Notification: Grant of a lease: Example 4
An agreement for a non-residential lease is entered into. The lease will be for 10 years from and including the date of grant of the lease, at a rent of £100,000 per annum. The tenant substantially performs the agreement by taking possession of the premises on 1 July2005, and pays rent in accordance with the agreement at a rate of £100,000 per annum. In the agreement for lease, this payment may be expressed as a licence fee payable for occupation during the period prior to actual completion of the lease. For stamp duty land tax purposes it is treated as rent payable under a notional lease (refer to SDLTM11010).
As the date of actual grant is not known, the notional lease is for an indefinite term, so is treated as a lease for one year (refer to SDLTM14050).
A notional lease such as this must be notified if it meets the normal notification criteria.
The net present value of the rent of this 1 year lease is £96,618 and so is below the commercial threshold of £150,000. This notional lease does not have to be notified as:
- it is for a term of less than seven years, and
- tax is not chargeable at a rate of 1% or higher on the consideration.
Refer to SDLTM17010 for details of substantial performanceof agreements for lease.