7 Lease structure and content Flashcards
What forms the basis of calculating Stamp Duty Land Tax SDLT or Land Transaction Tax LTT?
Net Present Value NPV
How to calculate NPV?
Calculate a lump sum equivalent of the rent over the years it is payable
What do you need to calculate the NPV?
- start date of lease and lease term (Eg 10 years)
- rent payable for each of the first five years
when is SDLT payable? (amount)
over £150,000 up tp £5 million of 1% is payable
over £5 million SDLT of 2% is payable
How many years does the lease have to be to become registered at the Land Registry?
7 years
If the lease is silent on alterations, what is the exception by law to the tenant?
the tenant is free to carry alterations, BUT the doctrine of hate applies where any alterations made by the tenant cannot reduce the value of the premises
What is an absolute covenant against alterations?
alterations are not permitted
What is a qualified covenant against alterations?
alterations are only permitted with landlord’s consent
What does ‘User’ refer to?
what the lease allows the tenant to use the premises for
Tenant’s statutory rights to carry out improvements
under s3 LTA 1927, the tenant serves notice to the landlord, if the the landlord objects, then tenant may apply for a court’s permission to carry our the improvements IF the improvements:
- add to value of property
- reasonable and suitable for character of property
- will not diminish value of any other property belonging to the landlord
A freeholder (the ‘Landlord’) granted a commercial lease to a tenant. The tenant currently uses the property as a hairdresser but wants to change the use to a clothes shop. The tenant does not plan to undertake any significant alterations to the property. The lease provides the following:
‘The Tenant covenants not to use the Property other than as a hairdresser or a hair salon without the consent of the Landlord.’
Which one of the following best describes the Landlord’s position?
A. The Landlord is required to act reasonably in deciding whether or not to grant consent to the change of use.
B. The Landlord is entitled to charge a lump sum as a condition of granting consent to the change of use.
C. The Landlord will be able to withhold consent to the request to change the use of the property.
D. The Landlord cannot withhold consent as the tenant’s proposed use is within the same planning use class as the existing use.
D. The Landlord is entitled to increase the rent as a condition of granting consent to reflect the new use.
C
