Terminating Commercial Leases and Changes to Tacit Relocation
The Leases (Automatic Continuation etc.) (Scotland) Bill was first presented in the Scottish parliament in January 2025. This bill aims to reform the common law doctrine of tacit relocation, which automatically extends Scottish commercial leases if neither the landlord or tenant terminate the lease.
The bill replaces the common law doctrine with a statutory scheme called “automatic continuation”. The reform aims to provide a more predictable process for the landlord and tenant and clarify rules around termination of a lease.
Key Changes Proposed
Changing the Presumption of Automatic Continuation
A new provision is being introduced to clarify how commercial leases can end without formal notice. A lease can now end if the tenant vacates the property with the landlord’s agreement and the circumstances clearly show that both parties intend for the lease to terminate on that date.
This new bill provides a more straightforward statutory method for ending a lease, reducing reliance on traditional formal procedures and increasing certainty for all parties.
Automatic Continuation Periods for Commercial Leads
The automatic continuation period differs depending on the original lease length.
The bill outlines that for leases longer than one year, the automatic continuation period will usually be one year. However, the lease agreement can outline a shorter continuation period, but it must be no less than three months.
If a lease has the original length of between 28 days and one year, its continuation period will match the original duration. Again, the lease agreement can outline a shorter continuation period, however it must be at least 28 days.
For leases with an initial length of less than 28 days, they will continue for their original duration.
Lease Notice Periods Changing
A lease can also still be terminated by serving a valid notice, the bill sets out new notice periods for this purpose. This is called a notice/intention to quit. If the lease period is 6 months or longer, you must give notice of 3 months. If the lease period is less than 6 months, you must give 3 months notice.
Impact of the reform on Tenants and Landlord
It is hoped that the new reform will bring clarity to the process of ending commercial leases, which can prove problematic under the existing system.
Additionally, an extended notice period makes more logical sense for commercial leases. The traditional 40 day notice period can prove challenging for businesses to organise removal and transition into their new premises whilst maintaining continuity of trade. A longer notice period will aid in dealing with the realities of relocating commercial premises.
The bill will also reduce the risk of unexpected lease extensions as Landlords and tenants will have a clearer understanding of their obligations and the consequences of inaction. On the other hand, this bill will provide more stability for tenants who wish to maintain occupancy without the uncertainty of having to renegotiate leases every year.
Conclusion
As of July 2025, the bill is currently making its way through the Scottish Parliament and is subject to amendments. Until the bill is made law, landlords and tenants of commercial premises still need to provide explicit notice in accordance with the terms of their lease.
Staying informed about the progress of this Bill is crucial for both tenants and landlords, given its potential impact on leases. If you need any guidance on how these changes might affect you, please don’t hesitate to contact a member of our Property team on 0141 433 2626.
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