Commercial Lease Solicitors in Scotland

Why a Scottish lease needs a Scottish solicitor

Commercial leases in Scotland have far less statutory protection than leases in England and Wales. There is no automatic right to renew, and most of the rules that govern the relationship between landlord and tenant come from the lease itself. That makes the wording more important, not less: what you sign is what you are bound by, often for five, ten or fifteen years.

Scots law also has rules of its own that do not appear anywhere in the lease, such as tacit relocation, the landlord's hypothec and the statutory protection against irritancy. We explain how each one affects you, whether you are a tenant taking your first unit or a landlord letting part of your portfolio.

What we look at in a lease review

We read the lease, and the offer or heads of terms behind it, and report to you on:

• Repairs. Most Scottish commercial leases are full repairing and insuring leases, which put the cost of all repairs on the tenant, including inherent defects and, in some leases, rebuilding. If the building is not in good condition, we recommend a photographic schedule of condition, so you are not asked to hand it back in better condition than you received it.
• Rent and rent reviews. How and when the rent is reviewed, whether reviews are upwards only, and what assumptions the valuer must make.
• Service charge. What the landlord can recover, whether there is a cap, and how the costs are shared with other tenants.
• Break options. The dates and conditions for ending the lease early. Break conditions are applied strictly, so a small arrear or an unfinished repair can defeat a break.
• Use and alterations. What you can use the premises for, and whether you need consent for fitting out or later alterations.
• Assignation and subletting. Whether you can transfer the lease to a buyer of your business or sublet surplus space.
• Keep-open clauses. In Scotland, a court can order a tenant to keep trading if the lease requires it, which is not the position in England, so we look closely at any obligation to stay open.
• Guarantees and rent deposits. What you or your directors are personally committing to.

Many leases now follow the Property Standardisation Group model commercial lease. We tell you where a draft departs from it and whether that is reasonable.

Leaving at the end of the lease

A Scottish commercial lease does not simply end on its expiry date. If neither side serves a valid notice to quit, the lease continues by tacit relocation, usually for another year, on the same terms. For most commercial leases the notice must be served at least 40 days before the expiry date. Tenants who forget can find themselves liable for another year's rent, and landlords who forget can lose the chance to regain possession.

At the end of the lease, the landlord will usually serve a schedule of dilapidations setting out the repairs they say are due. We advise on the claim and negotiate a settlement.

If things go wrong

If a tenant falls behind with the rent, the landlord's main remedy in the lease is usually irritancy, which ends the lease early. The Law Reform (Miscellaneous Provisions) (Scotland) Act 1985 gives tenants some protection: for unpaid rent, the landlord must first serve a warning notice giving at least 14 days to pay. Landlords in Scotland also have a hypothec over certain goods in the premises as security for rent. Our guide to evicting a commercial tenant in Scotland explains the process from the landlord's side.

Tax and registration

LBTT on leases. Land and Buildings Transaction Tax is charged on the net present value of the rent payable over the term. There is no tax on the first £150,000, 1% on the value from £150,001 to £2 million and 2% above that. The tenant submits the return, and for leases that trigger a return, a further review return is due every three years, and when the lease is assigned or ends. We calculate the tax and submit the returns for you.

Registration. A lease of more than 20 years must be registered in the Land Register of Scotland to protect the tenant against a sale of the building. Shorter leases are protected against a new landlord once the tenant has taken entry. Registering the lease in the Books of Council and Session as well allows either party to enforce payment obligations without first raising a court action.

Extensions, variations and new leases

If you want to stay beyond the end of your lease, we can negotiate an extension or a new lease with the landlord, and document it in a minute of variation or a fresh lease. An extension can have LBTT consequences, so we check the tax before it is signed. See our page on deeds and minutes of variation for more on changing an existing lease.

If you would rather own your premises than lease them, our commercial purchase service covers buying in Scotland.