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Miscellaneous Provisions: ‘'Rent'’ payable for a period before grant: Example 1
A lease is granted on 1 July 2005 of a retail unit in a shopping centre, for a term of 5 years from 1 January 2005 at a rent of £45,000 per annum. The lease has not been substantially performed in advance of completion.
No rent is recoverable in respect of the pre-grant period (the earlier start date is merely to bring the lease term in line with other units owned by the same landlord). For the purposes of the net present value (NPV) calculation, the ‘rent’ for the period from 1 January 2005 to 30 June 2005 is ignored as it is not chargeable as rent.
The rent taken into account for the purpose of the NPV calculation is as follows.
| Year 1 (1 July 2005 - 30 June 2006) | £45,000 |
| Year 2 (1 July 2006 - 30 June 2007) | £45,000 |
| Year 3 (1 July 2007 - 30 June 2008) | £45,000 |
| Year 4 (1 July 2008 - 30 June 2009) | £45,000 |
| Year 5 (1 July 2009 - 31 December 2009) | £22,500 |
The term of the lease is 4 years 184 days from the date of the grant and it has an NPV of £184,232. The tax payable on the NPV of the rent at 1% of the excess over £150,000 is £342.