Upper Tribunal finds tacit relocation did not apply to assured tenancy after dispute over required termination notice period

Appellants Nicola and Mark Brown sought recovery of possession of subjects from respondent Louise Lead, who argued that the tenancy agreement had varied the required notice period from 40 days to 2 months. The FTS agreed with this argument, but the appellants contended that properly construed, the 2-month notice clause was a break clause distinct from terminating a lease at its ish.

The appeal was heard by Sheriff George Jamieson, with Anderson, advocate, appearing for the appellants and Barbour, advocate, for the respondent.

Misunderstood the concept

In October 2013, the parties entered into a short assured tenancy with an initial term running from 1 November 2013 to 1 May 2014. Following the end of this initial term, the tenancy initially continued by tacit relocation. A clause in the tenancy agreement provided that the landlord “may” end the tenancy by giving the tenant no fewer than two months’ notice where the notice started on a rent due date and ended no later than the last day of the fixed term. While “rent due date” was not defined, the rent was stated to be payable on the second day of each month.

On 26 October 2023, the appellants served a notice to quit on the respondent that identified 9 December 2023, a date short of the two-month notice period, as the termination date. The ground relied upon by the appellants was Ground 1A (landlord’s financial hardship intended to be alleviated by occupying the let property) a temporary provision introduced by the Cost of Living (Tenant Protection) (Scotland) Act 2022 saved for the present proceedings by virtue of the notice being served before the 2022 Act provisions expired on 1 April 2024.

The FTS characterised the issue in dispute as whether a valid notice to quit had been served. It considered that the standard 40-day notice period had been varied by the 2-month period stipulated in the tenancy agreement. The tenancy accordingly remained a contractual assured tenancy rather than a statutory one, and Ground 1A did not reply.

For the appellants it was submitted that the FTS had misunderstood the concept of tacit relocation and instead concerned itself with whether a termination provision in the lease had been properly implemented. The question was not whether the lease had been formally terminated, but whether the circumstances as a whole were such as to exclude tacit relocation. The FTS ought to have held that the notice to quit was sufficient to exclude the doctrine past the ish date of 9 December 2023.

Distinction in law

In his decision, Sheriff Jamieson said of whether the notice period had been varied: “The notice provisions in the tenancy agreement are not stated to be the only grounds for terminating the tenancy. Both the landlord and tenant were permitted to give notice to the other to end the tenancy on giving not less than two months’ notice starting on a rent due date (the 2nd day of a month), which is consistent with the type of mutual break provision referred to in paragraphs 10.1 and 10.2 of McAllister, The Scottish Law of Leases, 5th edition.”

He added: “The landlord notice provision does not expressly stipulate that it is a variation of the notice period required for a notice to quit. A notice to quit terminates a tenancy at its ish. Provision (a) says nothing about terminating the lease at its ish or the period for a notice to quit. As McAllister makes plain, a lease can terminate earlier, under a break clause, and this termination of a lease is distinct from terminating a lease at its ish.”

Considering whether the leading case on tacit relocation, Rockford Trilogy Ltd v NCR Ltd (2022) could apply to residential leases, the sheriff said: “I can see no basis for limiting this principle only to commercial leases as suggested by Ms Barbour. If a distinction can, in law, be drawn between terminating a tenancy (such at its ish by a notice to quit in valid form), and the renewal of a tenancy by tacit relocation, then those distinctions are to my mind equally applicable to both types of tenancy. This may be unsatisfactory, but no legislative amendment has been made to remedy this situation, and I must therefore apply the law as it stands.”

He went on to say: “I am not persuaded by Ms Barbour’s argument that Rockford Trilogy falls to be distinguished because of the terms of section 112(1) of the Rent (Scotland) Act 1984 requiring a written notice to quit in the case of dwellinghouses. This formality attaches to the manner in which a tenancy of a dwellinghouse is terminated at its ish. It does not deal with the separate principle of how a lease may be renewed by tacit relocation. Section 112(1) does not therefore assist the Respondent in connection with the issue of the interruption of tacit relocation in this case.”

Sheriff Jamieson concluded: “Esto the period of notice had been varied to two months, the facts and circumstances of the case were such to exclude tacit relocation in any event. In either situation, the contractual tenancy was brought to an end, a statutory tenancy was created, and the Appellants were entitled to apply for an order for possession under Ground 1A.”

The UTS therefore allowed the appeal and remitted the case to the FTS to decide on the ground of possession and the reasonableness of making an order. The FTS was further directed to find in fact and law that tacit relocation had ceased to operate in respect of the contractual assured tenancy.