When a lease, which is the relevant interest in a building,
terminates the following rules apply:
If the lessee remains in possession of the building with the lessor's consent without a new lease being granted, the lease that has terminated is treated as continuing for as long as the lessee remains in possession.
If there was an option, in the lease that has terminated, for the lessee to be granted a new lease and the lessee exercises that option, the new lease is treated as a continuation of the old lease.
If the lessor pays a sum to the lessee when the lease terminates in respect of the building, the lease that was terminated is treated as if it had come to an end by the lessee surrendering it in return for the sum that the lessor has paid him.
If another lease is granted to a different lessee when the lease terminates and the new lessee pays a sum to the original lessee in connection with the transaction, the two leases are treated as if they were the same lease and as if that lease had been assigned by the old lessee to the new lessee in return for the sum which he or she received.
Example Cass leases a qualifying building from Ollie. Cass’s lease is the relevant interest in the qualifying building.
In the BPRA legislation,
lease includes an agreement for a lease, but only
where the term to be covered by the lease has begun, and any
tenancy. It does not include a mortgage.
In Scotland leasehold interest means the interest of a tenant in property subject to a lease.