Stamp Duty Land Tax (SDLT)

Where the deed of variation is dated on or after 19 July 2006, SDLT evidence is only required where the deed:

• takes effect as a surrender and re-grant of the existing lease; or
• takes place before the end of the fifth year of the lease term and increases the rent payable; or
• gives effect to an “abnormal” increase in the rent payable (i.e. at least doubling it) in respect of a lease that was subject to SDLT rather than Stamp Duty when originally granted.

Surrender and re-grant

The Court of Appeal in Friends Provident Life Office v British Railways Board [1996] confirmed that the intention of the parties was an important factor in deciding whether a deed of variation took effect as a surrender and re-grant by operation of law, unless the nature of the changes compelled the court to declare that the deed took effect as a new lease.

The court ruled that if the changes affected the legal estate and either increased the extent of the demised premises or the term of the lease, then a surrender and re-grant would occur.

Where the intention of the parties is merely to rectify an error in the original lease, this must be made clear in the deed.

The next page looks at specific applications to vary a lease.