Tacit relocation

The Leases (Automatic Continuation etc.) (Scotland) Bill was presented to the Scottish parliament in January 2025. This proposes to reform the common law doctrine of tacit relocation, which automatically extends Scottish commercial leases if neither party takes steps to end the lease.

The Bill replaces tacit relocation with a statutory scheme called “automatic continuation”. This reform aims to clarify the rules surrounding lease termination and provide a more predictable framework for both landlords and tenants.

Key aspects of the proposed reforms

Terminology Change

Tacit relocation will be renamed “automatic continuation”.

Changing the presumption of automatic continuation

The bill introduces a statutory code for contracting out of automatic continuation by consensus (in absence of formal notice) – whereby a lease can end “if the tenant gives up possession of the subjects of the lease – (i) with the acquiescence of the landlord, and (ii) in circumstances which indicate that both parties intend the lease to end on that date.”

Notice Periods

A lease can of course still end via a valid notice being served and the Bill proposes the following notice periods:

• Notice to quit or of intention to quit must be received on or before the last day for giving notice under the lease to which it relates.
• The last day for giving notice is: (a) if the period of the lease is six months or longer, the day which is three months before the termination date of the lease, (b) if the period of the lease is less than six months, the day which is one month before the termination date of the lease.

Automatic Continuation Period

• For leases longer than one year, the automatic continuation period will be one year, or a shorter period specified in the lease, with a minimum of three months.
• For leases between 28 days and one year, the continuation period will be the original duration of the lease or a shorter period, with a minimum of 28 days.
• Leases of less than 28 days will continue for the original duration.

Impact of the Reforms

Clarity and Certainty

The reforms aim to bring more clarity and certainty to the process of ending commercial leases, which can be problematic under the current system.

Reduced Risk

Landlords and tenants will have a clearer understanding of their obligations and the consequences of inaction, reducing the risk of unexpected lease extensions.

The Bill helps avoid the common issue of catching out the unwary landlord or tenant, who takes no steps to end the lease, but who may have already made other plans for when the lease ends. If, for example, a landlord was to agree a new lease with a new tenant without a valid notice being served by either party, they could be in breach of contract with their future prospective tenant if the existing Tenant was to continue to occupy the premises.

An extended notice period is also more in line with commercial realities. For longer leases the traditional 40 day notice period is often inadequate for retailers to strip out, find new premises and fit those out whilst maintaining continuity of trade. A longer notice period may assist in negotiating the realities of closing and relocating commercial premises.

Next steps

The bill is currently making its way through the Scottish Parliament and is subject to further amendments. Landlords and Tenants of Commercial premises should be aware of the need to provide explicit notice in accordance with the terms of their lease until the Bill is made law.

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The information and opinions contained in this blog are for information only.  They are not intended to constitute advice and should not be relied upon or considered as a replacement for advice.  Before acting on any information contained in this blog, please seek solicitor’s advice from Gilson Gray.