Leases (Automatic continuation etc.) (Scotland) Bill: child rights and wellbeing impact assessment

Child Rights and Wellbeing Impact Assessment Template

Introduction

1. Brief Summary.

Type of proposal: Bill

Key terms

Tenant – A person who, in terms of a lease, occupies heritable property (generally speaking, land or buildings) belonging to a landlord to whom they pay rent. The occupation of heritable property by a tenant of fishing, shooting or mineral rights is limited to the purposes for which the lease of such rights exists.

Landlord – The party to the contract of lease who grants the lease. Usually this is the owner of heritable property (generally speaking, land or buildings) which is the subject of the lease.

Commercial Lease - A contract under which one person, the landlord, grants to another, the tenant, the right to use heritable property (generally speaking, land or buildings) for a fixed time in return for a regular, periodical payment known as rent.

Litigation - the process of taking legal action.

The Bill implements recommendations of the Scottish Law Commission published in its Report on Aspects of Leases: Termination (“the Report”).^[1] A lease is an agreement under which one party, the landlord, grants to another, the tenant, the right to use land or buildings for a definite period of time in return for regular periodic payments, more often referred to as rent. There are essentially three main types of lease in Scotland: agricultural leases; residential leases; and commercial leases. It is the last category with which the Bill is concerned, although it will also apply to student lets by institutional landlords and holiday lets.

The Scots law of commercial leases is mostly governed by common law rules. Where that law is not clear or readily accessible, this results in unnecessary cost for both landlord and tenant. Aside from monetary cost in terms of legal fees, this can involve delay and hassle for people in charge of a business. Unnecessary disagreements and litigation can occur.

The overall policy aim of the Bill is to improve, simplify and update aspects of the Scots law of commercial leases so that it meets the needs of a modern Scottish economy. Most businesses, large or small, work at least to some extent from places which are rented, entering into leases for a variety of uses - from manufacturing through to professional services, retail, digital start-ups and the hospitality sector - and for widely differing timeframes. They are one of the essential building blocks of the Scottish economy and a key driver of growth and productivity.

A number of changes are made to specific aspects of the Scots law of commercial leases, and more information can be found in the Policy Memorandum and Explanatory Notes accompanying the Bill when it was introduced to the Scottish Parliament.

The policy objectives of the Bill will contribute to the National Outcome on fair work and business, by providing the necessary legislative framework to help make our economy more stable, productive and efficient.^[2]

Start date of proposal’s development: May 2024 (building on earlier Scottish Law Commission consideration)

Start date of CRWIA process: May 2024

2. With reference given to the requirements of the UNCRC (Incorporation) (Scotland) Act 2024, which aspects of the proposal are relevant to children’s rights?

The framework introduced by the Bill does not make any particular provision as regards children, but has the potential to affect any child between the ages of 16 and 18 who has entered into a commercial lease, either as a tenant or as a landlord. The Age of Legal Capacity (Scotland) Act 1991 provides for a general rule, that when reaching 16 a person gains the legal capacity to enter into any transaction. However, certain safeguards allow for transactions to be considered not legally binding if entered into under the age of 18.

If implemented, the Bill will improve, simplify and update aspects of the law of commercial leases, particularly in relation to the circumstances in which leases continue after their termination dates, so that it meets the needs of a modern Scottish economy. For those children who are commercial tenants or landlords (which, anecdotally, we expect will be a small number) the updated law will be more user-friendly, resulting in a better understanding of this area of law.

It is considered that the assessment of the impact of the provisions in the Bill requires consideration of Article 3.1 (the best interests of the child), Article 12.2 (the right to be heard in judicial proceedings) and Article 16.1 (arbitrary or unlawful interference with the child’s home) read with Article 1 of the UNCRC. Provisions in the Bill are not considered to have an impact with respect to any other Articles. The principal legal effect of not extending the Bill’s provisions would be to deny children who are a commercial tenant or landlord access to the modern, updated framework set out in the Bill. The Bill does not alter the kind of transactions that a child may enter into, rather it adds clarity to a type of transaction that a child may enter into, that is, a commercial lease. The Bill also does not compel a child to act as a commercial tenant or landlord.

Overall, under the current legal framework, it is possible for 16 & 17 year olds to enter into a commercial lease. The Bill makes reforms that are aimed at preventing potential misunderstandings and other additional burdens caused by the complexity of the current law.

Figures from an official UK document in 2018^[3] indicated that there were about 450,000 16-24 year olds running smaller businesses in the UK. It has not been possible to disaggregate this information in terms of age any further and not all of these business owners will be renting commercial property. Our expectation from anecdotal evidence is that the numbers of commercial tenants or landlords between the ages of 16 and 18 years of age will be a low number of this small subset.

The Bill applies to student lets by educational institutions and holiday lets which could apply in some cases while a student or tenant is under 18, but as with short lets of under 3 months they are excluded from most of Part 2 of the Bill. This is because those lets are excluded from the rules which the Bill replaces on how leases such as commercial leases continue. As a result, no one will be adversely affected by the introduction of the Bill. Student lets are also defined by reference to regulated institutions who will take into account the best interests of a child under 18 for whom they are responsible. Holidays lets are not used as a permanent home, and the protections in the Bill are proportionate in the circumstances of those engaging in holiday lets.

3. Please provide a summary of the evidence gathered which will be used to inform your decision-making and the content of the proposal.

As mentioned above, figures from an official UK document in 2018 indicated that there were about 450,000 16-24 year olds running smaller businesses in the UK. It has not been possible to disaggregate this information in terms of age any further and not all of these business owners will be renting commercial property. Our expectation though is that the numbers of commercial tenants or landlords between the ages of 16 and 18 years of age will be a low number of this small subset.

4. Further to the evidence described at ‘3’ have you identified any 'gaps' in evidence which may prevent determination of impact? If yes, please provide an explanation of how they will be addressed.

The Bill team will continue to consider the matter as the Bill develops and Parliament scrutinises the provisions however the current evidence which is based on the provisions of the Bill at introduction allows for an assessment of potential impacts to be identified.

5. Analysis of Evidence.

Not applicable.

6. What changes (if any) have been made to the proposal as a result of this assessment?

Not applicable.

Conclusion

7. As a result of the evidence gathered and analysed against all UNCRC requirements, what is the potential overall impact of this proposal on children’s rights?

Neutral.

8. If you have identified a positive impact on children’s rights, please describe below how the proposal will protect, respect, and fulfil children’s rights in Scotland.

Not applicable.

9. If a negative impact has been identified please describe below. Is there a risk this could potentially amount to an incompatibility?

Not applicable.

Mitigation Record

What options have been considered to modify the proposal in order to mitigate negative impact or potential incompatibility issues?

Please summarise mitigation actions taken below

Not applicable.

10. As a result of the evidence gathered and analysed against all wellbeing indicators, will the proposal contribute to the wellbeing of children and young people in Scotland?

Not applicable.

11. How will you communicate to children and young people the impact that the proposal will have on their rights?

This impact assessment will be published by the Scottish Government on its website so those wishing to access it can do so. The impact assessment in so far as is possible has been written in accessible language so those reading it can understand its content. The Scottish Parliament will undertake scrutiny of the Bill proposals, including a call for evidence at stage 1 before the Parliament. If the Bill passes, the Scottish Government will take steps to publicise its coming into force (at least 6 months following Royal Assent), and in particular with legal and property professionals who deal with commercial leases.

Post Assessment Review and sign-off

12. Planning for the review of impact on children’s rights and wellbeing.

The Bill team will continue to monitor the impact of the proposals during the Bill development process and as Parliament scrutinises any Bill. If new information comes to light, this will be assessed for potential impact on children and young people. However, this is not anticipated.

13. Sign off.

Policy Lead Signature & Date of Sign Off: Michael Paparakis, 18 November 2024

Deputy Director Signature & Date of Sign Off: Denise Swanson, 02 December 2024

Date CRWIA team first contacted: 03 September 2024