differences between leases in England and Scotland
If your business is based in England and you are thinking of taking on a lease in Scotland, you need to know one thing – the leasing laws of the two countries are fundamentally different! You should speak to a Scottish solicitor to advise you before entering into a commercial lease.
The exact differences are fairly technical. For those who want to know more, we indicate some of the main differences below.
- absence of regulations: in Scotland the landlords’ and tenants’ obligations are primarily regulated by what the lease says rather than by any Act of Parliament. The Landlord and Tenant legislation applying in England does not apply in Scotland.
- lease terms: the Scottish courts look at the precise terms of the lease and normally interpret these terms in a strict fashion. There is little legislation in Scotland to override the terms of the lease.
- no rules of equity: there is no principle of equity applying under the law of Scotland nor applied by the Scottish courts except to a limited degree.
- no additional protection of occupation: tenants of commercial property in Scotland do not have any statutory protection of occupation other than the extremely limited protection given by the Tenancy of Shops legislation.
- reasonableness: unlike the position in England, landlords generally do not need to act reasonably unless the lease specifically requires them to do so
- end date of the lease: although a lease in Scotland will specify an end date, it will usually only end on that date if a written notice has been given (normally of not less than 40 days) by either the landlord or the tenant to avoid the lease continuing automatically to remain in force.
- alterations and improvements: if a tenant has carried out improvements/alterations to the property, in the absence of provision in the leases, there will be no right to compensation. The landlord will normally seek to have the option either to have the property reinstated or left with such additions without any compensation being due.
- the underlying law is otherwise often pro-tenant: by this we mean that, where the written lease is silent on a particular point, the law will, by default, usually benefit the tenant. This really only becomes when a commercial lease has been poorly drafted and is unclear. The tenant’s repairing obligation is a good example - in the absence of express wording in a commercial lease, the tenant will have only limited liability to repair of premises.
- the underlying law can have unexpected consequences: most commercial leases will make clear that they remain in force, even if the building has been completely destroyed or damaged beyond repair. However, if the lease is silent or the wording is unclear, the underlying law in Scotland is that such a lease will automatically terminate on destruction or material damage of the building.