Commercial Leases Last Forever (sort of) – Termination of Commercial Leases in Scotland

In Scotland, leases of commercial premises never end (*sort of!).  

Most people don’t know that. And so, the Scottish Government decided to do something about it – well, until they very recently decided to do nothing!  

To explain: a commercial lease may state that it comes to an end on 31 December, but it will continue beyond 31 December unless either the landlord or the tenant serves a valid notice to quit on the other.

However, chances are that most tenants (and landlords) won’t know about this rule unless they have perhaps fallen foul of it in the past. It’s the law, you’re expected to know it, but it’s not typically written down anywhere in the lease. This quirk of Scottish property law is known as tacit relocation, and it’s this that the government wanted to address. 

Many small businesses and traders enter into leases without legal advice or guidance. As a consequence, they might be unaware of this principle, under which a lease continues (forever) on a year-to-year basis until a notice to quit from either party brings it to an end. The danger for the unaware is that you get trapped in a lease you assumed was coming to an end.

If its complicated, make it simple

Simplification is what the Scottish Government had in mind. In 2022, the Scottish Law Commission (tasked with promoting ideas for law reform) published an excellent report on termination of leases in Scotland. On the back of the report, draft legislation – the Leases (Automatic Continuation etc.) (Scotland) Bill – was introduced in the Scottish Parliament on 11 December 2024 to implement changes to the law recommended in the report. The draft legislation aimed to clarify the law, simplify processes and increase awareness on how leases work. In line with the usual procedure, a consultation was launched at the beginning of this year to invite views on the draft bill.

So far, so good. 

However, it’s no surprise that this complicated subject drew a multitude of views and opinions on how to make it simple. Some responders questioned the need for any change at all, others suggested that the bill might result in yet more complexity of a different sort. This lack of consensus ultimately caused the draft legislation to be shelved 

The outcome

In a letter dated 10 September 2025 the cabinet secretary responsible for the bill admitted: “it is clear to me that, regrettably, there is no [..] consensus among Committee Members on this Bill and it appears unlikely that such consensus will be reached“. With the forthcoming election in 2026 there are other priorities. It remains to be seen whether the bill will come back in a different form following the election. 

So, for now, the best way to avoid the oddity is to remember to diarise your lease termination date, the requisite notice period (the accepted standard being at least 40 clear days prior to the end of a lease), and to take action to serve a notice to quit well ahead of the end date in your lease. But a word of warning – it can get complicated, and each lease can be different, so it is best to consult a lawyer(!) to avoid the one-year rollover pitfall.

By Burness Paull LLP, Scotland, a Transatlantic Law International Affiliated Firm.  

For further information or for any assistance please contact ukscotland@transatlanticlaw.com

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