Leasehold and Freehold Reform Act 2024

Variation of the lease

7 (1) This paragraph applies if a rent variation notice becomes enforceable.

(2) The landlord and the tenant, and any other party to the qualifying lease, must, upon the payment of the required premium by the tenant to the landlord, vary the qualifying lease by making the required peppercorn rent variation.

(3) A rent variation notice is “enforceable” from the time when the landlord admits or the appropriate tribunal determines—

(a) that the tenant has the right to a peppercorn rent, and

(b) all the terms on which the lease is to be varied, including what premium is payable (whether or not any shares of the premium that may be payable under paragraph 8(9) have been determined).

(4) The “required peppercorn rent variation” is the variation of the lease as admitted by the landlord or determined by the appropriate tribunal (see sub-paragraph (3)(b)).

(5) The “required premium” is the value of the right to receive rent over the remaining term of the qualifying lease.

(6) Except in the case of a lease falling within paragraph 8, 10 or 11 of Schedule 4 (market rack rent lease, lease already renewed under the LRA 1967 or business tenancy), that value is an amount equal to the term value of the lease as determined in accordance with paragraph 25 of Schedule 4.

(7) In this paragraph “relevant property” means the property demised by the qualifying lease to which the right to a peppercorn rent applies (see paragraph 2(6)).