HomeCommercial PropertyShort or Long Term Lease?

Short or Long Term Lease?

Many Tenants are reluctant to commit themselves to long Leases, whereas Landlords are keen to obtain a long-term Tenant to enhance the investment value of their Property. Landlords may, however, be prepared to agree short-term lettings if the alternative is being left with an empty Property.

 

The length of the Lease will also be relevant in calculating potential Land Transaction Tax liability (still commonly referred to as Stamp Duty) and also whether or not the Lease will be registered at the Land Registry.

Land Transaction Tax is, among other things, calculated by reference to the rent and the period of the Lease and generally the longer the Lease the higher the Land Transaction Tax liability will be.

Land Transaction Tax is payable by the ingoing Tenant.  Just like when buying a house, the potential liability for Land Transaction Tax needs to be considered, among other things, for cash flow purposes given that the Land Transaction Tax would be payable within 30 days of the Lease being granted or the Tenant taking occupation of the Property (which ever is the earlier).

It is advisable for Tenants to calculate potential Land Transaction Tax liabilities for different Lease periods.

 

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