27 Nov 2025
By Donna Kelly-Gilmour, Partner, Commercial Real Estate, Gilson Gray
Introduction
Commercial tenants, landlords and investors across Scotland have been watching closely as the Scottish Parliament considered the Leases (Automatic Continuation etc.) (Scotland) Bill – legislation aimed at reforming how commercial leases continue and come to an end. The proposed changes would have modernised an area of law that many businesses find confusing and outdated. However, the Bill was withdrawn in September 2025. As a result, the existing rules based on the long-standing doctrine of tacit relocation remain in place.
For organisations that rely on clarity and predictability in their leasing arrangements, this development raises important practical questions. What does the withdrawal mean for current leases, future negotiations and risk management? And what other legal changes should commercial property stakeholders be aware of?
What the Bill Aimed to Change
Under current Scots law, a commercial lease can automatically continue – often for a full year – if neither party serves valid notice before the lease’s natural end date. This doctrine of tacit relocation is unique to Scotland and is frequently misunderstood, particularly by businesses operating on both sides of the border.
The Bill would have replaced this with a clearer statutory framework. Continuation would have been for a defined period, notice rules would have been simpler, and responsibilities during the final stages of a lease would have been more predictable. Many regarded the proposals as a long overdue modernisation that would reduce unnecessary disputes and ensure that lease endings occurred by intention rather than default.
Why the Bill Was Withdrawn
The withdrawal reflected the challenge of balancing the interests of commercial landlords and tenants, as well as the practicalities of legislative timing. While many tenants and advisers supported the reforms, some landlords were concerned about losing flexibility or preferred the certainty of the current one-year continuation model. It became evident that the Government required more time to refine the proposals and build wider consensus.
Although the Bill has been withdrawn, stakeholders should not assume the issue has been abandoned entirely. Commercial lease reform remains a recognised area of need, and we may see revised proposals in the years ahead.
What This Means for Landlords and Tenants Now
With the law unchanged, tacit relocation continues to operate exactly as before. This means that failing to serve correct and timely notice can still result in a lease continuing automatically on the same terms – often unintentionally. For landlords planning refurbishment, redevelopment or re-letting, or for tenants intending to relocate or renegotiate terms, this can create significant operational and financial consequences.
Clients should therefore review their existing leases and internal procedures to ensure all critical dates and notice requirements are monitored carefully. A proactive approach reduces the risk of a lease extending unexpectedly and provides greater scope for negotiation well before key milestones arise.
How We Can Help
The commercial leasing landscape in Scotland continues to evolve, even without the expected legislative reform. Ensuring your business remains protected requires a clear understanding of lease obligations, notice periods, negotiation strategies and the wider legal changes affecting the sector.
Our commercial real estate team advises landlords, tenants, developers and investors across Scotland on all aspects of leasing, property transactions and regulatory developments. We can:
Conclusion
Although the withdrawal of the Automatic Continuation Bill means that the traditional rules of tacit relocation remain, the commercial property landscape is still changing in ways that present both risks and opportunities. With careful planning and informed legal advice, businesses can continue to navigate lease arrangements confidently and benefit from emerging developments across the sector.
If you would like tailored advice on your commercial lease portfolio or wish to discuss any of the issues raised above, please get in touch with our team.
Find out more about our Real Estate services here.
