07 April 2020

Coronavirus (Scotland) Act 2020: Changes for landlords and tenants. The Coronavirus (Scotland) Act 2020 comes into force today and changes the rules on termination of commercial leases for non-payment of rent and other sums due.

Where a landlord threatens to formally terminate a lease because of non-payment of rent or other sums due, the minimum ‘time-to-pay’ the landlord has to give a tenant before terminating has been extended from 14 days to 14 weeks from the date of a notice threatening termination.

Furthermore, this also relates to breaches for non-payment occurring before the Act comes into force today.

Moreover, any pre-irritancy warning notices already issued with time to pay still running are made void by the Act.

Consequently, landlords will have to re-issue any pre-irritancy warning notices and tenants will now have a minimum of 14 weeks to pay from when new notices are issued, regardless of when the breach happened. All of which seems fairly functional.

For tenants, the changes no doubt align with the overarching political aim of protecting business. They can breathe a sigh of relief knowing that they can’t be thrown out on to the street, compounding the commercial mountains they already have to climb on the other side of the lockdown. However, the slate is not wiped clean; rents and other sums due still accrue and ultimately tenants still have to find those funds or reach compromises with their landlords.

For landlords, the picture may not seem so rosy. With more and more tenants looking to rent deferrals, rent holidays, mid-term rent incentives, and topped with the moratorium on diligence now put out from 6 weeks to 6 months on unincorporated tenants, landlords may feel they are facing a regear season over the spring, summer and quite possibly beyond, the likes of which they may never have seen before.

This provides great uncertainty for both landlords and tenants alike. All businesses prefer certainty and so the importance of the approach in documenting newly agreed arrangements under existing leases could hardly be in sharper focus.

See our related article on Covid19 advice for landlords and tenants on approaches to coronavirus issues and practical points to remember.

Contact

Mark McEvinney, Senior Solicitor E: mme@bto.co.uk T: 0141 225 5275

Also see: Commercial Leasing: A Practical Guide for Landlord and Tenant Amidst Covid-19