Ultra-long leases to be converted to ownership in final stage of Scottish property law reforms

The Long Leases (Scotland) Bill completes a programme of property law reform that began with the ending of feudal tenure in 2004. Under the Bill, all eligible ultra-long leases will be converted to ownership on the "appointed day", currently anticipated to be 28 November 2015. Ultra-long leases are those entered into for 175 years or more.

Stewart Stevenson, Scotland's Environment Minister, said that the Bill would simplify land tenure in Scotland.

"Ultra-long leases are so long that the tenant is, in effect, the owner in all but name," he said. "Clarifying the law makes life easier for tenants in ultra-long leases and for lenders and solicitors engaged in transactions relating to the properties. This legislation will simplify property law and convert virtual ownership into actual ownership."

There are currently around 9,000 ultra-long leases in Scotland, according to the Scottish Government, most of which are for 999 years. Two thirds of the properties let under these leases have annual rents of £5 or less.

Eligible ultra-long leases will be converted into ownership on the appointed day, unless the tenant opted out. The Bill's provisions will apply to all properties where the lease has more than 175 years left to run in the case of non-residential properties, or 100 years left to run in the case of residential properties, on the appointed day.

The Bill allows for compensation to be paid to landlords by the tenants in some circumstances, and landlord will also be able to preserve sporting rights in relation to game and fishing where appropriate.

Property law expert Ewan Alexander of Pinsent Masons, the law firm behind Out-Law.com, described the Bill as, in the main, a "sensible tidying-up exercise".

"In the vast majority of cases, this is a sensible tidying-up exercise which will remove some ancient long-leasehold rights and instead covert them to ownership," he said. "This will be welcomed by housebuilders in particular: long-leasehold interests could not be funded and housebuilders could not create title conditions needed to regulate their developments."

"Removing these restrictions would, he said, make those areas of the country where ultra-long leases were common much more open to development.

Stevenson said that the Scottish Government would now concentrate on providing information on the changes to landlords, tenants and their legal representatives, particularly in areas such as Alva, Ardrossan, Blairgowrie, Saltcoats, Stevenson and Wishaw where such leases are common.