Commercial Property For Rent Scotland

 While the recent political unrest may have sparked fears for certain sectors, Scotland’s commercial leasing market remains robust. The country offers a range of office and industrial solutions for rent around the main cities.

In Scotland, the law of commercial leases is based on common law rather than statute. While the law is similar to that of England, there are some key differences.

1. Supply and Demand

Despite political uncertainty, commercial property investment continues to attract investors. However, it is predicted that a lack of new-build Grade A office space could lead to rising rents. In addition, a drop in tourist numbers may negatively impact high street retail and consumer confidence.

According to the latest RICS Commercial Property Monitor, occupier demand remained flat in Q2 2023. Office and industrial sectors showed some signs of improvement but retail continued to be a challenge.

Dundee Property Management, Office space is increasingly viewed as a key asset for employers, especially in the technology sector. The building a company chooses to rent can be a major factor in employee satisfaction and recruitment. Companies can also use their offices to demonstrate environmental commitment. For example, a recent office development at 177 Bothwell Street in Glasgow features a rooftop running track and sources all its energy from renewables. These features are designed to support employee health and wellbeing. They also enhance the sustainability of a building and contribute to a sense of place in the city.

2. Rents

Despite the recent political unrest that has unsettled many sectors, the Scottish commercial property market appears to be holding steady. Several factors are contributing to this.

Unlike residential leases, which can be formally agreed between the parties by signing contracts, commercial property contracts are normally exchanged via solicitors’ missives. The missives comprise an Offer to Lease issued by the landlord’s solicitors and an Acceptance of the lease from the tenant’s.

The agreement will usually include a 'permitted use of the premises' clause that lists the purposes for which you can rent the space. This is important because you cannot sublet or assign your lease without the landlord’s consent.

At common law, substantial destruction of leased property may result in the termination of the lease but statutory intervention is rare for other types of lease. A good survey of the property will help you identify potential problems before committing to a lease. If you are leasing the property as a limited company, you can ask for a moratorium on your rent arrears which will give you a breathing space to work out a payment plan.

3. Taxes

Getting to grips with the complexities of commercial property tax can make all the difference in the success of an investment. That’s why investors should seek expert guidance before making any decisions in this area.

In Scotland, LBTT (Land and Buildings Transaction Tax) is payable on the acquisition of land and buildings. LBTT replaced SDLT in Scotland on 1 April 2015 and is based closely on its UK-wide counterpart.

Individuals letting commercial property are subject to income tax on their rental income, and deductions are available. Non-resident landlords are subject to a 20% withholding tax on rents paid to them, unless they apply to HMRC under the non-resident landlord scheme for relief from this liability. Shares in companies that own commercial property are typically acquired tax-free, but if the shares are transferred to a non-UK resident individual or a settlor-interested trust, taxable attribution of profits may arise. This will usually be at the marginal rate of the investor.

4. Leases

For those familiar with commercial property leasing in England, the process in Scotland may differ slightly. As such, it is important to seek expert advice on Scottish property law.

In Scotland, it is common practice for the terms of a lease to be agreed through an exchange of letters (known as missives) between the solicitors for each party. A draft form of lease will usually be attached alongside the letter of offer.

Property Management Dundee, It should be noted that the lease will usually contain a clause which excludes automatic renewal. Essentially, assuming that the minimum notice periods have been met, a commercial lease in Scotland will end when the agreement ends.

However, there are limited statutory protections for tenants against forfeiture which cannot be contracted out of. It is therefore worth reading the lease carefully to understand your rights and duties. The lease will also dictate what uses the property can be put to. Any use that is not on the list will need to be authorised by the landlord.