Tacit Relocation: The Scottish peculiarity

What is tacit relocation?

Tacit relocation is the principle where a commercial lease is automatically extended beyond its expiry date if neither party serve notice to terminate it. It creates a default position, which parties can be unaware of its existence and consequences. Generally, where the original lease term was over one year and no notice is served then the lease will continue the same terms and conditions as before — including the rental rate, for a maximum period of one year. 

Issues

In response to the Scottish Law Commission’s (SLC) discussion 2022 paper Aspects of Leases: Termination, the Faculty of Advocates as consultees said that “tacit relocation gives rise to a number of consequential requirements (e.g. notices to quit) which in turn can create complexity, uncertainty, expense”.

Parties and practitioners have described it as unfair and that it creates uncertainty and confusion. At the outset of a lease. parties have agreed a length of term and expect a lease to end and not to be bound for another year — another year of rent and costs for a tenant, and a year without control of the property and ability to manage it can have detrimental consequences.

It is not only the principle in itself that is problematic, but the notice periods. 40 days’ notice can be insufficient for parties to either remove from premises and restore them in accordance with the obligations under the lease, or to find new tenants to avoid any void periods. 

How to avoid tacit relocation?

The Sheriff Courts (Scotland) Act 1907 sets out the notice periods to be given, and the most common are:

1. Premises let for four months or longer — 40 clear days notice.
2. Premises let for less than four months — notice to be 1/3 of the term.
3. Land of more than two acres, let for three years or longer — at least one year and not more than two years’ notice to be given

Is notice the only way?

There has been case law to support that the actings of the parties could prevent the doctrine applying (Rockford Trilogy Limited v NCR Limited (2021), where the court was willing to accept an informal form of notice. However, the risk of potential cost involved with an informal approach and any claim that the lease has not expired will likely deter most from relying on this and instead opt to send formal notice. 

Some suggest that there is an ability to contract out of tacit relocation, but it is unclear if that is correct for commercial leases and, considering the proposed reform, it seems unlikely that contracting out is competent.   

Proposed reform 

The Scottish Law Commission put forward 86 recommendations to simplify and modernise tacit relocation — or what they recommend should be known as the automatic continuation of leases. In 2022 and in January 2025 we saw The Leases (Automatic Continuation etc.) (Scotland) Bill (the Bill) introduced to the Scottish Parliament. 

Some of the recommendations include:

1. allowing parties to contract out;
2. increase notice periods;
3. update legal terminology; and
4. create a statutory code for automatic continuation.

The Bill is currently at Stage 1 and this process is expected to complete in September 2025. It is hoped that the Bill, and ultimately the statute, will support landlords and tenants in the future by making the position on terminating a lease clear. 

In the meantime, advice should be sought on serving notice to terminate a lease and should you need any assistance, please get in touch with our real estate team.