Commercial Leases in Jersey – a brief guide
While the terminology may seem quite familiar for real estate practitioners in other jurisdictions the legal effects in relation to Commercial leases in Jersey can be very different and assumption should not be made.
Term of lease
Commercial leases in Jersey for a term in excess of nine years must be passed before the Royal Court of Jersey on a Friday afternoon.
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.
Security of tenure
Jersey has 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. A landlord holding Jersey property should however note that, 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.
Unless the lease expressly provides otherwise, a tenant may not assign a lease without the consent of the Landlord. Jersey has no equivalent protection such as the English Section 19 of the Landlord and Tenant Act 1927, which implies that a landlord must act reasonably.
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.