How does a reversionary lease work?

In simple terms a reversionary lease is one which is granted today, with a term commencement date of tomorrow or some other future date. In other words, this would be the grant of a lease, which is slotted in above an existing lease, for a term which takes effect at some future point.

What is the purpose of a reversionary lease?

A lease that takes effect when an existing lease has expired. However, the expression “reversionary lease” is also used to mean any lease where possession is delayed to a future date.

Can you forfeit a reversionary lease?

If the current lease is forfeit for breach of covenant or tenant’s insolvency, the landlord will not want its freedom to deal with the premises fettered by a reversionary lease. This can be achieved by specific drafting in the forfeiture clause of the reversionary lease.

When does a reversionary lease have to be given?

In simple terms a reversionary lease is one which is granted today, with a term commencement date of tomorrow or some other future date. A reversionary lease cannot specify a term commencement date which is more than 21 years after its date of grant.

When does an overriding lease come into effect?

The overriding lease will be for a term equal to the original lease, which it overrides, plus three days. It will otherwise be on the same terms as the original lease, but excluding personal covenants and provisions that have ceased to have effect.

What happens if there is a void period between tenants?

There may be a void period between tenants where the landlord would lose out on rent and may be liable for business rates. Why not vary the existing lease to extend the term? This would trigger an implied surrender and re-grant of the lease, with unintended tax, land registration and other consequences for both parties.

When do you have to reattach a lease to an existing lease?

The standard of repair required by a lease is normally the standard at the date the lease is granted. However in a renewal, the tenant should be obliged to yield up the premises in the condition required by the previous lease. If there is an existing schedule of condition, reattaching it to the new lease is quite straightforward.