Leases

Long Leases Low Rent

Leases are categorised separately for stamp duty purposes. They are not conveyances on sale, but are subject to separate, but similar provisions.  The stamp duty provision vary with reference to the category of lease.

The lease head of charge applies to the creation of a lease.  The assignment of a lease is a conveyance on sale.

Lease premiums are stampable on the same basis of conveyances.  Many categories of properties, such as units in multi-unit blocks and apartments are tyoically sold by way of long lease at a nominal rent.

The voluntary (gift and undervalue) provisions applicable to conveyances also apply to leases.

Market Rent Leases

Stamp duty is payable at one percent, three percent or six percent of the annual rent depending on the length of the term ( 35 years or less, 35 to 99 years or more than 99 years respectively). In the case of a  lease at a rack rent (market rent) lease, by which the property is not sold but it is rented at market value, without a premium, the rent only is stampable.

Other categories of lease are equivalent to a  sale. A long lease granted at a nominal or no rent, is stampable on the basis of the price /  premium.  If there is premium and rent, it is stampable under both heads or categories. Stamp duty is also payable on the premium / price paid for the grant of the lease. It is paid at the same rates and  on the same basis as on a conveyance on sale.

Agreements for Lease

Prior to February 2013, there was no anti-avoidance in respect of an agreement for the grant of a lease of real property for more than 35 years.  There had long been anti- avoidance in respect of an agreement for a lease of less than 35 years.  There has also been anti avoidance in respect of an agreement for the assignment of a long lease, where the purchase monies are not paid under the  agreement within nine months of the buyer taking possession.

An agreement for a lease may be equivalent to a lease.  See generally the sections on Landlord and Tenant Law.  Leases are fundamentally founded on contract law.  An agreement for lease for a term of less than 35 years, is stampable as a lease.  Where subsequently a lease is entred in conformity with the agreement for lease, the lease is stampable for a nominal amount only.

Since February 2013, an agreement for the grant of a lease of more than 35 years is stampable in the same manner, as under a resting in contract arrangement in respect of a freehold interest.  An agreement for lease is stamped is dealt within the same manner as a lease for the same term and consideration.  The same broad provisions which are set out above, apply.

Rent Not Fixed for Term

Where there is a rent review clause (allowing for review upward or downwards), the rent review clause is subject to fixed duty at the rate of €12.50.

Where the rent is not ascertained, but  the premium is, the rent is deemed to be the market rent in light of that premium.  Conversely where the premium is not ascertained, but the rent is specified, the premium is deemed to be the market value premium, in light of that rent.

If a lease is granted in consideration of goods, the value of the goods may be the subject of stamp duty, as if it was rent.  Stamp duty is not payable on later penal rents which may arise under leases on the occasion of specific breaches.

Rate of Duty

Equivalent stamp duty rates apply to leases as apply to conveyances on sale. See the rates applicable to conveyances of residential and commercial property respectively.

The rate of stamp duty applicable to rents depends on the terms.

• In the case of a lease for a term equal to or less than 35 years, a one percent rate applies. 
• In the case of a term between 35 and 100 years, the rate is six percent. 
• in the case of a term over 100 years, the rate is 12 percent over 100 years. 

A counterpart lease is stamped for €12.50.

House Lease

Leases of apartments and dwellinghoues for less than 35 years with annual rents of less than €50,000 are exempt.  Accordingly, most private residential lettings are exempted.

Finance Act 2023 provides for an increase in the stamp duty exemption that applies on certain short-term leases of residential property. Leases on both residential and non- residential property are chargeable to stamp duty under the SDCA 1999.

Schedule 1  provided for an exemption from this charge for leases of houses and apartments where the term of the lease is for less than 35 years, or is for an indefinite term, and the annual rent is less than €40,000. The amendment  increased the annual rent threshold from €40,000 to €50,000.

Exemptions

Where lease is made in consideration of improvements, such as building or development, the value of that obligation is not generally stampable.

As with  conveyances, there were exemptions for leases for various public policy reasons.  These include

• leases to certain charities by housing or shared ownership groups,
• petroleum leases;
• leases where the lessee is a public entity and it is publicly funded;
• leases of commercial woodland where  part of the consideration represents the value of trees.  Trees must represent a substantial part of the land.  The exemption applies to the part attributable to the woodland.