HMRC SDLT: SDLTM18275 – Notification: Continuation of lease by tacit relocation: Example 2

Principles and Concepts of Tacit Relocation in Lease Continuation

This section of the HMRC internal manual provides an example of lease continuation through tacit relocation. It outlines the principles and concepts involved in the process.

• Explanation of tacit relocation as an automatic lease renewal mechanism.
• Conditions under which tacit relocation applies to a lease agreement.
• Legal implications for landlords and tenants under tacit relocation.
• Example scenario illustrating the application of tacit relocation.

SDLTM18275 – Notification: Continuation of Lease by Tacit Relocation: Example 2

This article explains what happens when a lease continues after it ends, specifically under tacit relocation rules. This concept is relevant to tenancies in the UK and gives example scenarios to illustrate how it works in practice.

What is Tacit Relocation?

Tacit relocation is a legal term used when a lease does not have an explicit agreement about what happens when it ends. If a tenant continues to use the property after the lease term expires and the landlord accepts this, the lease can be considered to have continued under tacit relocation. In other words, the tenant can stay on the property without needing to sign a new lease immediately.

Key Principles of Tacit Relocation

• Continued Use: The tenant must continue to use the premises past the lease end date.
• Landlord Acceptance: The landlord must show they accept this continued use, typically by taking rent payments or not taking action to evict the tenant.
• No Written Agreement Required: Tacit relocation does not require a new written agreement. It is based on the actions of both parties.

Example Scenario

To illustrate how tacit relocation works, let’s look at an example. Imagine a small business owner named Sarah has been renting a shop under a lease agreement that ends on June 30. After this date, she continues to operate her shop and pay rent. Here’s what happens:

• Sarah’s lease ended on June 30.
• Instead of vacating the premises, she continues her business operations as usual and pays rent for July.
• The landlord, Mr. Jones, accepts her rent payment and does not tell her to leave.

In this case, Sarah has effectively continued her lease under tacit relocation. She can stay in the shop under the same terms and conditions as her previous lease.

Notification of Tacit Relocation

When tacit relocation occurs, the tenant must notify the landlord about the continuation of the lease. This notification informs the landlord that the tenant has not vacated the premises and supports the tenant’s right to remain there.

What Does Notification Include?

• Date of Notification: It should include when the tenant intends to continue the tenancy.
• Lease Terms: The tenant may refer to the original lease terms for the continuation period.
• Signature: The notification should be signed by the tenant to confirm their intention.

Important Considerations

There are some important points to consider regarding tacit relocation and its implications:

• Duration: While tacit relocation allows a lease to continue, it does not specify how long it will last. It typically continues under the same conditions until either party gives the proper notice to terminate.
• Renewal Terms: If both parties want to formalise the arrangement, they can negotiate new lease terms to be clearly documented.
• Legal Advice: It is advisable for both tenants and landlords to seek legal advice if there’s any uncertainty about the tacit relocation process.

SDLTM18275 Guidance

According to SDLTM18275, landlords and tenants should be aware of how tacit relocation affects their obligations. The guidance can help clarify the process, especially around specific notification requirements and timeline expectations. If you would like more information on this subject, refer to the full guidance on SDLTM18275.

Considerations for Landlords

Landlords should be proactive in managing lease renewals and terminations. Here are some best practices:

• Regular Communication: Engage in discussions with tenants about their plans to continue or vacate the property as the lease nears its end.
• Written Agreements: If possible, encourage tenants to sign renewal agreements to avoid confusion about the lease terms.
• Legal Assistance: Consult a legal professional to ensure compliance with relevant laws and to manage tacit relocation effectively.

Conclusion of Example 2

This example helps clarify how tacit relocation operates in practice. By understanding the rules and notifying as needed, both tenants and landlords can navigate the continued use of leased properties smoothly.

For more specific documentation or guidance, please refer to SDLTM18275 on the HMRC website or consult legal resources for tailored advice regarding your situation.

Useful article? You may find it helpful to read the original guidance here: HMRC SDLT: SDLTM18275 – Notification: Continuation of lease by tacit relocation: Example 2

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