The reasons why commercial property rent disputes in Scotland have jumped for the first time since 2016

“It’s worth noting that the number of cases going to a third party remains low by the standards of the past decade.”

Scottish commercial property rent disputes have risen for the first time since 2016 but remain well below the historic annual average, new analysis has revealed.

The number of disputes between landlords and occupiers rose last year as more cases had to be referred to a third-party for resolution, according to property consultancy Knight Frank, which obtained figures from the Royal Institution of Chartered Surveyors (Rics). They show that there were a total of 67 applications for third-party arbitration in 2023 - up by a third on the number recorded during the previous 12 months.

Last year’s tally was the highest since 2020’s 69 cases, but is around half the annual average. There were 24 in Edinburgh and 23 in Glasgow, while the remaining cases were spread across Scotland. So far in 2024, there have been 16 applications for third-party review, suggesting that the number of cases will remain comparatively low this year.

Andrew Hill, lease advisory partner at Knight Frank Scotland, highlighted a number of reasons behind the rise in Scottish commercial property rent disputes.

Independent experts, or arbitrators, are appointed to cases where commercial tenants and landlords cannot agree on a new rental deal at a fixed-term review date. Typically, these are conducted every five years, depending on the terms of an occupier’s lease.

Andrew Hill, lease advisory partner at Knight Frank Scotland, said: “It’s unsurprising to see the number of rent disputes tick up after hitting their lowest point in a decade in 2022. During the pandemic, there was greater collaboration between landlords and occupiers, with the former providing rent-free periods and deferring rents in exchange for lease extensions. That was inevitably going to change as conditions normalised and more people came back to the office.

“At the same time, prime rents are seeing considerable rises in Edinburgh and Glasgow. Landlords – mainly of prime, Grade A properties – see it worthwhile pushing for increases at the moment, whereas they may not have in previous years. Given the lack of availability of Grade A space in Edinburgh, in particular, there are few options for occupiers to choose from if they were to decide to move within the next year or two.

“However, it’s worth noting that the number of cases going to a third party remains low by the standards of the past decade.”