Essential parts of a lease

There must be two identifiable parties who are capable of coming to an agreement about the lease. They must be legally capable of contracting (in other words, they must have sufficient legal 'capacity' to contract and have reached the age of capacity to contract, which in Scotland is 16 years old). [1]

The parties to the lease do not necessarily have to be individuals but can be companies or organisations for example.

It is possible for there to be joint landlords and/or joint tenants.

The landlord must also have a legal right to grant a lease over the property being leased (called 'the subjects'). The most common example of someone with such a legal right is the owner of a property. [2] However, if the owner has a mortgage or other secured loan over the property, they should check the terms of their mortgage as they may have to obtain the consent of the lender before granting the lease. It is always advisable to check this as, if a lease is granted by an owner without the consent of the lender, it can cause problems. However, case law suggests that tenants can not be expected to check whether or not there is a security in place before taking on a tenancy. [3]

Another example of someone with a legal right to grant a lease is a tenant who is subletting. [4] Again, this right may be qualified and the tenant may have to obtain the consent of the landlord before granting the lease. This should always be checked in advance.

There must be some property that is being leased. This does not necessarily have to remain the same throughout the duration of the lease. What is essential is that there is an agreed mechanism whereby both parties can identify the subjects. If such is present, this requirement is satisfied. [5] Some landlords of houses in multiple occupation have, in the past, included a term in the contract which provides that the occupier may be moved to a different room within a building during the term of the contract. This would not normally prevent the contract from being a lease.

There must be a rent. The court cannot deduce a rent where there has been no agreement between the parties about this. [6] A rent normally involves the payment of money. Where no money is paid, the normal conclusion should be that there is no rent and, hence, no tenancy. However, occasionally other obligations, such as maintenance of the garden, can be treated as a kind of rent and so satisfy this requirement. [7]

There must be a duration, or expiry date (called an 'ish'). Where this has not been agreed by the parties, a duration of one year will be implied. However, this is only appropriate where the parties have come to an agreement about the other elements and the tenant has taken possession of the subjects, or agreement exists that possession is to be taken. [8]

It is common practice in Scotland for a lease to specify more than one termination date. For example, the lease might state that its duration is for one year initially and monthly thereafter. Although this has not been the subject of case law, this kind of provision is probably lawful. So long as both parties can ascertain the termination date at any stage in the duration of the lease, the law will give effect to the intentions of the parties.

There is no requirement for an 'ish' in a private residential tenancy and a lease for this type of tenancy will still exist even if there is no express duration, so long as the other elements are met. [9]