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Long Leases in Scotland

Those who know about Scottish law will be aware that it is not now practically possible to create a lease in excess of 20 years in Scotland. Additionally, feus were prohibited in 2000 and most were converted into an ownership for the vassal. A similar arrangement is now being proposed for certain long leases which have survived previous reforms.

The Land Tenure (Reform) Act 1974 acted to prevent longer leases occurring because it allowed landlords to terminate the lease at any point after 20 years. This meant that no tenant would normally be prepared to enter into any such arrangement and longer leases accordingly dropped away. However, some leases, created prior to that Act, are still in existence and were not removed by the various legislation in 2000 and 2003 which aimed at removing feudal tenures. Some of these leases are ludicrously long (one million years in the case of several in Paisley). In 2006 the Scottish Law Commission produced a report suggesting a further ‘clean up’ of these anomalous leases by converting what it called ‘ultra-long’ leases into a right of ownership.

The Scottish Executive has responded to this report by producing a consultation supplemented by a draft bill in which it proposes converting any lease for more than 175 years which has more than 100 years left to run into a right of ownership for the tenant.

The proposed bill contains mechanisms for sporting rights to be preserved for landlords. This is unsurprising as one of the reasons for the creation of such leases was to preserve these rights for landlords whose primary interest in the land was for its leisure facilities. They are also of substantial value in some cases and there would be difficulty in compensating landlords for their loss. The bill also proposes to compensate landlords for the loss of their title in the land to be based on the rent level and calculated in a similar manner as was carried out during the abolition of feus. There are also provisions for higher levels of compensation to be payable in certain limited circumstances if the landlord serves an appropriate notice on the tenant. It is intended that higher levels of compensation will be payable by way of instalments.

The consultation continues until 30 June 2010.

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