Aspects of leases

Commissioner

David Bartos

Team Members

Alastair Smith, Project Manager
Daniel Buchan, Legal Assistant

The reform of proprietary aspects of leases is included in our Tenth Programme of Law Reform (paras 2.10-2.16).  The project will take a focussed approach, looking at areas as to where law reform is most needed.  We will concentrate mainly on commercial leases, as the law on residential leases and agricultural leases is already subject to significant statutory regulation. 

Aspects of Termination

Following an initial scoping exercise, assisted by contributions from members of our Advisory Group at a meeting in September 2017, we have begun by considering issues relating to the termination of leases.

Our Discussion Paper was published in May 2018.  It includes chapters on tacit relocation; notices to quit; apportionment of rent; the Tenancy of Shops (Scotland) Act 1949; irritancy; and the doctrine of confusio.  The consultation closed on 14 September 2018 and we are very grateful to all those who have contributed to our consultation process.  The responses we received were both valuable and varied.  They have allowed us to formulate policy on how a commercial lease can be terminated at its ish (expiry date) and the circumstances in which the law should automatically extend its duration.  With the help of our Advisory Group, we have drawn up provisional recommendations (apart from on one matter) and have instructed Parliamentary Counsel to prepare a draft Bill giving effect to them.

Once the Bill is drafted we propose to have a consultation on its terms to allow anyone interested to put further comments to us.  Following that consultation we will submit our final report (which will include the draft Bill) to the Scottish Ministers and publish it on our website.  We anticipate doing so by early 2022.  We hope that the importance of the Bill in clarifying the law for property investors and commercial tenants alike will allow for implementation in the Scottish Parliamentary session beginning in 2021.

As well as informing policy decisions, our analysis of responses has also helped identify areas which will require further consideration.  In respect of the doctrine of confusio, for example, consultation responses highlighted a lack of consensus as to the present law and suitable reform measures.  With the assistance of our Advisory Group we have worked on developing a scheme to allow a “shadow lease” to continue to exist in limited circumstances where the tenant acquires the landlord’s interest in the let property.  However, any future law reform project will require to carry out further consultation before making any recommendations in that regard. 

Similarly, responses to both the Discussion Paper and a mini-consultation carried out amongst retail stakeholders demonstrated a lack of consensus surrounding the Tenancy of Shops (Scotland) Act 1949.  While respondents to the Discussion Paper generally favoured repeal of the Act, retail stakeholders did not support this approach and suggested that it should either be reformed to bring it into line with its original objective of protecting small businesses or remain as it is.  This lack of consensus has highlighted that more work is necessary in order to come up with effective law reform proposals.  Due to constraints on time and resources, it is not possible for us to carry out this work within the scope of our current law reform project. 

For these reasons, our report  will not contain recommendations in respect of either confusio or the Tenancy of Shops (Scotland) Act 1949.  We hope to return to both topics in a future phase of our work on leases.

Contact

If you require further information about this project please email charles.garland@scotlawcom.gov.uk.