The provisions of the Coronavirus (Scotland) Act 2020 – the Scottish Government's first major legislative effort to provide relief to the disruption caused by the coronavirus pandemic – came in to force on 7 April 2020. In this blog we summarise what those in the real estate sector need to know about this legislation.
Timing
The Coronavirus (Scotland) Act 2020 (the "Act") makes amendments to a number of pieces of existing Scottish legislation. These amendments are generally temporary and will come to an end on 30 September 2020, though the Act allows the Scottish Government to extend this date until 30 September 2021.
Evictions: Commercial Property
The Act provides that tenants of commercial property must now be given 14 weeks' (rather than 14 days') prior notice of eviction for non-payment of rent and/or other sums payable under their lease.
Two important points to note are that: (i) this 14 week period (which is capable of being extended by the Scottish Ministers) applies regardless of whether the outstanding sums pre-date the Act coming into force, and (ii) any irritancy warning letters which were served before the Act came into force and where the 14 day notice period had not expired must now be re-issued and provide the tenant 14 weeks' notice. It's also important to note that tenants will remain liable to pay rent and other sums payable under their lease and landlords will be entitled to pursue recovery of payment arrears.
The statutory guidance accompanying the Act makes clear that the change to the notice period has been made to address concerns around tenant cash flow, though neither the Act nor the guidance specifically acknowledge the impact of negative cash flow to many commercial landlords, particularly those with debt servicing commitments.
It is not yet clear what transitional arrangements will apply to any irritancy warning notices which are served in the coming months and where the 14 week notice period under such notices is still running when the provisions of the Act cease to have effect.
Evictions: Residential Property
While the Act is in force, tenants under most forms of Scottish residential tenancies must be given 6 months' prior notice of eviction in most circumstances, including for non-payment of rent (where previously only 3 months' notice was required).
The Act also provides that eviction orders may now only be awarded to private landlords at the discretion of the relevant court and where the court considers that it would be reasonable to grant such an order. Previously no such 'reasonableness test' existed and in many instances courts were obliged to grant orders provided certain fact patterns existed (for example, where the tenant was in arrears of rent).
The court of first instance for private landlord evictions (The First-tier Tribunal (Housing and Property Chamber)) is not sitting for hearings until (at least) 28 May 2020 as a result of the coronavirus.
Conveyancing Transactions
The Keeper of the Registers of Scotland has, at the time of writing, closed Scotland's two property registers owing to coronavirus. The Act seeks to remove this significant roadblock to the completion of property transactions in Scotland by allowing for documents to be submitted for land registration electronically and for the 'protected period' under any existing Advance Notices (the Scottish equivalent of a 'priority search' in England & Wales) to be extended until the property registers are re-opened.
Registers are currently piloting their electronic system for registration and hope to have it up and running soon. Meantime, purchasers (and their lenders) who wish to complete an acquisition whilst the property registers are closed remain able to do so, but must consult with their advisors on any risks which may result from the delay in registering their title or security. At Brodies we have been developing strategies in consultation with other law firms designed to mitigate such risks and your Brodies transaction team will be able to provide you with full details of these.
Planning
The Act, in conjunction with a letter from the Chief Planner, provides some welcome certainty for the planning system. In particular by extending certain timelines (e.g. any planning permission which is due to expire before 6 October 2020 is extended by six months, removing pressure to commence development) and relaxing certain enforcement actions, allowing pubs and restaurants to provide takeaway services on a temporary basis.
Licensing
The Act makes a number of temporary changes to the Licensing (Scotland) Act 2005, which the Scottish Government states are designed to minimise the chances of licence holders' right to hold and keep a licence being adversely affected through no fault of their own as a result of the coronavirus outbreak. These changes include permitting those licensed premises selling food to also sell food for delivery or takeaway and extending some timescales surrounding licensing applications and procedures. Crucially, the Act makes clear that premises licenses will not automatically be forfeited where the licensed premises is closed owing to coronavirus.
For more details on some of the topics above and more, please visit the Brodies Covid 19 Hub here.
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Senior Associate
