Miscellaneous provisions: Grant of a lease to commence in the future: Example
A lease is executed on 1 December 2005 which has a term from and including 1 December 2010 to 30 November 2020, at an annual rent of £100,000.
The grant of this lease is notifiable (and any tax payable) on or before 31 December 2005.
The net present value (NPV) of the rent over the term of the lease is £831,660. The first year’s NPV calculation is £100,000 discounted by 3.5%, not £100,000 discounted by 3.5% six times. This is because the NPV calculation only starts at the first year of the term of the lease, which in the case of a reversionary lease is the date the lease term commences in the future (1 December 2010 here) and not the last date of execution.
See SDLTM18740 for the SDLT treatment of variations of Scottish leases to extend the term and for SDLT implications of the express surrender/renunciation of a Scottish leases and grant of new lease.