Scottish and English property laws have always retained a unique and separate character, but this process has accelerated since the Scottish Parliament assumed responsibility for land law in 1999 – with implications for both commercial property and domestic conveyancing.
The most important differences between property law in Scotland and England in terms of procedures and terminology are as follows.
Buying a house in Scotland process
Outright ownership – equivalent to ‘freehold’ in England – is known as ‘heritable title’
A contract is established through a series of formal solicitors’ letters known as ‘missives’. These missives are replied to with counter offers known as “qualified acceptance”.
There is no second stage of this process equivalent to ‘exchange of contract’ and a binding contract is reached upon acceptance of all points in a missive letter.
Missive letters may also contain ‘suspensive conditions’, conditions which, if not met, allow for automatic termination of the contracts. The most common example is an adverse survey.
The full purchase price is usually paid at completion with no deposit paid before this point without explicit agreement.
The missive process does not occur in most commercial transactions, with an initial offer issued in draft form and adjusted through negotiation rather than through formal exchange of letters.
There is no equivalent of the English Landlord and Tenant Acts covering certain aspects of commercial lease in Scotland.
There is generally no right to renew beyond the period of lease in Scotland and generally there is no security of tenure beyond the period of the lease contained in the contract with the exception of certain limited rights in relation to the tenants of retail premises. If termination is not served within the correct timescale however, tenants are entitled to 12 months continuation at existing terms.
Scottish leases cannot be granted for more than 175 years (20 years for residential properties).
Under Scottish law a lease is automatically terminated if the property let by the lease is destroyed or damaged sufficiently to render the property useless
Tenants are not entitled to any compensation for improvements made to the property at the end of a lease unless explicit contractual provision has been made for this.
In Scotland where a tenant assigns its interest in a lease the assignee takes its place and becomes the tenant, and the original tenant has no responsibility to the landlord after the date of assignation. Traditionally in England the first tenant will continue to have a contingent liability to the landlord during the whole period of the lease
Commercial Energy Performance
New energy efficiency regulations came into force in Scotland in Autumn 2016, which significantly affect the commercial lease of properties.
If you own a commercial building you must publicly and prominently display an Energy Performance Certificate demonstrating how energy efficient your building is using grades from A to G, if:
the total floor area is above 500 square meters
the building is regularly visited by the public
an EPC has already been produced for the building’s sale, rental or construction.
You must have an EPC if you rent out or sell the premises and you will be fined up to £5000 if you do not make an EPC available to any prospective buyer or tenant.
Additional regulations came into force in Scotland in September 2016 under Section 63 of the 2009 Climate Change Act, designed to improve energy efficiency and triggered by the sale or lease to a new tenant of the property.
In addition to existing Energy Performance Certification building owners must prepare a Section 63 Action Plan setting out targets for energy and emission savings and detailing what physical improvements are planned to improve energy efficient, and the timescales involved.
As with an traditional EPC for commercial property, the Action Plan must be made available to prospective buyers or tenants and provided to new owners or tenants.