Aspects of Leases – Tenancy of Shops

Tenancy of Shops (Scotland) Act 1949

Commissioner

David Bartos

Team Members

Julie Bain, Project Manager
Julia Lopatka, Legal Assistant

Latest news

On 18 February 2025 the Commission published its Report on Aspects of Leases: Tenancy of Shops (Scotland) Act 1949 (SLC No 267). A Business and Regulatory Impact Assessment, executive summary and news release are also available. 

The 1949 Act

The Tenancy of Shops (Scotland) Act 1949 applies when leases to retail, food and drink hospitality (including pubs and possibly restaurants), or hair and (possibly) beauty businesses expire. It is also relevant for leases of wholesale units and warehouses. The 1949 Act gives most tenants of such leases a limited right to seek renewal of the lease.
Originally intended as a temporary measure to assist small shopkeepers threatened with the closure of their businesses, as a result of the prevailing shortage of commercial property in the aftermath of World War II, the idea behind the Act was to allow those tenants to obtain additional time to relocate in order to avoid being forced out of business altogether. Against the background of unaffordable rents caused by urban renewal and concerns over the shortness of the standard 40-day notice to quit period, the Act was made permanent in 1964.

Nowadays, the Act is rarely used. When it is used, stakeholders have informed us that it is not operating as Parliament had intended. Use of the Act by small shopkeepers appears to be virtually non-existent. Instead, we have been made aware of some large retail tenants employing the threat of renewal under the Act to extract favourable terms from their landlords during renewal negotiations. The test for renewal has been criticised as vague and productive of uncertainty. Finally, and not least, it has been suggested that the commercial environment for retail lets has changed so materially since 1964 that the Act has become unnecessary. In summary, the Act is outdated, ineffective and unfit for the modern commercial market.

Background to the project

Accordingly, in our Discussion Paper on Aspects of Leases: Termination (Scot Law Com No 165) we asked whether the Act should be repealed. Although a significant majority of respondents were in favour of repeal, we concluded that further work had to be done before any recommendations on the future of the 1949 Act could be made. Hence, in our Report on Aspects of Leases: Termination (Scot Law Com No 260) we stated that further consultation would be necessary to establish the most appropriate route forward.

The Report and its Implementation

Following that report we carried out a further review of the Act and consulted on proposals for its reform or replacement in addition to the option of repeal. Views on these options were invited in our Discussion Paper on Aspects of Leases: Tenancy of Shops (Scotland) Act 1949 (Scot Law Com No 177) which was published on 30 April 2024. We are very grateful to all those who responded. The feedback received was both valuable and varied and had helped us to formulate our policy and the recommendation of the Report, namely to repeal the 1949 Act.

We hope that the Scottish Government will take forward this recommendation by means of the lodging of an amendment to the Leases (Automatic Continuation etc) (Scotland) Bill. The aim of that Bill is to implement the recommendations of our Report No. 260.

Transparency Statement

David Bartos had a connection to this project by reason of his wife having been the landlord of one small high-street style shop until September 2023. However, he has applied the objective test for an interest under section 5.5 of the Code of Conduct for Scottish Law Commissioners (June 2022 version). Having done so and consulted the Standards Commission for Scotland, he does not consider that he has an interest to declare in the project which would prevent him from participating in it. This is because:

• any recommendations from the project would not in themselves produce a change in the law, but would require to be made law by the Scottish Parliament after debate;
• the decisions taken and recommendations made as part of the project are informed by the responses to consultations carried out by the Commission obtaining views from a wide range of stakeholders; and
• there is no likelihood of his wife standing to benefit from such recommendations in the near future.

Contact

We are always keen to engage with stakeholders who may be affected by or have an interest in the subject matter of this project. We would be happy to hear from anyone who wishes to contribute their ideas or views.

For further information, please contact Julie Bain at info@scotlawcom.gov.uk.