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Stronachs’ earlier release Irritancy (termination) of leases in Scotland discussed measures brought into force in England, Wales and Northern Ireland by the Coronavirus Act 2020. On Tuesday 31 March, and earlier than expected, the “Coronavirus (Scotland) Bill”, was fast-tracked through Holyrood.  

In the context of commercial leasing, the approach south of the border has been largely adopted in Scotland. Royal Assent was given on 6 April 2020, meaning the Bill has become law, although it has been indicated the measures introduced shall expire after 6 months (the “emergency period.”)

The Bill is broad in its scope, dealing with a number of issues including court process and relaxation of local authority rules.  For the commercial property sector, the following key points are worth highlighting: -

Commercial Leasing

Since the Covid-19 lock-down, many Tenants have been seeking rent reductions or suspensions. The Coronavirus (Scotland) Bill does not impose any obligation on Landlords to enter into such agreements so, subject to any contrary provision of the Lease, parties remain free to negotiate.  Indeed, we have been advising a number of our clients on the terms of their respective Lease obligations and undertakings in this context.  

Monetary Breaches

Prior to terminating a commercial Lease on grounds of failure to pay rent (or other sums due), commercial Landlords must serve written notice on the Tenant providing them with an opportunity to make good the arrears.   Previously, a minimum of 14 days’ notice was required but this has been extended to 14 weeks. In effect, therefore, the Landlord cannot take steps to irritate/terminate the Lease for at least 14 weeks following non-payment of rent or other sums due under the Lease.

The Bill does not impose restrictions on other legal remedies available to Landlords for recovery of Tenant arrears but given the Courts are in lockdown, there are likely to be considerable delays associated with such alternative routes of recourse.

Non-monetary Breaches

Landlords’ powers to terminate a Lease on grounds of “non-monetary” breach (e.g. failure to maintain a particular part of property as provided for within the Lease) are unaffected by the Bill.  Having said this, lock-down measures restrict the movement of people and services.  It may, therefore, be considered unreasonable for a Landlord to expect a Tenant to take action to remedy such a breach within the timescale provided for within the Lease.  

Further emergency legislation is to be reviewed later this month following parliamentary recess.  Meantime should you have any queries with regards the above or should you have any concerns regarding rights or obligations in respect of a commercial Lease, please don’t hesitate to get in touch with a member of our commercial property team.

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