Reversionary leases (or future leases) are granted to take effect in possession at a future date. This Practice Note looks at:
when a reversionary lease is used (including to avoid surrender and regrant)
statutory rules relating to the grant of reversionary leases (including in relation to term and registration), and
key transaction and drafting points to consider on the grant of a reversionary lease
A reversionary lease is typically granted to an existing tenant (rather than an unrelated third party). In effect, it allows the parties to ‘extend’ the term of the tenant’s existing lease and avoid inadvertent surrender and regrant. Most frequently, it is used to document a lease renewal by contractual negotiation rather than under statutory provisions (eg Landlord and Tenant Act 1954 (LTA 1954)—see: LTA 1954 procedure—overview).
The grant of a reversionary lease often forms part of a lease re-gear transaction (see Practice Note: Lease re-gears—what, when and how?).
A reversionary lease should be used to avoid unintentional surrender and regrant when
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