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Commercial Leases and the Coronavirus (Scotland) Act

April 30, 2020 Covid-19

The Coronavirus (Scotland) Act (“the 2020 Act”) was granted Royal Assent on 6 April 2020 and thus became law on Tuesday 7 April 2020. This Act of the Scottish Parliament complements and regulates the use of emergency powers given to Scottish Ministers under the UK Parliament’s Coronavirus Act 2020. The 2020 Act has created many provisions to ease regulations around sectors that may struggle to meet their statutory requirements. One such sector is commercial property.

Prior to the 2020 Act, the mechanisms by which landlords in Scotland could terminate a commercial lease were set out in the Law Reform (Miscellaneous Provisions) (Scotland) Act 1985 (“the 1985 Act”). This legislation was introduced to protect tenants from landlords seeking expedited evictions at the first chance of asking. This was achieved by the introduction of ‘pre-irritancy notices’. These are notices served by the landlord on the tenant identifying a breach, and allowing the tenant a reasonable period to remedy the breach, under threat of irritancy. The 1985 Act allows tenants a minimum of 14 days protection in the case of non-payment of rent. If the tenant failed to make payment within the notice period, be that 14 days or longer, the landlord had the power to proceed and terminate the lease and take enforcement action to evict the tenant.

Schedule 7 of The Coronavirus (Scotland) Act has extended the usual notice period for non-payment of rent from a minimum of 14 days to a minimum of 14 weeks. This minimum period applies to all commercial property leases and includes those where a warning notice has already been issued. If an irritancy notice had already been issued, and the 14 days had not yet expired on 7 April 2020, then that notice is invalid. If this applies, a new notice will need to be served on the tenant in order for a lease termination to be valid. The result of this measure is that the earliest that a notice period can expire, and a lease can therefore be terminated, is 14 July 2020. These emergency measures are in place until 30 September 2020 however, the Scottish Ministers have the power to extend the measures, or to alter the period of notice.

These measures have been introduced to aid tenants who are currently suffering due to financial circumstances which are most likely out with their control. However, tenants should not view the 2020 Act as a mechanism for rent relief. Although the period afforded to tenants to make payment has been increased, rent and associated payments will continue to accrue during the 14-week period, and enforcement action to recover these amounts will be possible for landlords. Tenants who are served with an irritancy notice should therefore still seek to make payment, or to come to an agreement with their landlords wherever possible. Landlords and tenants should also note that the provisions of the 2020 Act only apply to notice for the non-payment of rent, and that landlords still have the right to take action to terminate a lease and evict tenants on the grounds of non-monetary breaches. Reasonableness is an important factor in non-monetary breaches, and landlords should therefore take into account the effects of the Coronavirus when deciding whether to pursue a non-monetary breach.

If a landlord served the notice, and it expired on or before 6 April 2020, they can proceed with termination of the lease, and enforcement of the eviction as usual. The practical consideration of courts only carrying out essential business may not allow enforcement to take place. This will probably also apply when we reach the 14 week mark if the court system is still only processing essential business.

If you are a landlord seeking to issue an irritancy notice for either non-payment or rent, or a non monetary breach, or you are a tenant who has been issued with an irritancy notice, please do not hesitate to get in touch with our , who will be able to provide you with advice and take action to help you out of your present situation.

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