Aspects of Leases – Tenancy of Shops
Tenancy of Shops (Scotland) Act
Julie Bain, Project Manager
Alastair Smith, Project Manager
Craig Dalziel, Legal Assistant
The project will consider the Tenancy of Shops (Scotland) Act 1949 which is the only statutory form of security of tenure under Scots law for business tenancies. Broadly speaking it allows tenants of retail, wholesale, hairdressing or pub premises to apply to a court for a renewal of their lease for a period of up to 1 year from its expiry date.
The project proceeds as a continuation of work covered in our Aspects of Leases: Termination Report (No. 260) published in 2022. Completion of our review of the 1949 Act and the making of recommendations for its reform or repeal is included in our Eleventh Programme of Law Reform published in 2023.
The roots of the project originate in views expressed by stakeholders that the 1949 Act was not operating as Parliament had originally intended. It had been intended to benefit small shopkeepers. Now it was being used by national and international retail chains. Differing interpretations of the Act by the courts had exacerbated the situation. It was put to us that there was a lack of predictability as to whether a court would renew a lease of retail. Finally, and not least, it was suggested that the commercial environment for retail lets had changed so materially since 1963 when the Act had last been considered by Parliament, and that it served no further useful purpose.
Accordingly, in our Aspects of Leases: Termination Discussion Paper (2018) we asked a single question, namely “Should the Tenancy of Shops (Scotland) Act 1949 be repealed?”. From the responses received from consultees, it became clear that there were divergent views on whether the Act should be repealed or instead restricted to ensure it operates as originally intended. In addition, the COVID-19 pandemic had affected the retail industry. For these reasons in our Report on Aspects of Leases: Termination (No. 260) we reported that further consultation would be required to establish the most appropriate route forward for the Act.
Our initial scoping work has identified several key issues which require to be addressed: These include:
(a) Whether the Act should be clarified to restrict its operation to small business tenants only;
(b) If so, by what means should the scope of the Act be restricted;
(c) What the test should the court apply in deciding whether to renew a lease in the face of opposition from the landlord;
(d) How a reformed Act would fit with the recommendations for automatic continuation that we have made in our (Report) (No.260); and
(e) Whether, rather than it being reformed, the Act should be repealed.
The aim is to produce a Discussion Paper for public consultation on these and other issues in 2023. After taking the outcome of the consultation into account our ultimate intention is to publish a report with our recommendations to the Scottish Government during the course of 2024.
David Bartos has a connection to this project by reason of his wife being the landlord of one small high-street style shop. However, he has applied the objective test for an interest under section 5.5 of the Code of Conduct for Scottish Law Commissioners (June 2022 version). Having done so and consulted the Standards Commission for Scotland he does not consider that he has an interest to declare in the project which would prevent him from participating in it. This is because:
- any recommendations from the project will not in themselves produce a change in the law but will require to be made law by the Scottish Parliament after debate;
- the decisions taken and recommendations made as part of the project are informed by the responses to consultations carried out by the Commission obtaining views from a wide range of stakeholders;
- there is no likelihood of his wife standing to benefit from such recommendations in the near future.
We are always keen to engage with stakeholders who may be affected by or have an interest in the subject matter of this project and would be happy to hear from anyone who wishes to input.
For further information, please contact Julie Bain or Alastair Smith at firstname.lastname@example.org.