A Bill to amend the existing law on long leases in Scotland has been introduced and is expected to be enacted prior to May 2011.

The provisions of the Bill if enacted will see ultra-long leases of more than 175 years with over 100 years still to run converted into ownership. The Bill also includes provisions on compensatory and additional payments which are payable by tenants to landlords. Some leasehold conditions will subsist but will affect the new title as a real burden. Sporting rights in favour of the landlord can also be preserved.

The provisions of the Bill could have some unwanted implications for rural landlords who have let property on a commercial basis for periods in excess of 175 years.

In situations where the leasehold will be converted into outright ownership, some proactive steps may require to be taken by landlords to preserve any rights or convert conditions into real burdens. Notices requiring payment of compensation will be subject to strict time limits.

The key for landowners and those with interests in such long leases is to consider taking action at an early stage, and to take informed advice.