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Avoiding stamp tax surprises: what landlords and tenants need to know

Mike Dalton, Head of Stamp Taxes at Grant Thornton UK, explains the charges that could arise from making revisions to leases.

Stamp tax The impact of the COVID-19 pandemic on many businesses has created a material impact on cash inflows, and the usage of real estate in the short to medium term. Consequently, some tenants are struggling to pay rent as it falls due or find that their needs for space have changed. Landlord negotiations have taken place, or will need to take place, to address what, in many cases, is hoped to be a temporary problem.

Various solutions may be considered to alleviate rent burdens in the short term. In very simple cases this may involve a deferral of rent collected without any variation of the lease. More complex solutions may also be considered, such as varying the profile of rent (to allow a rent-free or reduced rent period, with a corresponding increase in later years), or allowing a rent-free period but requiring an extension to the lease term. There is an increasing trend for landlords to propose new lease models with rent related to turnover for tenants in the retail/leisure sector.