Conversion of ultra-long Leases to Ownership: The Application Process

Under the Long Leases (Scotland) Act 2012, as from 28 November 2015, tenants under qualifying long leases became the outright owner of the leased property, generally without payment to the current owner.

There are some exceptions, but a qualifying lease must:

• be registered in the Land Register of Scotland or Register of Sasines;
• have a term of over 175 years - and in relation to a private dwelling house have at least 100 years run and for all other properties at least 175 years left to run;
• and have an annual rent of £100 or less.

For further commentary on the Act and on qualifying leases and exceptions, please see our previous Public Law article.

The Registers of Scotland do not automatically update affected titles, and formal application needs to be made to the Registers to reflect a conversion.

The relevant application for qualifying leases which are registered in the Land Register is a ‘Notification of Inaccuracy in the Register’. This application notifies the Registers that the Land Register Title Sheet is not up to date, and needs to be amended to show the holder of the former long leasehold interest as the new outright owner.

In updating the Title Sheet, the Registers will carry forward all existing title conditions to the new title, and if there are any other conditions specific to the lease (other than payment of rent) those will also be disclosed on the new Title Sheet as title conditions, even though they may no longer be enforceable.

If there are additional rights included within the lease which are not already included on the Title Sheet, and which the Act has converted into servitude rights (easements), those must be specifically referenced when the application is submitted. These would include, for example, rights of access.

If the qualifying lease is registered in the Register of Sasines, the tenant can seek voluntary Land Registration of the plot it now, following a conversion, owns in the Land Register.

CMS’ Scottish Real Estate Team worked closely with the Registers in completing our first application on behalf of a long standing investment client for conversion of a long lease to ownership. Our application was the first application to be successfully processed in Scotland, giving us first-hand experience of the procedures and points to look out for.

If you think your organisation has a qualifying lease, and you would like to discuss this further, our Team would be delighted to assist.