Full ownership rights for tenants in ultra-long leases.
Tenants with leases over 175 years long will now become owners of their property as a result of legislation coming into force tomorrow.
The Long Leases (Scotland) Act 2012 simplifies property law, converting virtual ownership into actual ownership for tenants of ultra-long leases.
The legislation, which completes a series of Scottish property law reforms, will affect around 9,000 ultra-long leases in Scotland. Most last for 999 years but periods vary and the leases can be up to 1 million years long.
Minister for Community Safety and Legal Affairs, Paul Wheelhouse, said:
"Until now, the law around ultra-long leases has been complicated and cumbersome, despite tenants being really the owner in all but name.
"That's why I am delighted this legislation will make life easier for tenants and protects them from unacceptable conditions on their property.
"The changes help lenders and solicitors who might be unfamiliar with ultra-long leases, which are relatively rare. The legislation also contains provision for landlords to be properly compensated by tenants for the changes coming into force on Saturday.
"This is the last of a series of reforms recommended by the Scottish Law Commission aimed at simplifying, updating and improving our property law."
The 2012 Act comes into force on Saturday 28 November, when the ultra-long leases will convert to full ownership. This is Martinmas, one of the traditional term days in Scotland when rent would be collected.
Tenants have been able to opt out of the changes if they do not want ownership of the property.
The new law also covers some leases which last for shorter periods, like 99 years, but are perpetually renewable.
More information is available from the Scottish Government's website: http://www.gov.scot/Topics/Justice/law/17975/LongLeases
Under the 2012 Act, leases will convert to ownership if they are of more than 175 years and:
• Have more than 175 years to run on 28 November 2015 – non-residential leases
• Have more than 100 years to run on 28 November 2015 – residential leases
Leases do not convert to ownership under the Act where the annual rent is more than £100.
Where a lease is converted into ownership the tenant may need to make compensation and additional payments to the landlord. In most cases compensation will be very low, as annual rent is very low, typically under £5 a year.
The 2012 Act followed a report by the Scottish Law Commission: http://www.scotlawcom.gov.uk/files/7412/7989/6621/rep204.pdf It is one of a series of reports by the Commission on property law, which included work on the abolition of feudal tenure and on clarifying the law in relation to tenements and title conditions.
Section 67 of the Abolition of Feudal Tenure etc. (Scotland) Act 2000 makes provision so that leases entered into now may not last longer than 175 years.
Some areas of Scotland have more ultra-long leases than others. Work by the Scottish Law Commission highlighted particular numbers of the leases in Alva, Ardrossan, Saltcoats, Stevenston and Wishaw.