23 September 2011
The Long Leases (Scotland) Bill published in the Programme for Government 2011-2012 is the final part of a series of recent legislative reforms intended to modernise the system of property law in Scotland.
The purpose of the Bill is to implement the recommendations of the Scottish Law Commission in its report entitled ‘Conversion of Long Leases’ (SLC 2006).
Crucially, once this Bill is enacted, ultra-long Scottish leases will be automatically converted to outright ownership on ‘the appointed day’. An ultra-long lease is defined under the Bill as a registered lease of over 175 years that has more than 100 years left to run.
Unless the tenant opts-out, conversion of qualifying leases will be automatic. The ‘appointed day’ will be?Whitsunday (28 May) or Martinmas (28 November) on or after the day two years after the day the Bill comes into force.
The main policy rationale for the Bill is that a tenant’s right under an ultra-long lease is analogous to a right of ownership and so the Bill provides for such a right to be converted. This is matched with compensation for the former landlord based on the annual rent payable under the lease in question, where the landlord submits a claim.
The Bill also permits certain conditions contained in ultra-long leases to be converted to real burdens in the title deeds. Another key proposal of the Bill is the opportunity for former landlords to preserve sporting rights to game and freshwater fishing where applicable.
Leases excluded from the scope of the conversion scheme include: Leases of minerals; Leases with an annual rent greater than £100; Leases of land for providing access to electricity cables and water/gas pipes.
The Scottish Government estimates there are around 9000 leases that may qualify for conversion in Scotland. The SLC report indicates ultra-long leases in Alva, Ardrossan, Saltcoats, Stevenston and Wishaw.
Landlords and tenants who may be affected by the Long Leases (Scotland) Bill should seek legal advice as to its implications and their respective positions under the new legislation.