The Scottish Government announced on 10 September 2025 the withdrawal of the Leases (Automatic Continuation etc.) (Scotland) Bill from Holyrood before it had even completed the first stage of its journey through the Scottish Parliament. The Bill had been much anticipated among the commercial property Industry - following a period of consultation and reporting by the Scottish Law Commission – as bringing some certainty to, and modernisation of, the law in Scotland regarding termination of commercial leases. We have summarised the proposals previously.
We understand that the primary reasons for withdrawal included concerns about the complexity of the proposed changes and acknowledgment that more work might be needed to strike the right balance between legal certainty and practical flexibility - as well as a general inertia towards reform of longstanding legal principles.
Regardless of these issues, however, the news that the Bill is not set to become law, at least not in the near future, will be disappointing to those who sought codification and clarity in what is an uncertain area of the law.
Given that we are, it seems, stuck with the existing legal position for the foreseeable future, it's probably worth rehearsing some of the key points to be aware of:
Generally speaking, there is no security of tenure in Scotland
Unlike in England & Wales, tenants of commercial premises north of the border do not – subject to an important exception (see 2 below) - enjoy security of tenure. When the lease term comes to an end, the tenant must vacate the premises.
Note that this doesn't apply to residential or agricultural tenancies, where statutory protection is afforded to tenants. Limited protection is also given to tenants of shop premises but the legislation is obscure (and the Scottish Law Commission is considering whether this should be retained).
Tacit relocation will operate in the absence of a notice to terminate
At common law, either party under the Lease must give at least 40 "clear days" notice of termination. Such a notice need not be in writing unless the Lease expressly provides for this – and modern and well-drafted leases almost always do – if not, verbal communication would suffice. If neither party gives the requisite notice to the other, the Lease will continue on the same terms and conditions for a further year (or, if the original term was less than a year, for the same duration again). This principle is known as tacit relocation – and can lead to an unwelcome surprise for the unwary!
What amounts to "notice" is something of a grey area
Recent case law has emphasised that there is no specific form of wording required to prevent tacit relocation from operating. Indeed, in one recent case, email correspondence between agents, discussing the possibility of a reletting following termination, was considered sufficient to prevent the lease from continuing even though no formal termination notice had been issued.
Each case will depend on the precise facts and circumstances, and to avoid uncertainty, legal advice should be obtained to ensure that a notice is served which effectively brings the lease to an end.
Errors in the notice can be fatal
Perhaps contrary to the above paragraph, a notice which attempts to terminate the lease may be considered invalid if it contains an error. Again, recent case law has held that a notice which incorrectly specified the precise identity of the landlord company was ineffective, even though it had been sent to the correct address and there was evidence that a director of the actual landlord had received a copy of the notice.
The proposed Bill had contained a provision to the effect that a minor error in identifying the parties, the property or the termination date would not render the notice invalid if a reasonable person would have recognised the true position.
"Deemed delivery" clauses can cause uncertainty
Leases often contain a clause stating that notices served under the Lease will be deemed to have been served 48 hours following posting if sent by e.g. recorded delivery. This is useful in allowing the party issuing the notice to know that it has been validly served whether or not it has actually reached the recipient.
However, this period needs to be factored into the timings for serving notice. The requirement for 40 "clear days" requires that the date of service and the date of termination are discounted, and an additional couple of days needs to be factored in also if reliance is to be made on the deemed delivery provisions.
More fundamentally, recent case law has suggested that, while notices exercising a break option will be deemed to be notices "under the lease", this may not apply to termination notices – it may in fact be the case that evidence is required to show that a notice to quit has actually been received. Needless to say, this uncertainty caused much anxiety during the Covid lockdown when notices were sent to workplace addresses with no indication that anyone was there to collect the mail! Again this was a point which the proposed Bill had been set to clarify.
As can be seen above, the current law is riddled with uncertainties. It had been hoped that the Bill would address these issues but we will have to persevere with the status quo for now.
On the subject of Lease termination, don't forget also that leases granted under the LBTT (Scottish stamp duty) regime will also require termination to be notified to Revenue Scotland – otherwise hefty penalties may be incurred.
Brodies' real estate team is geared up and on hand to guide clients through this maze and to help minimise the risk of unwelcome surprises. Please contact Laurence Douglas if you require further information.
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