Scottish Law Commission’s Report on the Tenancy of Shops (Scotland) Act 1949

The Scottish Law Commission (SLC) has published their report on The Tenancy of Shops (Scotland) Act 1949, recommending the Act be repealed without statutory replacement.

The report marks the conclusion of the SLC’s review of commercial leasing laws in Scotland, having previously labelled the Act outdated and unfit for purpose. The SLC has been considering whether the Act should be reformed, replaced (e.g. with a mandatory notice scheme) or repealed. The SLC recommended that the Act be repealed in full and without replacement, suggesting that is the only realistic option for legal reform.

The Act was introduced in 1949 to protect local shopkeepers – predominantly small or independent retail businesses - operating in difficult economic circumstances after World War II. It provides certain retail tenants with a right to apply to the court to renew their lease where a landlord has served a notice to terminate and refused to extend the lease.

The retail landscape has changed considerably since the Act was introduced, marked by the emergence of large or national retailers and supermarkets, operating from retail parks and department stores.

Today, the Act is rarely applied by tenants (not least successfully), and has come under significant criticism for its lack of clarity and legal certainty, in particular for its broad and unclear use of the term “shop” within the Act. The Act also creates an unhelpful distinction between the rules for retail leases and those for other commercial premises such as offices, industrial or leisure facilities. 

In consultation with retailers, legal and other professionals, the SLC found there to be little support for replacement or reform of the Act. Reform of the Act ran the risk of increased complexity to commercial leasing rules. Replacement would continue a system of different rules for different kinds of commercial leases, which was also seen to be undesirable.

The SLC concluded that the arguments in favour of simple repeal of the Act were strongest. This would leave all commercial leases in Scotland subject to the general body of existing law in Scotland, creating a clearer and simpler legal position for tenants. This goes hand in hand with the SLC’s earlier proposals to create a statutory framework for terminating commercial leases in Scotland (you can read more about this in our previous Law-Now article here).

We will watch with interest to see if the SLC’s recommendations are taken forward by the Scottish Government. In the meantime, if you require assistance in relation to termination of a lease in Scotland, please reach out to the CMS Scotland Real Estate Team and we will be happy to assist and advise you. 

Article co-authored by Daisy Sewell, Trainee Solicitor at CMS.