Commercial leases in Jersey – an overview
While the terminology may seem quite familiar for real estate practitioners in the United Kingdom and elsewhere the legal effects in relation to Jersey Commercial leases can be very different.
Term of lease
Under Jersey law a commercial lease with a term of nine years or less may be dealt with without of the formality of attending the Royal Court. These can be completed on any day by the parties executing the lease document itself.
Leases for a term in excess of nine years must be passed before the Royal Court of Jersey on a Friday afternoon.
Security of tenure
In Jersey, there is no equivalent to the Landlord and Tenant Act 1954 relating to a prima facie right to remain in commercial premises after the expiry of a lease
However, under Jersey law, if a tenant remains in occupation after expiry of the term and rent continues to be accepted rent, a new tenancy may be deemed to arise on identical terms, save as to guarantors.
There is no presumption under Jersey law that a tenant may assign a lease without the consent of the Landlord (unless the lease expressly provides otherwise). Jersey has no equivalent statutory overrides section 19 of the Landlord and Tenant Act 1927 which implies into any qualified covenant against assignment the obligation of the landlord not to unreasonably.
Breach or termination
Jersey has no concept of forfeiture of leases. There is no equivalent of the Law of Property Act 1925 section 146 procedures. The Landlord is likely to have the right to cancel the lease on specified grounds if the Tenant is in breach, subject to obtaining an appropriate court order. There is no provision for “relief” from cancellation. If both parties wish to terminate the lease, they can enter into a contract of cancellation on agreed terms.
Goods and Services Tax (‘GST’) may be payable on Commercial Leases. This is currently 5% on rental. There are exceptions to this. International Service Entities such as Banks, trust companies and other financial institutions who have been granted such an exemption will not incur GST.
Non-resident landlords are taxed at a rate of 20% on rental income derived from Jersey property.
Stamp duty on leases is payable if the term of the lease exceeds nine years.
There is no capital gains tax in Jersey.
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The information and opinion expressed in this briefing does not purport to be definitive or comprehensive and are not intended to provide professional advice. For specific advice, please contact Parslows, We are not responsible for, and do not accept any responsibility or liability in connection with, the content of this document or any reliance upon it