The Scottish Law Commission has today published a Report recommending a new set of rules for the ending of leases of commercial property in Scotland, replacing the existing common law of tacit relocation. 

The Report makes various recommendations for reform of the existing law as it applies to commercial leases (not residential, agricultural or crofting leases). 

Recommendations include:

  • the common law rules be set out in a statutory code which will replace “tacit relocation” with the phrase “automatic continuation” and remove any doubt about whether parties may contract out of a requirement to give notice before a lease comes to an end;
  • establish modern rules in relation to notices to quit (from landlord to tenant) and notices of intention to quit (from tenant to landlord);
  • clarify the law on termination of leases and make it more straightforward to apply;
  • pre-irritancy warning notices be made capable of delivery by sheriff officer;
  • protections for the interests of lenders relying on a lease as a heritable security;  
  • introduction of an implied term obliging a landlord to repay overpaid rent covering periods after the ending of a lease.

The SLC say that their new scheme of automatic continuation will bring clarity and certainty to both landlords and tenants and increase the attractiveness of investment in commercial property in Scotland.  Full details of the Report can be found here.