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SCOTTISH LAW COMMISSION

Report on Conversion of Long Leases

Laid before the Scottish Parliament by the Scottish Ministers under section 3(2) of the Law Commissions Act 1965

December 2006

SCOT LAW COM No 204

SE/2006/238

EDINBURGH: The Stationery Office

£xx

This publication (excluding the Scottish Law Commission logo) may be re-used free of charge in any format or medium for research for non-commercial purposes, private study or for internal circulation within an organisation. This is subject to it being re-used accurately and not used in a misleading context. The material must be acknowledged as Crown copyright and the title of the publication specified.

For any other use of this material please apply for a Click-Use Licence for core material from the Office of Public Sector Information (OPSI) website: www.opsi.gov.uk/click-use/index.htm. Telephone enquiries about Click-Use Licences should be made to OPSI, Tel: 01603 621000.

The Scottish Law Commission was set up by section 2 of the Law Commissions Act 1965^[1] for the purpose of promoting the reform of the law of Scotland. The Commissioners are:

The Honourable Lord Eassie, Chairman

Professor George L Gretton

Professor Gerard Maher, QC

Professor Joseph M Thomson

Mr Colin J Tyre, QC.

The Chief Executive of the Commission is Mr Michael Lugton. Its offices are at 140 Causewayside, Edinburgh EH9 1PR.

Tel: 0131 668 2131

Fax: 0131 662 4900

Email: [email protected]

Or via our website at www.scotlawcom.gov.uk – select "Contact"

NOTES

1. For those wishing further copies of this paper it may be downloaded from our website or purchased from TSO Scotland Bookshop.
2. If you have any difficulty in reading this document, please contact us and we will do our best to assist. You may wish to note that an accessible electronic version of this document is available on our website.

SCOTTISH LAW COMMISSION

Item No 1 of our Seventh Programme of Law Reform

Report on Conversion of Long Leases

To: Ms Cathy Jamieson MSP, Minister for Justice

We have the honour to submit to the Scottish Ministers our Report on Conversion of Long Leases.

(Signed) RONALD D MACKAY, Chairman

GEORGE L GRETTON

GERARD MAHER

JOSEPH M THOMSON

COLIN TYRE

Michael Lugton, Chief Executive

6 November 2006

Contents

	Para
Part 1 Introduction	Part 1
Background	1.1
Empirical work	1.4
What is a long lease?	1.5
Earlier conversion schemes	1.8
Our recommendations in summary	1.10
Which Parliament?	1.12
Part 2 Qualifying leases	Part 2
The case for conversion	2.1
Qualifying duration	2.13
Initial term	2.13
Unexpired duration	2.16
Computation of duration	2.22
Renewals	2.23
Breaks	2.27
Leases for life	2.29
Recommendation	2.30
Lease as a registered real right	2.31
Exempt leases	2.32
Type of property	2.33
Minerals	2.34
Inalienable property	2.36
Nature of landlord	2.39
Date of lease	2.40
Rent	2.41
Existing conversion schemes	2.43
Recommendation	2.44
Leases and subleases	2.45
Part 3 Conversion	Part 3
Voluntary or compulsory?	3.1
Compulsion	3.1
Exemption	3.4
One day or many?	3.9
From lease to ownership	3.14
Introduction	3.14
Transfer from landlord to tenant	3.15
Conferral of ownership on tenant	3.19
Conversion of lease to ownership	3.20
Evaluation	3.22
Extinction of landlord's interest and of intermediate leases	3.23
Real rights and conditions of the lease	3.25
Real rights	3.25
Conditions of the lease	3.27
Recommendation	3.30
Reservations and pertinents	3.31
Servitudes	3.34
Leases without tenants	3.42
Part 4 From leasehold conditions to real burdens	Part 4
Introduction	4.1
Qualifying conditions	4.3
Introduction	4.3
Enforceable against successors	4.4
Of the nature of a real burden	4.5
Some exclusions	4.6
Pre-emptions	4.12
Implied terms	4.13
Inversion of possession	4.14
Recommendation	4.17
Constitutive deeds	4.18
Qualifying lease	4.19
Superior leases	4.20
Variations	4.25
Assignations and deeds of condition	4.26
Recommendation	4.27
Conversion in outline	4.28
Facility burdens	4.30
Further special cases	4.34
Service burdens	4.35
Manager burdens	4.36
Conservation burdens	4.37
Personal pre-emption burdens and personal redemption burdens	4.38
Economic development burdens	4.39
Health care burdens	4.40
Recommendation	4.41
Other conditions: the position of landlords	4.42
Conversion by nomination of benefited property	4.42
Conversion by agreement	4.48
Other conditions: the position of third parties	4.49
Introduction	4.49
Express rights	4.50
Implied rights: common schemes	4.52
Implied rights: partial assignations	4.53
Recommendation	4.55
Conditions reserving development value	4.56
Prior variation or extinction of conditions	4.57
One choice	4.58
Notices	4.60
Service	4.60
Separate notices and combined notices	4.62
Recommendation	4.63
Registration	4.64
Invalidity	4.66
Introduction	4.66
Applications to the Lands Tribunal	4.67
Application for rectification	4.69
Challenge to the burden itself	4.70
Conditions affecting the landlord or third party	4.71
Conditions enforceable contractually	4.74
Part 5 Minerals and sporting rights	Part 5
Introduction	5.1
Reservations of minerals	5.3
Sporting rights	5.7
Reservations of sporting rights	5.10
Preservation: in principle	5.13
Preservation: a scheme in outline	5.15
Content of preserved right	5.18
Freshwater fish	5.19
Game	5.20
Exclusivity	5.22
Recommendation	5.23
Part 6 Compensation	Part 6
Introduction	6.1
Compensatory payment	6.3
Basis of calculation	6.3
Non-monetary rents and royalty rents	6.9
Cumulo rent	6.11
Partially continuing leases	6.15
Recommendation	6.16
Compensation due only where claimed	6.17
Renewal premiums	6.22
Allocation of premiums	6.26
Additional payment: grounds	6.28
Introduction	6.28
Non-monetary rents	6.29
Rent review	6.30
Rent increase	6.31
Renewal premiums exceeding £100	6.32
Residual value of reversionary interest	6.33
Early termination	6.34
Right to development value	6.36
Recommendation	6.38
Additional payment: amount	6.39
Procedure	6.39
Matters to be taken into account	6.40
Valuation of reversionary interest	6.43
Capping of claim for development value	6.45
Date of valuation	6.46
Recommendation	6.47
Claims in excess of £500	6.48
Intermediate leases	6.52
Crystallisation of liability	6.56
Time scale	6.63
Enforcement	6.64
Payment by instalments	6.65
Service	6.70
Negative prescription	6.74
Unpaid rent	6.75
Leasehold casualties	6.76
Part 7 Notices of exemption	Part 7
Introduction	7.1
Exemption	7.2
Publicity	7.2
Tenant under the qualifying lease	7.3
Notice	7.4
Service	7.5
Registration	7.6
Effect	7.7
Sublease of an exempt lease	7.8
Recommendation	7.9
Recall	7.10
Introduction	7.10
Notice of recall	7.11
Unexpired duration exceeding 100 years	7.12
Effect	7.13
Recommendation	7.15
Part 8 Miscellaneous topics	Part 8
Updating the Land Register	8.1
Notices: evaluation for registration	8.9
Unregistered leases	8.14
Stamp Duty Land Tax	8.19
Recommendation	8.25
Translation	8.27
Part 9 Residential ground leases	Part 9
Introduction	9.1
Protection of tenants	9.6
The case for protection	9.8
Loss of a home	9.8
Absence of alternative accommodation	9.10
Comparison with other leases	9.11
No compensation for improvements	9.12
The case against protection	9.13
Justified expectations	9.14
Previous opportunity	9.16
Cost to the tenant	9.17
Escalation of compensation for voluntary conversions	9.20
Results of consultation	9.21
Evaluation	9.25
Part 10 List of recommendations	Part 10
Appendix A: Draft Long Leases (Scotland) Bill	A
Appendix B: List of those who submitted written comments on Discussion Paper No 112	B
Appendix C: Survey of Long Leases	C
Appendix D: Clauses extracted from a 999 year lease of land in Wishaw granted in 1901	D

Abbreviations

1954 Act

Long Leases (Scotland) Act 1954

1967 Act

Leasehold Reform Act 1967

2000 Act

Abolition of Feudal Tenure etc. (Scotland) Act 2000

Gordon, Scottish Land Law

W M Gordon, Scottish Land Law (2^nd edn) (Edinburgh, 1999)

Guthrie Report

Scottish Home Department, Report of the Scottish Leases Committee (chaired by Lord Guthrie) (1952, Cmd 8656)

Hunter, Landlord and Tenant

Robert Hunter, A Treatise on the Law of Landlord and Tenant (3^rd edn, 1860)

Paton & Cameron, Landlord and Tenant

G C H Paton and J G S Cameron, The Law of Landlord and Tenant in Scotland (Edinburgh, 1967)

Rankine, Leases

J Rankine, The Law of Leases in Scotland (3^rd edn) (Edinburgh, 1916)

Reid, Property

Kenneth G C Reid et al, The Law of Property in Scotland (Edinburgh, 1996)

Scot Law Com DP No 112

Scottish Law Commission, Discussion Paper on Conversion of Long Leases (Scot Law Com DP No 112) (2001)

Scot Law Com No 165

Scottish Law Commission, Report on Leasehold Casualties (Scot Law Com No 165) (1998)

Scot Law Com No 168

Scottish Law Commission, Report on Abolition of the Feudal System (Scot Law Com No 168) (1999)

Scot Law Com No 181

Scottish Law Commission, Report on Real Burdens (Scot Law Com No 181) (2000)

Stair Memorial Encyclopaedia

Stair Memorial Encyclopaedia: The Laws of Scotland (25 vols, Edinburgh 1986-95)

Note 1   Amended by the Scotland Act 1998 (Consequential Modifications) (No 2) Order 1999 (SI 1999/1820).    [Back]