SDLTM10040 - Introduction: definitions: agreements for lease

A lease is often preceded by an agreement for lease. Although this may operate in law as an equitable lease, SDLT purposes it is treated as a contract which may be charged to SDLT in certain circumstances:-

• Entering into an agreement for lease does not in itself constitute a land transaction for the purposes of SDLT (FA03/S44(2))
• If the agreement is not ‘substantially performed’ before the lease itself is concluded, the agreement is treated as part of the same transaction as the lease and the effective date will be that of the lease itself

BUT:

If an agreement is ‘substantially performed’ before the lease is concluded, it will itself be treated as the grant of a notional lease with the effective date being that of substantial performance (FA03/SCH17A/PARA12A).

For further details and examples of substantial performance of agreements, refer to:

SDLTM17010 onwards.