenants to establish if it’s possible to get things back on track. If it becomes apparent that the tenant is unable or unwilling to meet its obligations then the landlord can make time efficient preparations for terminating the lease.
“The cost of living crisis” has intensified the impact of the coronavirus pandemic to the extent we may feel the effects for generations to come. While it appears we are winning the public health battle, economically speaking, significant challenges lie ahead. Regardless, we are here to provide you with clear, effective advice at every stage of the process.
Please contact a member of our Commercial Dispute Resolution team if you require assistance.
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