… from the DAC Beachcroft real estate asset management group: Renewing interest in lease renewals.
If your tenant is delaying agreeing a lease renewal you can encourage them to move things forward by flagging the SDLT incentives, a couple of which are highlighted below:
1. SDLT leases with security of tenure under the 1954 Act “grow” once held over for a year, requiring a further SDLT return to be filed and most likely requiring additional SDLT to be paid. This is an administrative burden for the tenant and may lead to a greater overall SDLT liability for them. This is avoided if the new lease is agreed within a year of the old lease expiring.
2. Alternatively, where the old lease was subject to stamp duty and has been held over, you may be able to greatly reduce the tenant’s SDLT liability by not requiring the new lease to be backdated to the day after the old lease expired. The value of this will depend on any rent increases in the holdover period and calculations should be done to find the most tax efficient option.
Knowledge of points such as these can strengthen your negotiating position with your tenant.