Coronavirus: Scottish Parliament to give more protection to commercial tenants

31 March 2020

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Commercial tenants have been given more protection against having their lease terminated because they have not paid their rent on time, following the introduction of the draft Coronavirus (Scotland) Bill today [31st March 2020].

Under existing law, if a tenant did not pay rent (or other monetary sums such as service charge or insurance premiums) on time, the landlord could serve notice of termination if payment was not made within a minimum period. The minimum period provided for in law was 14 days, although some leases allow a little longer.

Under the new rules, from the bill published today and expected to be in force very soon, the minimum period has increased to 14 weeks. This applies even if a notice has already been served.

This will be seen as good news for tenants, and bad news for landlords. Will this help the economy? Yes - because tenants are the people who produce the goods and services we buy, and it is reasonable that we focus on them just now. 

Retailers, restaurants and pubs are struggling. However, should there be more support for, say, Amazon, than a shopkeeper who could not compete with Amazon and let out his property as a café? Not all landlords are large pension funds!

The other question is how much difference it will make. If a landlord terminates a lease on grounds of non-payment of rent, that is an alternate remedy to bringing other action - and the landlord loses the right to sue for losses before the termination. 

That is fine if there is another tenant ready to go in and willing to pay much more rent, but that is not very likely right now.

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