The Office of State Revenue (‘OSR’) has released Practice Direction 73.1 which highlights the distinction between rent and premiums. What is important to note is that even where a payment is described as 'rent' on the face of a document, the OSR may consider it to be a premium and require the payment of duty.

Whether duty is payable depends on whether the OSR regards the money paid to be payment for the lessee's use and enjoyment of the land (ie rent), or consideration for granting the lease (ie a premium). A lump sum payment is likely to be regarded as a premium and therefore dutiable. However, there may be other factors in the documents (considered as a whole) which indicate that it should instead be seen as a rental payment.

When preparing an offer to lease, landlords should consider whether duty will be payable and which costs their tenants are agreeing to pay.

It is also something to take into account when considering taking, for example, a marina berth lease as stamp duty may turn out to be a further hidden cost on top of the initial lease fee.

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