Procedures

Procedures following the grant of a lease

Procedures following the grant of a lease

Many organisations make the mistake of thinking that once they have a lease granted to them, that is the end of the matter, as it is with many contractual arrangements.  In the case of short leases at a low rental, this may be the case, but it is always important to check if anything further needs to be done.

  • A lease of 7 years or more will often require completion of an SDLT1 (Stamp Duty Land Tax Return Form 1) that must be returned to the Inland Revenue and Customs agent within 30 days of completion of the lease.  Otherwise financial penalties are payable, even if no Stamp Duty Land Tax is payable e.g. because the tenant is a charity. This form must also be completed for any lease where the total rent during the term (calculated by a complex formula) including VAT exceeds £150,000, even if the term is less than 7 years. [Stamp Duty Land Tax]
  • If there is an open market rent review within the first 5 years from the actual start of the lease, the likely increase in rent be taken into account when calculating the rent for the purpose of deciding whether it is within or exceeds the £150,000 threshold. [Rent and rent review]
  • A lease for a term of over 7 years is subject to compulsory registration at the Land Registry.  This will involve an application to the Land Registry together with a fee, which for most leases at moderate rentals will be £40 or £30 where the application is made online.  The tenant must apply to register the lease within two months of taking the lease.
  • The Land Registry will nearly always require a plan that fulfils their very stringent requirements.  The plan must always be to scale, clearly show the boundaries on the ground, and show a north point.  Otherwise application for registration of the lease would, in the first instance, be rejected.
  • A further requirement is that the initial pages of a lease subject to compulsory registration must contain certain prescribed information.  A landlord, or the landlord’s solicitor will nearly always prepare the lease documentation but in some circumstances may still omit to use the right format.
  • If the landlords are themselves tenants under the freehold owner or yet another lease affecting the property, it will usually be necessary to give them notice that the lease has been granted.  This is usually given by the landlord rather than the undertenant who uses and occupies the property.