The rent payable for commercial property in Northern Ireland is usually quoted on a net basis, i.e. rent quoted per square foot or square metre will usually exclude toilets, columns, radiators, etc. Several other European countries measure on a gross basis.
In practice, commercial leases are most commonly granted for terms of 5-25 years. There is no automatic right to “break” the lease, prior to the end of the agreed term, although this is a matter for negotiation between the landlord and the tenant.
Rent reviews normally occur at five yearly intervals and are generally upwards only, although some tenants are starting to get upwards or downwards reviews agreed with landlords.
Stamp duty land tax is also payable on the creation of a lease. It is calculated using a formula based on the level of rent and the length of the term which produces a figure known as the net present value. If this figure is up to £150,000 no tax is payable; the portion between £150,000 and £5,000,000 is payable at 1% and the portion of the value that exceeds £5,000,000 is payable at 2%.
The occupier is generally liable for municipal rates unless an inclusive deal is reached with the landlord.
There may be a VAT charge on rents payable under the lease, paid by the tenant, but this is usually recoverable where the tenant is registered for VAT and has full VAT recovery.
Agreements for lease are separate contracts that landlords and tenants enter into prior to completing a new lease, if the grant of the lease is conditional upon issues such as planning or building works, agreements for lease can also be used to document capital contributions paid by landlords to tenants by way of an inducement or to assist with initial fit-out costs.