LFLs: commencement and transition: lease not materially different from the pre-existing heads of agreement
If a lease is to be an excepted lease, the principal terms of the lease (see BLM23015) must not be materially different from those in the pre-existing heads of agreement.
No change in lessee is allowed by Condition 5 in BLM23025.
A minor change in the specification of an asset would not constitute a material difference. A change in type of asset, for example from one type of aircraft to another, would constitute a material difference unless the two types of aircraft were so similar as not to be materially different.
A change in the rentals that reflects an increase in construction costs from estimates made at the date of the pre-existing heads of agreement is unlikely to make the final lease materially different from the existing agreement.
In contrast, if the increase in costs reflects a change in the nature of the assets to be leased then there might be a material difference from the existing agreement. It would depend on the details of the particular case, particularly the degree to which the assets that are finally leased are different from those described in the existing agreement.
It is, however, the final lease, taken as a whole, which must not be materially different from the existing agreement for the transitional rules to apply. All the facts should be taken into account before coming to a final decision.