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I might ask the legal team about that.

I will pass the question to Michael, to talk about the technicalities.

My understanding is that codification will simplify things by bringing into legislation all the legal principles of tacit relocation. It is a technical legal question, which I will pass over to Michael Paparakis to expand on, given his expertise.

As I said in my opening speech, the law of termination of leases needs reform because it is inaccessible, uncertain and outdated. The SLC considered the case for reform by consulting advisory groups, issuing a small discussion paper and engaging with the legal profession, landlords and small businesses.

The evidence that the committee has heard shows that legal professionals, the Faculty of Advocates and the Law Society of Scotland have all agreed that reform of some kind is needed. The Law Society, for instance, was clear that there is sufficient litigation and confusion in the area to justify reform for the advantage of tenants and landlords. In Scots law currently, commercial leases are principally agreed and governed by common law rules. When the law is not clear or readily accessible, that can result in unnecessary costs to the tenant and the landlord. Current legalities can cause difficulty for the landlord and the tenant, and resolving those can result in the expense of court proceedings. The bill is looking to simplify and improve that for the tenant and the landlord.

On the economic impact of the bill, I believe that it will have some economic benefit. Most businesses, whether they are small or large, from manufacturing through to professional services, retail, digital start-ups and the hospitality sector, operate to some extent out of let premises. Let premises make up 44 per cent of all non-domestic premises that pay rates, and the rateable value from those premises comes to £2.6 billion pounds. Making the law more certain and accessible can only benefit both tenants and landlords.

The issue of adding a bit more flexibility between the tenant and the landlord has been raised by a few people. It is an interesting suggestion, which we could explore moving forward. I do not know whether there would be any legal or technical obstacles to that. Michael might want to comment on that.

I do not have any information on that, because it is technical. I will pass the question to Lori Pidgeon or Michael Paparakis.

Good morning. The Leases (Automatic Continuation etc) (Scotland) Bill will implement recommendations that the Scottish Law Commission made in 2022 to reform aspects of the Scots law of commercial leases. This is the fourth SLC bill in the current parliamentary session and a fifth, which is on contract law, was recently announced in the programme for government, demonstrating our commitment to law reform.

Most businesses, large or small, operate from let premises, at least to some extent, and the relationship between landlord and tenant is crucial to commercial life in this country. It is important that the law that governs that relationship functions effectively, so the bill aims to improve, simplify and update aspects of the Scots law of commercial leases so that it meets the needs of a modern Scottish economy.

The bill’s principal purpose is to reform the current law of tacit relocation. That is the process whereby a lease continues automatically after its termination date unless one party gives notice to the other that it will come to an end or both parties agree at the time that it will come to an end.

I have listened to the evidence of stakeholders, including those who have questioned the need for reform in the area and others who have suggested that the bill might need to be rewritten. I do not agree with the latter view. As far back as 2010, the SLC was approached by practitioners and solicitors in the area who said that the law should be reformed because it was uncertain and was acting as a deterrent to commercial property investment. The SLC’s project sets out clearly that the law of termination of commercial leases is inaccessible, uncertain and outdated and why that is so. Representative bodies of Scottish small businesses and landlords have welcomed the bill and are supportive of it. No doubt we will discuss that further in today’s meeting.

All that aside, however, a number of technical issues have come up during stage 1 evidence. I have worked constructively with the committee on previous SLC bills and I will continue to do so as this bill progresses. I look forward to answering the committee’s questions.

I will pass over to Michael Paparakis or Lori Pidgeon, because that is a technical issue.

We will look into it and I will write to the committee with that information.

The new law is intended to replace the pre-commencement law underlying a lease, including any implied terms. It is not intended to validate or invalidate the arrangements that the parties have expressed in their lease, as paragraphs 8 and 10 of schedule 2 make clear.

Any express lease terms that are carefully negotiated by the parties will be unaffected by any provisions in the bill coming into force. For example, if a lease has an express term providing for a three-week period of notice for a lease that is longer than six months, that period will continue to be valid, notwithstanding the fact that the bill provides for a minimum period of 28 days.

The alternative that has been suggested by some stakeholders is to apply the new law to leases that are entered into after the coming into force of any other provision, but that would mean that one kind of complexity would be replaced by another. For instance, if the new law were to apply only to new leases, then, for many years into the future, the current common law would apply only to old leases, and landlords and tenants could encounter difficulties in the future because they do not understand which legal regime applies to their case.

The provisions of the bill will be commenced by regulations, and I will ensure that there is sufficient lead-in time for legal professionals and interested stakeholders to make sure that they have all their affairs in order with regard to this issue.